Challenges of CBAM Compliance in the Iron, Steel, and Aluminum Sector and the Submission of the Iron, Steel, and Aluminum Sectors to CBAM

General

Please note that this FAQ document focuses on the transitional period of the Carbon Border Adjustment Mechanism (CBAM), which came into effect on 1 October 2023. However, some questions also address the definitive period, which will start in January 2026.

Why is the European Union (EU) establishing a Carbon Border Adjustment Mechanism (CBAM)?

The EU is a global leader in combating climate change.The European Green Deal clearly sets the objectives of achieving a 55% net reduction in greenhouse gas emissions by 2030 (compared to 1990 levels) and becoming climate-neutral by 2050.

In July 2021, the Commission presented the Fit for 55 policy package to make these targets a reality and to further consolidate the EU’s position as a global climate leader.Since then, these policies have been shaped through negotiations between the European Parliament and the Council, and many have now been incorporated into EU law.

The CBAM is part of this framework and will prevent the weakening of EU climate action by addressing the risk of carbon leakage.

What is the current stage of CBAM implementation?

The European Parliament and the Council of the European Union, acting as co-legislators, signed Regulation (EU) 2023/956 establishing the CBAM on 10 May 2023.

• CBAM entered into application during its transitional period on 1 October 2023,

• and the first quarterly reports must be submitted by 31 January 2024.

The rules and requirements for reporting emissions under CBAM are set out in detail in Implementing Regulation (EU) 2023/1773, which governs reporting during the transitional period.

The Commission has already:

• established the CBAM transitional registry,

• prepared additional secondary legislation, and

• carried out the planned analyses.

The definitive system will apply from January 2026.

The European Commission has issued detailed guidance to support the implementation of CBAM during the transitional phase, including guides, webinars, e-learning materials, and other resources.All supporting materials can be accessed on the Commission’s official CBAM webpage.

How does the CBAM work?

CBAM is designed to comply with the EU’s international commitments, including WTO rules.It operates by reflecting the EU Emissions Trading System (EU ETS) in the following way:

• CBAM applies to the actual embedded emissions in goods imported into the EU.These emissions are calculated using a method consistent with that used for reporting emissions under the EU ETS for similar goods produced within the EU.

• From the start of the definitive period in 2026, EU importers will need to purchase CBAM certificates corresponding to the carbon price that would have been paid if the goods had been produced under EU carbon pricing rules.

• Conversely, if a non-EU producer has already paid a carbon price on the embedded emissions in the country of production, the corresponding cost will be fully deducted from the CBAM obligation.

Thus, CBAM helps reduce the risk of carbon leakage, encourages greener production processes abroad, and motivates other countries to adopt carbon pricing measures.

To ensure legal certainty and stability for businesses and third countries, CBAM is phased in gradually, initially covering only sectors with a high risk of carbon leakage, namely:iron and steel, cement, fertilizers, aluminum, hydrogen, and electricity generation.

During the transitional period, starting on 1 October 2023, a reporting system applies to these goods.This phase aims to ensure a smooth transition and to facilitate dialogue with third countries.Financial adjustments under CBAM will begin in 2026.

How does CBAM interact with the EU Emissions Trading System (ETS)?

The EU ETS is the world’s first international emissions trading system and the EU’s flagship policy for combating climate change.

It sets a cap on greenhouse gas emissions from energy generation and large industrial installations.Emission allowances must be purchased on the carbon market, although certain free allowances are distributed to industries to prevent carbon leakage.

To strengthen the incentive for emission reduction, CBAM will be introduced gradually as free allowances are phased out.While the number of free allowances under the ETS will decrease for all sectors over time, the reduction will accelerate for CBAM-covered sectors from 2026 onwards, ensuring that the ETS continues to drive the EU’s ambitious climate goals effectively.

CBAM will be based on a system of certificates corresponding to the embedded emissions in imported goods.Although CBAM is not a cap-and-trade system, its certificate prices will mirror the ETS allowance price.

When the full CBAM regime becomes operational in 2026, it will be aligned with the revised ETS, particularly regarding the phase-out of free allowances in sectors covered by CBAM.In practice, until 2034, when free allowances are expected to be fully phased out, CBAM will apply only to the share of emissions not covered by free allowances, ensuring fair treatment between importers and EU producers.

How does CBAM interact with other emissions trading systems outside the EU?

CBAM ensures that imported goods are not treated more favorably than EU products, thanks to three key design features:

1. CBAM considers the actual embedded emissions, meaning that non-EU exporters who decarbonize will pay less under CBAM.

2. The price of CBAM certificates will be equivalent to the ETS allowance price paid by EU producers.

3. Effective carbon prices paid abroad will be deducted to avoid double carbon pricing.

If such a carbon price is paid abroad (e.g., under another emissions trading system), the Commission will adopt secondary legislation defining the rules and procedures for accounting for it before the end of the transitional period.

During the transitional period, import reports must include, for information purposes, the carbon price paid in the country of origin for the embedded emissions of imported goods (taking into account any rebates or compensations).

Which sectors are covered initially, and why were they chosen?

CBAM initially applies to imports of the following goods:

• Cement

• Iron and steel

• Aluminum

• Fertilizers

• Hydrogen

• Electricity

These sectors were chosen because they are highly emission-intensive and particularly exposed to the risk of carbon leakage.Together, they account for over 50% of emissions from industrial sectors covered by the EU ETS.CBAM may be expanded to other ETS sectors in the future.

Which products are covered by the CBAM Regulation?

CBAM applies to Combined Nomenclature (CN) codes, which are HS codes extended by two digits and used for EU exports.

All products for which embedded emissions must be reported are listed in Annex I of the CBAM Regulation.These are referred to as CBAM goods.Sectors such as “iron and steel” are listed for information purposes only.

