The EU published the implementation details of the Carbon Border Adjustment Mechanism (CBAM) during its transitional phase, what are the key points to pay attention to?

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As one of the key policies in the EU’s ambitious fight against climate change agenda, CBAM is an essential pillar of the Fit for 55 Package and is the EU’s landmark tool to fight carbon leakage. Carbon leakage occurs when companies based in the EU move carbon-intensive production abroad to take advantage of lax standards, or when EU products are replaced by more carbon-intensive imports.

Recently, the EU announced the official text of the implementation rules for the transitional phase of the Carbon Border Adjustment Mechanism (CBAM), which will come into effect on October 1, 2023. And fully implemented before 2034. The EU will become the world's first economy to impose a "carbon tariff".

During the transitional period (2023.10.01-2025.12.31), only the CBAM report needs to be submitted, and the collection will not be based on the reported data. The data collected during the transition period will provide the basis for reporting during the collection period, helping to define a unique monitoring, reporting and verification approach for the collection period.

The main points of CBAM reporting requirements during the transition period are as follows:

Reporting subject: The importer in the EU, the person holding the customs declaration authorization, or the indirect customs representative is the reporting subject

Reporting frequency: once a quarter, and no later than one month after the end of the quarter.

Report content: the quantity of each imported commodity, the direct and indirect carbon emissions of the product, the carbon cost information paid by the product in the country of origin, etc. (for details, refer to Annex I of the Implementation Rules).

Calculation method: Annexes II~IV of the implementation rules for the transition period specify in detail the accounting boundary of each type of product, the emission sources and gas categories included in the accounting scope, the types of simple products and complex products, and the quantitative calculation formula of each type of emission source emission gas , default values of relevant emission factors, etc.

Calculation tools: At the same time, the guidance documents for enterprises outside the EU and the information collection and emission calculation tools were announced to help export enterprises outside the EU to better complete product emission calculations and submit information to CBAM reporting entities. Reporting entities may also use other methods to calculate emissions.