The CBAM (Carbon Border Adjustment Mechanism)
Now that the EU has established emissions trading for climate-damaging gases at plant operators (the German Emissions Trading Authority DEHSt at the Federal Environment Agency is responsible), importers are now obliged to report and price the import of product groups produced with a high CO2 input.
In order to prevent companies with CO2-heavy production (and similar climate-damaging emissions) from relocating their production to third countries due to the costs of the EU ETS (emissions trading), the European Commission has created a compensation mechanism to prevent carbon leakage - the relocation to countries with less stringent climate protection laws.
The requirements for the very complex data collection are very high. For this reason, however, the CBAM concentrates on some sectors with defined CN codes that cause particularly high emissions but are easily comparable.
- Cement
- Fertilisers
- Iron and steel Aluminium
- Chemicals (so far only hydrogen)
- If necessary, the petrochemical sector will be included in the next few years
- Electricity will also be assessed
In contrast to European emissions trading, these product groups subject to the CBAM reporting obligation are assessed for each importer. The prices for CBAM certificates are determined on the basis of the closing price on the emissions trading exchange.
The requirements for importers differ greatly from those of installation operators.
Why does the EU set such high standards, while companies in non-EU countries are not affected?
In many third countries, national levies to reduce climate-damaging emissions - especially CO2 - have already been enacted.
It is possible to enter equivalent levies in the third country as a reduction in the quarterly reporting of CO2 emissions. However, the EU's requirements for including this deduction are currently very strict.
When importing into the EU, the relevant CO2 emissions for the defined goods are then assessed and invoiced via certificates.
What can a supplier from a non-EU country do to reduce the tax burden of its customer in the EU?
It could reduce emissions in its production. For example, switching from coal-fired electricity to climate-neutral energy sources.
Why is the CBAM important for my EU company?
The requirements in EU ETS emissions trading only apply to producers, i.e. installation operators. The CBAM applies to every importer of the products listed above that are explicitly named in EU Regulation 2023/956.
Are all CO2-relevant emissions considered?
In the CBAM, the EU focuses on the relevant greenhouse gases that account for the largest share of the products with the highest emissions:
These are:
- Carbon dioxide
- Nitrous oxide (in the fertiliser sector)
- Perfluorinated hydrocarbons (in the aluminium sector)
The last two are converted proportionally.
How is the declaration for the levies made?
The notification for German companies currently takes place via the application in the BuG (citizen and business customer portal) of the customs authorities.
The EU has set up a comprehensive information page here: https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en
The template for the emissions data of third-country suppliers has also recently been made available in German. However, the CBAM levies only relate to the emissions that can be allocated to a product. Not to the total emissions of a company or the transport.
No more default values from the next quarter
Important: From the next quarter, companies will no longer be allowed to use standard values for the calculation, but will have to monitor the emissions of their third-country suppliers. Suppliers can voluntarily register in the CBAM transitional register.