For example, ammonia (CN code 2814) falls under the fertilizer sector and is covered by CBAM, even if it is imported for purposes other than fertilizer production.

Does CBAM apply to second-hand goods?

Yes.CBAM applies to all goods imported into the EU and released for free circulation in the EU single market.

Does CBAM apply to returned goods?

No.Returned goods are exempt from customs duties if they are either of EU origin or have previously been released for free circulation within the EU.Since CBAM applies only to goods originating from third countries, it does not apply to returned EU goods.

Does CBAM apply to the EU’s outermost regions, such as Mayotte or La Réunion?

No.CBAM applies only to goods originating from third countries and imported into the EU customs territory.As Mayotte and La Réunion are part of the EU customs territory, CBAM does not apply to goods produced there.

Which third countries are covered?

In principle, CBAM applies to goods from all non-EU countries.

However, countries that participate in or link their emission trading system to the EU ETS—such as EEA members and Switzerland—are exempt to avoid double carbon pricing.

CBAM also applies to electricity imported from third countries, including those integrating their power markets with the EU.If such integration is achieved and strict decarbonization commitments are fulfilled, the related countries may be exempted.These exemptions will be reviewed in 2030.

Do I need to report CBAM goods originating from the United Kingdom?

Yes.Embedded emissions for goods originating from the UK must be reported during the transitional period.

What happens during the transitional period?

The transitional period runs from 1 October 2023 to the end of 2025.

• The reporting declarant (the importer or indirect customs representative) must submit quarterly reports on the embedded emissions in imported CBAM goods.

• No financial adjustment (certificate purchase) is required during this period.

The purpose is to allow time for the full system to be implemented and for stakeholders to adapt.

Declarants should contact their national competent authority to access the CBAM Transitional Guidance, which provides detailed instructions on reporting.

The first CBAM quarterly report must be submitted by 31 January 2024, covering the period 1 October 2023 – 31 December 2023.

Are there penalties for non-compliance with the CBAM Regulation?

Yes.Reporting of embedded emissions for CBAM goods has been mandatory since 1 October 2023.

Declarants who fail to comply may face penalties ranging from €10 to €50 per tonne of unreported emissions.

Penalties apply when:a) The declarant fails to take the necessary steps to comply with reporting obligations; orb) The CBAM report is incorrect or incomplete, and the declarant does not correct it after the competent authority initiates a correction procedure.

Where can I find detailed information on how to report embedded emissions?

All reporting requirements are defined in Implementing Regulation (EU) 2023/1773.

The European Commission has published two guidance documents—one for importers of CBAM goods and one for third-country producers—as well as an optional communication template to facilitate information exchange between producers and importers.

These documents are available on the CBAM website:🔗 https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en

The importer guide is available in 24 official EU languages, and the producer guide is available in English, French, German, Polish, Spanish, Italian, Arabic, Korean, Mandarin, Hindi, and Turkish.

Is it mandatory to use the communication template (Excel file)?

No, it is not mandatory, but it is highly recommended.

The communication template helps businesses determine the embedded emissions in CBAM goods according to the methodology set out in Implementing Regulation (EU) 2023/1773.

It takes into account all relevant input streams, emission sources, electricity consumption, and precursor materials.The file includes a “Summary_Communication” worksheet, containing all the information required by the declarant and facilitating communication between third-country producers and importers (or their representatives).

Who is responsible in cases of incorrect or incomplete information?

Responsibility lies with the reporting declarant, who may be the importer or the indirect customs representative.The national competent authority is responsible for engaging with the declarant and, if necessary, applying penalties.

Who can I contact for further, more specific questions?

You can contact your national competent authority or the European Commission for any questions or clarifications regarding CBAM implementation.

A list of national competent authorities is published and regularly updated on the Commission’s official CBAM webpage:🔗 Carbon Border Adjustment Mechanism (europa.eu)

Reporting: Responsibilities and Procedures

Who is responsible for reporting?

During the transitional period, customs authorities will inform those making the customs declaration of their reporting obligations.The responsibility for reporting lies either with the importer or the indirect customs representative, depending on who submits the customs declaration.Customs authorities have the discretion to determine how they notify declarants about these obligations.

The person responsible for reporting may be one of the following:

• The importer, if:

  1. the importer lodges the customs declaration for release for free circulation in their own name and on their own behalf; and

  2. the importer is also authorized to submit the customs declaration and declares the import of the goods.

• The indirect customs representative, if the customs declaration is submitted by a representative appointed in accordance with Article 18 of Regulation (EU) No 952/2013, in the following cases:

  • the importer is established outside the European Union, or

  • the indirect customs representative has accepted the reporting obligations under Article 32 of Regulation (EU) No 2023/956, and the importer is established within the European Union.

The appointed indirect customs representative must be established within the EU and must meet the conditions set by the relevant Member State for customs representatives (see Article 18 of Regulation (EU) No 952/2013).

Can an importer have more than one indirect customs representative?

Yes.An importer is free to use different indirect customs representatives, each of whom will be responsible for the specific CBAM goods included in their own customs declaration.

Each representative will indicate their own EORI number in the customs declaration, which serves as evidence of who is responsible for the embedded emissions.Therefore, double counting of embedded emissions is not possible.

Will companies be allowed to report centrally if their subsidiaries in different Member States have different EORI numbers?

In principle, CBAM goods are attributed to a CBAM declarant through the EORI number submitted to the customs authorities.This means that, by default, separate CBAM reports will be submitted for different subsidiaries (each having its own EORI number).

However, since importers are allowed to appoint an indirect customs representative to assume their CBAM obligations, a single indirect customs representative can be appointed to represent all subsidiaries and submit one centralised CBAM report on their behalf.

What are the reporting obligations, and when must the report be submitted?

During the CBAM transitional period (from 1 October 2023 to 31 December 2025), importers must submit a CBAM report every quarter.Each report must include information on goods imported during the previous quarter and must be submitted within one month after the end of that quarter.

The reporting schedule for the transitional period is as follows:

Reporting Period	Submission Deadline
2023: October – December	31 January 2024
2024: January – March	30 April 2024
2024: April – June	31 July 2024
2024: July – September	31 October 2024
2024: October – December	31 January 2025
2025: January – March	30 April 2025
2025: April – June	31 July 2025
2025: July – September	31 October 2025
2025: October – December	31 January 2026

Each report must contain the information specified in Article 35 of the CBAM Regulation, including:

• The total quantity of each type of CBAM good imported,

• The total direct embedded emissions,

• The total indirect emissions,

• The carbon price paid in the country of origin for the embedded emissions of the imported goods (including any applicable precursors), taking into account any rebates or other forms of compensation.

I import only very small quantities of CBAM goods. Are these still subject to the CBAM Regulation?

Small consignments of CBAM goods may be automatically exempt under the de minimis exemption, provided that the total intrinsic value of CBAM goods in the consignment does not exceed EUR 150.

This means that the aggregate value of all CBAM goods in the shipment must be considered; if the value exceeds EUR 150, the exemption does not apply.

For illustration:

• Case 1:Your shipment contains several non-CBAM goods, each with a nominal value of €Y (irrelevant for the exemption), and one package of Portland cement (CN code 2523 21 00) worth less than €150.→ The de minimis exemption applies.

• Case 2:Your shipment contains several non-CBAM goods (irrelevant), plus one tonne of Portland cement (CN 2523 21 00) and one tonne of Other Portland cement (CN 2523 29 00), each worth €120.The total value of CBAM goods exceeds €150, therefore the exemption does not apply.

I did not import any CBAM goods during a specific reporting quarter. Do I still need to submit a report?

No.If you did not import any CBAM goods (i.e., did not release them for free circulation) during a given quarter, you do not need to submit a CBAM report for that quarter.

What is the role of the European Commission during the transitional period?

During the transitional period, the European Commission will:

• Manage the CBAM Transitional Registry;

• Provide lists of missing or non-compliant reports to national competent authorities (NCAs);

• Monitor implementation, progress, and risks related to CBAM, and assess its impact on exports, downstream products, trade flows, and least developed countries (LDCs).

The Commission will also adopt secondary legislation (implementing acts), including:

• Mid-2023: implementing acts on the transitional period (Article 35), reporting obligations, and reporting infrastructure;

• Mid-2024: acts on the authorization of declarants (Articles 5 & 17) and the CBAM Registry (Article 14);

• Mid-2025: acts on indirect emissions (Annex IV), verification (Article 8), verifier accreditation (Article 18), carbon price paid (Article 9), customs data (Article 25), continental shelf (Article 2), average ETS price (Article 21), CBAM declaration (Article 6), methodology (Article 7), and free allocations (Article 31);

• Mid-2025: delegated acts on verifier accreditation (Article 18) and the sale and repurchase of certificates (Article 20).

If necessary, the Commission will also adopt delegated acts on exempted countries, electricity rules, and anti-circumvention measures.

Finally, it will establish the Central Platform for certificate sales and repurchases during the definitive period.

What is a National Competent Authority (NCA)?

Each Member State has designated a National Competent Authority (NCA) responsible for performing the tasks defined under Regulation (EU) 2023/956.

In short, NCAs:

• Verify the quality of quarterly CBAM reports (with the Commission’s support),

• Contact declarants who fail to report,

• Ensure compliance with CBAM rules and impose penalties when necessary,

• And, from 2025 onwards, issue the “authorized CBAM declarant” status for the definitive period.

A list of NCAs is available and continuously updated on the Commission’s official CBAM website:🔗 Carbon Border Adjustment Mechanism (europa.eu)

Do importers of CBAM goods need to be authorized to import these goods during the transitional period?

No.Importers of CBAM goods do not need prior authorization to import during the transitional period.Customs authorities will inform importers about their reporting obligations at the time of import.

Are there any verification requirements during the transitional period?

No.Third-party verification is not required during the transitional period.Verification by an independent accredited body will become mandatory from 2026 onwards.Secondary legislation adopted for the definitive period will establish verification rules based on the data collected from EU importers during the transitional phase.

What supporting documents must be submitted with the quarterly CBAM report?

No original supporting documents are required.Declarants must submit the necessary data for the quarterly CBAM report only through the CBAM Transitional Registry.

However, under Annex III, Section A.2 of the Implementing Regulation, all data and supporting documentation used to determine the embedded emissions must be kept on record for at least four years after the reporting period.These records must be transparent and accessible to the declarant and may be requested by EU Member State authorities during audits.

I am both an importer and an indirect customs representative completing CBAM reports on behalf of another importer. Should I submit one or two separate CBAM reports?

A declarant may act as both:

• an importer (e.g., Company A importing steel), and

• an indirect customs representative (e.g., importing aluminium for Company B).

In this case, the declarant must submit a single quarterly CBAM report covering all CBAM goods for which they lodged customs declarations.

What is meant by the "effective carbon price" I must report?

As defined in the CBAM Regulation, the carbon price refers to the monetary amount paid in a third country under a carbon emission reduction scheme based on greenhouse gas emissions released during production.This may take the form of a tax, levy, fee, or the purchase of emission allowances under an emissions trading system.

During the transitional period, declarants must report the effective carbon price paid in the jurisdiction where the CBAM goods were produced.In the definitive system, this information will allow importers to receive a deduction to avoid double carbon pricing.

Who checks the accuracy of the data and reports submitted?

Under Article 11 of the Implementing Regulation, during the transitional period, the European Commission will conduct an initial review of CBAM reports and transmit a list of incomplete or questionable reports to the relevant national competent authorities (NCAs).The NCA will then decide whether to open an inquiry and potentially initiate a correction procedure, which may ultimately lead to penalties.

Is it possible to correct a previously submitted CBAM report?

Yes.According to Article 9 of the Implementing Regulation, a CBAM report can be corrected within two months after the end of the reporting period.

For the first two quarterly reports, a longer correction period applies — until 31 July 2024 — allowing declarants to correct reports submitted by 31 January and 30 April.

Does the report have to be in English, or can it be in other languages?

Reporting is possible in all 24 official EU languages.

CBAM Transitional Registry

What is the CBAM Transitional Registry?

To ensure the effective implementation of reporting obligations, the European Commission has developed an electronic database to collect all reported information during the transitional period.The CBAM Transitional Registry is a standardized and secure electronic system containing the common data elements necessary for reporting, ensuring data access, processing, and confidentiality.

It serves as the foundation for the development of the CBAM Registry under Article 14 of Regulation (EU) 2023/956.

Importers can access the CBAM Transitional Registry via the following link:🔗 https://customs.ec.europa.eu/taxud/uumds/cas

What will the CBAM Transitional Registry be used for?

The Registry will facilitate communication and information exchange between the European Commission, national competent authorities, Member States’ customs authorities, and reporting declarants.

It will be used for data collection and analysis purposes only, not for enforcement.

Is the CBAM Transitional Registry the same as the EU Customs Trader Portal (EUCTP)?

No.The CBAM Transitional Registry operates independently from the EU Customs Trader Portal.

However, existing importers who already use the EUCTP may also act as CBAM declarants and, if their Member State allows, use their existing accounts.In some cases, specific access to the CBAM module may need to be requested.

Will the data shared in the CBAM Transitional Registry remain confidential?

Yes.According to Article 14 of the CBAM Regulation, all information in the CBAM Registry is confidential, except for basic business identifiers such as company names, addresses, contact details, and locations of third-country installations.

Both Article 13 of the CBAM Regulation and Article 15 of the Implementing Regulation require NCAs to maintain professional secrecy regarding the data obtained.

Some data may be required to verify emission levels, especially when not validated by independent verifiers.However, much of the information exchanged between operators and importers remains optional and sensitive — for example, detailed production data.

The optional Excel communication template allows operators to choose which data to share, ensuring flexibility for sensitive business information.

Based on the experience of the transitional period, the Commission will further define which information must be disclosed in reports and to external verifiers in the definitive period.It is also considering options for direct transmission of data from producers to the Registry without importers seeing specific details.

How can I register as a CBAM Reporting Declarant and access the CBAM Transitional Registry?

When economic operators intend to become reporting declarants for CBAM purposes, they must apply to the National Competent Authority (NCA) of their respective Member State. A provisional list of NCAs is published on the Commission’s dedicated CBAM webpage and is regularly updated: Carbon Border Adjustment Mechanism (europa.eu).

In each Member State, the NCA is also responsible for granting reporting declarants access to the CBAM Transitional Registry. In some cases, a new CBAM-specific account and login credentials may be required. In others, existing customs system credentials may be used. For example, in Spain, access to the CBAM Transitional Registry is only available through the customs portal. Please contact your NCA for further details regarding your login credentials.

How many CBAM Transitional Registry environments exist?

There are two CBAM Registry environments available for reporting declarants: production and conformance.

The conformance environment serves as a test environment, allowing users to familiarize themselves with the CBAM quarterly report form and the CBAM Registry interface.

For security reasons, a separate registration is required for each environment (though the same email may be used). Access credentials for both environments are provided by the relevant NCA.

• Production CBAM Transitional Registry: https://cbam.ec.europa.eu/declarant

• Conformance CBAM Transitional Registry: https://conformance.cbam.ec.europa.eu/declarant

Who can register a company as a CBAM Reporting Declarant?

Any natural person who can demonstrate that they represent the company may apply to the NCA of the Member State where the company is established to gain access to the CBAM Registry as a reporting declarant. The NCA is responsible for verifying the legitimacy of such requests and granting CBAM Declarant access rights.

The account holder authorized by the NCA is responsible for maintaining the confidentiality of their account credentials and for managing access permissions for any additional company users.

Can companies not directly subject to CBAM access the CBAM Transitional Registry?

No. Access to the CBAM Transitional Registry is limited to reporting declarants, NCAs, customs authorities, and the European Commission.

How should data be entered into the CBAM Transitional Registry?

Quarterly reports must be completed per importer, per CN code, and per installation. There are two ways to input data into the CBAM Transitional Registry:

• Manual entry: Reporting declarants can enter data directly within the CBAM Transitional Registry interface.

• XML upload: Reporting declarants can also prepare and upload their CBAM quarterly reports in XML format. Once an XML file is successfully uploaded, a new draft quarterly report will be created in the Registry interface for submission.

A supporting XLS file for preparing XML uploads will soon be published on the Commission’s CBAM website.

Mandatory and optional fields exist within the Registry. Mandatory fields are marked with an asterisk (*) and are also identified in the supporting XLS file.

Detailed information on completing reports and using the XSD schema can be found in the CBAM Transitional Registry User Manual for Declarants.

A draft report can be saved even if not all mandatory fields are completed. However, all mandatory fields must be filled in before submission.

What is the methodology for calculating embedded emissions during the CBAM transitional period?

What is the relevant time frame for such calculations? Can data from previous years be used?

The default reporting period (reference period) for determining embedded emissions is one calendar year. However, other periods covering at least three months (e.g. a “production year”) may be justified if they provide equivalent coverage. More details can be found in Section 4.3.4 of the guidance for EU importers and Section 4.3.3 for non-EU installations.

For the CBAM report due in the first quarter of the year, data from the previous year should be used. If such data are not yet available by January/February, the previous year’s data may still be applied.

What are “simple” and “complex” products?

There are two types of CBAM goods: simple and complex.

• Simple products are made from input materials whose embedded emissions are considered zero under the CBAM reporting methodology. Therefore, the embedded emissions of simple products are limited to those arising during their own production process.

• Complex products include the embedded emissions of relevant precursor materials used in their manufacture. “Relevant precursors” are input materials that are themselves CBAM goods used to produce another CBAM good.

For example, in the cement sector, clinker is a relevant precursor because it is the main component used in Portland cement.

What are direct and indirect emissions?

• Direct emissions refer to those generated during the production processes of CBAM goods, including heating and cooling. Emissions from the generation of heating and cooling—regardless of location—are considered direct emissions.

• Indirect emissions refer to those associated with the generation of electricity consumed during the production of CBAM goods.

Embedded direct and indirect emissions of relevant precursors are also considered when determining the total embedded emissions of CBAM goods.

During the transitional period, importers must report both direct and indirect emissions for all CBAM-covered goods.From 1 January 2026, the definitive period will begin:

• For iron/steel, aluminium, and hydrogen, CBAM coverage will be limited to direct emissions only.

• For cement and fertilizers, importers must continue reporting both direct and indirect emissions.

What is the “bubble approach,” and how does it work?

If an installation produces a complex product and its precursor, and the precursor is used exclusively in the manufacture of that complex product, a combined (single) production process system boundary can be defined within the installation (see guidance documents for clarification).

If an imported CBAM product is produced using EU-manufactured precursors (e.g. pig iron), should this be considered in the calculation?

Yes. Relevant precursors produced within the EU must also be taken into account when determining embedded emissions.

However, if the precursor originates from EU production, the carbon price already paid in the EU can be reflected in the CBAM report. (Further details are available in Section 6.10 of the guidance for non-EU installations on carbon pricing mechanisms.)

Does the European Commission formally verify the “equivalence” of alternative methods?

The transitional period is considered a learning phase for all stakeholders, including the Commission and national authorities.Alternative methods that do not meet the standards of Article 4(2) of the Implementing Regulation may be rejected—particularly after 31 July 2024.

In such cases, the NCA will engage with the declarant to obtain more accurate data.

How are indirect emissions from CBAM product manufacturing determined?

Indirect emissions are calculated by multiplying the electricity consumed during production by the applicable emission factor. The emission factor may be based on the grid mix or represent actual generation data.

Which emission factors should be used to determine indirect emissions from electricity?

For the transitional period, default emission factors for electricity are based on five-year average data from the International Energy Agency (IEA) and are provided by the Commission in the CBAM Transitional Registry by country.

Alternatively, the emission factor of the electricity grid in the country of origin may be used if it is based on publicly available data. Both the “electricity emission factor” and the “CO₂ emission factor” may be used.

Actual (plant-specific) emission factors may be applied if a direct technical connection exists between the power generation source and the installation producing the CBAM good, or if there is a power purchase agreement (PPA) between the generator and the consumer.

Can market-based certificates (Guarantees of Origin, Renewable Energy Certificates, etc.) justify the use of actual emission factors?

During the transitional period, the general rule is to use default values provided by the Commission.However, actual emission factors may be used under the conditions described above (i.e. direct connection or PPA).

Market-based instruments such as Guarantees of Origin or Green Certificates cannot be used to justify actual emission factors.

Further information can be found in Annex III, Section D.2 of the Implementing Regulation, and in Section 6.7.3.2 of the non-EU operators’ guidance document.

Should transport within the installation be included in emission calculations?

Emissions from transport using fixed equipment such as conveyors, pipelines, and similar systems must be included.Emissions from mobile machinery (e.g. trucks, forklifts) are excluded.These rules are aligned with those under the EU Emissions Trading System (ETS).

Can Carbon Capture and Utilisation/Storage (CCU/CCS) be considered when determining embedded emissions?

Yes — CCUS technologies may be considered if specific conditions are met. These include cases where captured CO₂ is chemically bound in products or permanently stored in geological formations.

Applicable criteria are detailed in Annex III, Section B.8.2 of the Implementing Regulation and explained further in Section 6.5.6.2 of the non-EU operators’ guidance.

What should I do if my supplier fails to provide the required data before the reporting deadline?

Close cooperation between declarants and third-country producers is crucial.The Commission has issued guidance and templates to help producers determine the embedded emissions of their goods.

Ultimately, the reporting declarant is responsible for ensuring CBAM reports are complete and accurate.If reporting obligations are not met, the declarant may face penalties.

Until 31 July 2024, declarants may use default values provided by the Commission to estimate embedded emissions for products lacking complete data.

For the first three reporting periods, default or estimated values may be used without limitation.After 1 July 2024, estimated values may still be used but will be limited to 20% of total embedded emissions for complex products.

By the end of 2025, the Commission will review and update default values based on the data collected.

During the transitional period, only general default values (by CN code) will be available.In the definitive period, default values will be specified by country or region.

How are default values determined, and when will they be published?

On 29 September 2023, the EU Joint Research Centre (JRC) published estimated GHG emission intensities for key energy-intensive sectors (iron & steel, fertilizers, aluminium, cement) in the EU’s main trading partners.

These data form the scientific basis for determining default values under CBAM, which are expected to be published by the end of 2023.

For how long may EU importers use alternative monitoring and reporting methods?

During the transitional period, some flexibility is allowed:Until 31 December 2024, declarants may use equivalent systems such as(a) a carbon pricing scheme,(b) a mandatory emissions monitoring system, or(c) an internal monitoring system — provided these offer comparable coverage and accuracy (Article 4(2)).

Until 31 July 2024, where complete data are unavailable, other reference methods (see Article 4(3)) may also be applied.The Commission will evaluate such approaches to inform the definitive CBAM reporting methodology.

How should emissions from biomass use be accounted for?

CBAM follows the same rules as the EU ETS.

• When biomass is used as a process input (e.g. as a reducing agent in a blast furnace or in electrode production), the resulting emissions are considered zero (“zero-rating”).

• When biomass is used as a fuel for energy generation, emissions are counted unless the biomass meets the sustainability and GHG-saving criteria of the Renewable Energy Directive (EU) 2018/2001.

The applicable criteria depend on the biomass type.Further details are provided in Annex D of the guidance document for non-EU installations.

How should decimals and rounding be handled in calculations?

All significant figures (consistent with measurement uncertainty) must be preserved throughout the entire calculation process.

Should gross or net weight be used in calculating embedded emissions of imported CBAM goods?

CBAM goods are measured by net weight when imported into the EU customs territory.Therefore, the calculation of embedded emissions for CBAM goods should also be based on net weight.

How should stock items without emission data be handled?

Embedded emissions for such stock items may be estimated using default values published by the Commission by 31 July 2024.

Subsequently, actual data must be reported.In cases of missing data for older spare parts or stock items, data for similar or identical products may be used after 31 July 2024.

How should emissions from a facility serving multiple production processes be allocated?

All inputs, outputs, and related emissions from a facility should be allocated to a production process, unless associated with non-CBAM goods.

For shared equipment, resource streams, or emission sources, inputs, outputs, and emissions should be apportioned appropriately among the relevant processes.

For example, if a facility produces treated water and 60% of it is used in manufacturing a CBAM product, then 60% of the emissions from water treatment should be attributed to that CBAM product.

Should off-spec products that are still sold be included in determining activity levels?

Yes. If the off-spec product can be sold and belongs to a CBAM product category (as listed in Implementing Regulation (EU) 2023/1773), it must be included when determining activity levels.

Is cement defined as a complex product under CBAM?

Yes. Cement is considered a complex product because clinker—a CBAM-covered good—is its precursor.

Are exothermic chemical reactions in fertilizer production counted as direct emissions?

Yes. Any reaction resulting in CO₂ release through oxidation of organic chemicals, as well as emissions from the conversion of natural gas to hydrogen, are considered direct emissions.

Can CO₂ chemically bound in urea be counted as negative emissions?

No. Under the EU ETS, CO₂ bound in urea is not considered negative emissions.Therefore, no deductions are applied for CO₂ embedded in urea under CBAM reporting.

This also means that CO₂ transferred from ammonia production to urea production is counted as an emission under ammonia production.

Who is the reporting declarant for electricity imports under CBAM?

Generally, the importer named in the customs declaration is the reporting declarant.However, under Article 5(4) of the CBAM Regulation, if capacity allocation is explicitly made for electricity imports, the holder of that capacity allocation may act as the reporting declarant in the Member State where the import is declared.

What is the difference between the electricity emission factor and the CO₂ emission factor?

The electricity emission factor represents the weighted average emission factor of all electricity generation sources (including nuclear and renewable sources) within a specific geographical area (e.g., a third country, a group of third countries, or a region within a third country).

In contrast, the CO₂ emission factor represents the weighted average emission factor of electricity generation sources based only on fossil fuel combustion.

This means that, for the same geographical area, the CO₂ emission factor is higher than the electricity emission factor.

During the transitional period, the CO₂ emission factor is used as the default method for determining specific direct embedded emissions for electricity as a CBAM product.For CBAM products other than electricity, the electricity emission factor is used as the default method for determining specific indirect emissions.

Which CO₂ emission factors should be used?

The default values for imported electricity are calculated by the European Commission based on the best available data, depending on the third country, group of third countries, or designated regions within a third country.

For the transitional period, the default values include CO₂ emission factors for each country based on five-year averages from the International Energy Agency (IEA) data and are provided in the CBAM Transitional Regulation.

If no specific default value is available, the EU CO₂ emission factor should be used. This factor is also based on IEA data and is included in the CBAM Transitional Regulation.

If a declarant can provide sufficient evidence—based on official and publicly available information—that a lower factor applies, they may determine the CO₂ emission factor according to the method set out in the Implementing Regulation.

What are the requirements for reporting the actual embedded emissions of electricity (“conditionality”)?

If real emission data for a specific electricity generation facility can be used (meeting the conditions in Annex IV(5) of the CBAM Regulation), the following conditions must all be met:

• The amount of electricity for which real embedded emissions are claimed must be covered by a power purchase agreement (PPA) between the authorized CBAM declarant and an electricity producer located in a third country.

• The generation facility must either be directly connected to the EU transmission system or there must be no physical network congestion at any point during export.

• The generation facility must not emit more than 550 grams of CO₂ per kilowatt-hour of electricity generated from fossil fuels.

• The electricity amount claimed must correspond to the allocated interconnection capacity designated by the relevant transmission system operators in the country of origin, and both the generation and allocation must cover the same time period, which must be at least one hour.

Are transit countries considered for electricity in CBAM?

No.For electricity as a CBAM product, the relevant third country is the country of origin where the electricity is generated.Emission factors for transit countries are not taken into account in the CBAM report.

What are the system boundaries for determining embedded emissions of electricity?

Only direct CO₂ emissions occurring during the production of electricity are considered for reporting.Upstream emissions related to the manufacturing or installation of renewable facilities (e.g., wind turbines) are not included.

Hydrogen

What is the link between hydrogen as a CBAM product and the Renewable Energy Directive (EU) 2018/2001 (“RED II”)?

The Implementing Regulation states that “hydrogen produced may be considered to have a zero emission factor for electricity if it is certified under the European Commission Delegated Regulation (EU) 2023/1184(1)” (Annex II, Section 3.6).

This means that hydrogen certified as a renewable fuel of non-biological origin (RFNBO) under the Renewable Energy Directive is recognized as such, and no additional certification is required.

If such certification is not available, indirect emissions must be determined in accordance with Annex III.

Iron and Steel

Are auxiliary processes such as lime kilns or coke ovens included when calculating embedded emissions for steel products?

The system boundaries for each aggregated product category are defined in Annex III of Implementing Regulation (EU) 2023/1773.

Lime kilns and coke ovens are not included in the system boundaries for iron and steel production, as their outputs (lime and coke) are not CBAM products.Therefore, lime and coke are not considered precursors when calculating specific embedded emissions.

However, the production of utilities such as treated water and compressed air is included in the system boundaries.

Are iron ore pellets covered by CBAM?

Yes.Iron ore pellets fall under CN code 2601 12 00 (“Agglomerated iron ores and concentrates, excluding roasted iron pyrites”).They are considered precursors (“sintered ore”) for the production of pig iron or Direct Reduced Iron (DRI).

Aluminium / Steel

Should specific embedded emissions of aluminium/steel products be determined separately for different alloy grades?

Generally, specific embedded emissions are determined for aggregated product categories, unless different production methods are used within the same facility.

Aggregated product categories may include products under different CN codes.Even within the same CN code, alloy composition or scrap input may vary.

However, during the transitional period, embedded emissions may be reported at the aggregated product category level.Companies may voluntarily choose to determine more detailed embedded emissions for specific products or product groups.

Customs

Can an importer use different customs representatives for customs declarations and CBAM reporting?

Under Article 5 of the CBAM Regulation, during the transitional period, importers of CBAM goods may appoint direct or indirect customs representatives in accordance with Article 18 of Regulation (EU) No 952/2013 (the Union Customs Code):

• In the case of direct representation, the EU-established importer remains responsible for CBAM obligations, while the direct customs representative submits the customs declaration.

• In the case of indirect representation, if the importer is established in the EU and the indirect representative agrees, CBAM reporting obligations apply to the indirect representative.

• If the importer is not established in the EU, CBAM reporting obligations always fall on the indirect customs representative.

Therefore, an EU-established importer may use different customs representatives — for example, one direct representative for the customs declaration and another indirect representative for CBAM reporting.

In such cases, the direct representative must indicate the indirect customs representative in the customs declaration.However, during the transitional period, it is not possible to have multiple indirect representatives for CBAM goods under the same customs declaration.

If the importer is established outside the EU, the indirect representative is responsible for both the customs declaration and CBAM reporting.

What happens if an indirect customs representative refuses to take on CBAM reporting obligations?

This can only occur if the importer is established in the EU.If the importer is outside the EU, the indirect representative must fulfill CBAM reporting obligations.

Article 8(3) of the Implementing Regulation specifies that if an indirect representative refuses to assume CBAM reporting obligations, they must inform the importer accordingly.

If no such notification is made, the indirect representative remains responsible for the reporting obligations.

Can a direct customs representative act as a CBAM declarant for companies established in the EU?

Yes, importers established in the EU may appoint direct or indirect customs representatives.However, under the CBAM Regulation and the Implementing Regulation, the reporting obligations fall either on the importer or, where applicable, on indirect representatives who have agreed to take them on (see Article 32 of Regulation (EU) 2023/956 for the transitional period).

If the importer appoints a direct representative, the importer remains responsible for CBAM reporting obligations and acts as the CBAM declarant.

Importers may, however, appoint service providers to assist in preparing and submitting CBAM reports.Still, the ultimate responsibility for compliance remains with the importer or indirect representative.

Are customs representatives required to check if their clients are registered CBAM declarants before submitting a customs declaration?

According to Article 15(2) of the Union Customs Code (UCC), any person submitting a customs declaration (importer or representative) is responsible for:

• (a) the accuracy and completeness of the information provided,

• (b) the authenticity, validity, and correctness of supporting documents, and

• (c) compliance with all obligations related to the customs procedure.

This also applies to any other form of information provided to customs authorities.

Therefore, while it is not legally mandatory, it is strongly recommended that direct representatives verify whether the person on whose behalf the declaration is submitted complies with CBAM Regulation requirements before filing the declaration.

My company is registered in an EU Member State but imports CBAM goods through multiple Member States. Should these imports be consolidated into a single quarterly report?

Yes.During the transitional period, the CBAM declarant is responsible for submitting quarterly CBAM reports covering all imported CBAM goods and their embedded emissions.

CBAM goods are attributed to a declarant through the EORI number provided to customs.If a single company operates under one EORI number, the quarterly report should consolidate all CBAM imports, even if they entered the EU through different Member States.

Importers may choose to appoint a third-party customs representative, who, if they accept the reporting obligation, must use their own EORI number during import and fulfill the CBAM obligations on behalf of the importer.

Are goods transiting between EU Member States reportable under CBAM?

No.Only goods released for free circulation in the EU are subject to CBAM — not goods merely transiting between Member States.

If SKDM goods have been released for free circulation in the EU due to a non-compliant customs procedure, and all duties and taxes have already been paid under this non-compliant procedure, is there still an SKDM reporting obligation?

The release of goods for free circulation requires that the SKDM obligations have been fulfilled. Therefore, checks regarding whether these requirements have been met must take place before the goods are released for free circulation.

In cases of non-compliance, Article 198(1)(b) of the Union Customs Code (UCC) applies — meaning “customs authorities shall take any measures necessary, including seizure, sale, or destruction, where goods cannot be released for free circulation because they are subject to prohibitions or restrictions.”This applies because SKDM requirements are mandatory, and failure to comply triggers enforcement measures.

Additionally, Article 198(2) UCC applies, stating that “third-country goods abandoned to the State, seized, or confiscated shall be deemed to be placed under the customs warehousing procedure.”

Do I need to declare SKDM goods under the inward processing procedure?

SKDM applies only to goods released for free circulation in the EU. Therefore, goods placed under a customs suspension procedure for future export or processing are not subject to SKDM obligations.

However, if goods placed under the inward processing procedure are later released onto the EU market, an SKDM obligation arises.

Moreover, in the specific case where goods under inward processing are used to produce a final product that is released for free circulation within the EU (as per Article 6 of the Implementing Regulation), a reporting obligation also applies.In this case, the SKDM report will include data on the quantities and embedded emissions of the SKDM goods processed, but not on the quantities or embedded emissions of the final product itself, as the latter is not directly subject to SKDM (Articles 6(a) and 6(b) do not apply).

Definitive Period

How will SKDM function during the definitive period?

Under the definitive system, SKDM will mirror the EU ETS based on certificates purchased by importers.The price of these certificates will be calculated weekly, based on the average auction price of EU ETS allowances, expressed in euros per tonne of CO₂ equivalent.

Importers must register — either individually or through a representative — to participate in the SKDM system and purchase certificates.The number of certificates submitted must correspond to the amount of embedded emissions (in tonnes of CO₂) in the imported goods. Certificates can be purchased throughout the year.

Each Member State will sell SKDM certificates to authorized declarants established within its jurisdiction. Only authorized SKDM declarants can purchase them.Certificates for emissions from imports in 2026 must be surrendered by May 31, 2027 via the SKDM Registry.

Emission reporting will continue to be carried out via the online SKDM Registry, as in the transitional period.

What obligations will importers have during the definitive period?

During the definitive period, only authorized SKDM declarants will be permitted to import goods into the EU (Article 4 of the SKDM Regulation).

An authorized SKDM declarant is defined in Article 5 as:

• If the importer is not established in an EU Member State: a direct customs representative;

• If the importer is established in an EU Member State: the importer itself or, by agreement, a direct customs representative.

Therefore, if an importer is not established in the EU and their customs representative is not authorized as an SKDM declarant, the relevant SKDM goods cannot be imported into the EU.

Will the import of SKDM goods be prohibited if the EU importer is not authorized after 2026?

Yes. Article 25 of the SKDM Regulation stipulates that “customs authorities shall not allow the importation of goods by any person other than an authorized SKDM declarant.”

How is the SKDM report submitted during the definitive period?

The SKDM report is submitted via the SKDM Registry by the authorized SKDM declarant.During the definitive period, the “Transitional SKDM Registry” will be replaced by the “Definitive SKDM Registry.”

How can importers access the SKDM Registry in the definitive period?

Once an importer’s application is approved by the competent authority, it is recognized as an authorized SKDM declarant.Each declarant will be assigned an SKDM account number by the European Commission, granting access to the SKDM Registry.

What is the European Commission’s role during the definitive period?

As during the transitional phase, the Commission will:

• Manage the SKDM Registry,

• Review submitted reports,

• Communicate potential issues to national competent authorities,

• Monitor implementation and avoidance risks.

The Commission will also operate a central platform for selling SKDM certificates to importers, who will then surrender them via this platform.

Will the EU expand the scope of SKDM?

At the end of the transitional period (end of 2025), the Commission will conduct a comprehensive review of SKDM implementation.Using data collected during this time, it will assess the possibility of extending SKDM to other products and sectors covered by the EU ETS that are at risk of carbon leakage (Article 30(2)).

Any expansion will require a legislative proposal from the Commission and subsequent approval by the European Parliament and the Council.

When is an SKDM declarant “authorized,” and what is the authorization timeline?

The competent authority of the Member State where the applicant is established grants authorization when the applicant meets the following criteria:

• Has not committed serious or repeated infringements of customs, tax, market abuse, or SKDM regulations;

• Demonstrates sufficient financial and operational capacity;

• Is established in the Member State where the application is made;

• Has been issued an EORI number.

A consultation process precedes authorization and may not exceed 15 working days.Further details on the authorization procedure will be set out in secondary legislation during the transitional period (Article 17(10)).

How can EU importers prepare for the new system?

Non-EU producers of SKDM-covered goods should provide EU-registered importers with data on their products.If such data are unavailable at import, EU importers may use default values to estimate the number of certificates required.However, it is more advantageous for importers to provide verified embedded emissions data.

How will the reliability of reported data be ensured?

The Commission, in cooperation with Member State authorities, will continuously monitor reported emissions and related trade, detect non-compliance and avoidance, and carry out verifications.Verification reports will include details on emission quantities and allocation across products.

During the definitive period, reported embedded emissions must be verified by an accredited verifier in line with rules to be defined by the Commission.The verifier will prepare a verification report, and SKDM declarations must be submitted along with this report.

Penalties will apply to SKDM declarants who import goods into the EU without fulfilling their obligations under the Regulation.

How will verifier accreditation work?

The European Commission will define accreditation and verification rules in secondary legislation during the transitional phase.This will include:

• Two implementing acts under Articles 8 and 18 establishing verification principles and alignment with EU ETS verification, and

• A delegated act under Article 18 setting the conditions for verifier accreditation.

How will free allocation affect the SKDM payable amount?

Rules on this issue will be developed by the European Commission pursuant to Article 31(2) of the SKDM Regulation.

How will the carbon price paid in a third country be deducted from SKDM liability?

An authorized SKDM declarant may request a reduction in the number of certificates to be surrendered, corresponding to the carbon price effectively paid in the country of origin for the declared embedded emissions.

The Regulation defines carbon price broadly as “a monetary amount paid in a third country in the form of emission allowances under an emissions trading system, or as a tax, levy, or fee.”

Only carbon prices effectively paid in the country of origin are eligible for deduction.If the declarant has received a rebate or compensation, this will be taken into account when assessing whether the carbon price was effectively paid.

The Commission will, before the end of 2025, adopt an implementing act specifying further details on how to calculate the carbon price effectively paid in the country of origin (see Article 9(4)).

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