The CBAM has a clear purpose: to prevent carbon leakage. This occurs when companies relocate production to countries with less stringent environmental regulations, thus avoiding the EU’s climate policies. To counter this, the regulation will apply tariffs based on the carbon footprint of imported products.
This mechanism is also part of the European Green Deal, aiming to reduce global carbon emissions. Starting in 2026, CBAM will be integrated into the EU Emissions Trading System (EU ETS), ensuring that imports align with the EU’s climate commitments. This promotes fair and sustainable competition globally.
Sectors and products affected by CBAM
The CBAM will primarily affect carbon-intensive sectors, those with a high carbon footprint in their production processes. Key sectors under scrutiny for this new regulation include steel, aluminium, cement, and fertilisers. These industries are known for their high CO2 emissions due to the energy-intensive production processes they require.
The steel industry, which has one of the largest global carbon footprints, will see higher import costs due to carbon-based tariffs. A similar case applies to aluminium, another energy-intensive sector. Imports of cement and fertilisers will also be subject to cost adjustments, reflecting the need to ensure that non-compliant products face the same costs as those produced within the bloc.
Even greener sectors, such as hydrogen and imported electricity, will be subject to CBAM, depending on their carbon footprint. Consequently, all industries will need to adapt to these new regulations to comply with EU environmental standards by 2026.
CBAM regulations and legislation
The CBAM is regulated by Regulation (EU) 2023/956, which outlines the procedures for calculating the carbon emissions associated with imported products and how the corresponding tariffs will be applied. To comply with this regulation, companies must obtain CBAM certificates, which reflect the carbon emissions of their imports.
From 2026 onwards, businesses will need to ensure their imports are certified according to the new CBAM EU rules, ensuring that their products are not penalised by the carbon border adjustment.
CBAM operational and customs requirements
Complying with the Carbon Border Adjustment Mechanism (CBAM) involves not only adapting to environmental regulations but also following specific operational and customs procedures to ensure that imports meet the requirements set by the European Union. Below are the main steps and responsibilities that importing businesses need to follow to remain compliant with the CBAM.
Authorized declarants
One of the first steps in complying is registering in the CBAM system. Companies importing products into the EU must register in this system to manage their obligations according to the regulations. Additionally, each company must designate authorized CBAM declarants, who will be responsible for submitting documentation related to the carbon emissions of the imported products.
Authorized declarants are tasked with managing the import registry, carbon emissions declaration, and calculation of CBAM certificates necessary for evaluating imported products based on their carbon footprint. This process is crucial, as any errors or non-compliance could lead to fines or customs issues. It is essential for companies to choose qualified declarants who are familiar with the CBAM processes and regulations to avoid future complications.
Required customs documentation
To facilitate customs clearance under the CBAM, companies will need to submit specific customs documents. Some of the most important documents include:
- HS Code (Harmonized System): This code is used to classify goods based on their type and characteristics. It is essential for identifying products and correctly calculating their carbon emissions.
- EORI Number (Economic Operators Registration and Identification): This identification number is mandatory for all businesses involved in international trade within the EU. The EORI number allows EU customs to identify businesses conducting import and export operations.
- Single Administrative Document (SAD): This document is required to declare imported goods and allow for their customs clearance. In the case of CBAM, the SAD must include detailed information on the carbon emissions associated with the imported goods, as this data is critical for calculating tariffs and issuing certificates.
Correctly presenting this customs documentation is essential to avoid delays or problems in the importation process. Companies must ensure that the documents are complete, correct, and up-to-date before proceeding with any customs operations.
Accredited verifiers
One of the most critical parts of the CBAM compliance process is the validation of carbon emissions. To ensure transparency and accuracy in emissions declarations, companies must rely on accredited verifiers to certify the amount of carbon emissions of the imported products. These verifiers are independent entities, authorized by the EU’s competent authorities, who have the capacity to evaluate and confirm carbon footprint calculations.
Verifiers must follow the procedures set out by the CBAM regulation to audit the data provided by importers and ensure that CBAM certificates accurately reflect the carbon emissions associated with the imported goods. This validation is crucial for regulatory compliance, as any discrepancies in emissions could lead to fines or the invalidation of issued certificates.
It is important to highlight that accredited verifiers are also responsible for ensuring that carbon footprint calculations follow international standards and EU guidelines, providing confidence in data accuracy and maintaining the integrity of the CBAM system.
Economic and financial impact of CBAM
The economic impact of CBAM will be significant, as companies will need to manage the additional costs incurred from carbon-based tariffs. Companies that do not comply with environmental regulations will face higher costs, which could affect their profitability.
Managing carbon financial risk will be crucial for businesses. By purchasing CBAM certificates, companies can mitigate these costs. However, they must be prepared for the volatility of emission rights prices, which will require long-term financial planning.
CBAM Compliance methods and metrics
Companies must calculate and report the embedded emissions in their imported products. To comply with CBAM, they will need to use a standard methodology to determine their carbon footprint:
- Quarterly Report: Companies must submit quarterly reports on their carbon emissions.
- Annual CBAM Declaration: Once a year, companies will need to file a detailed declaration to ensure compliance with the regulations.
If you need help calculating the carbon footprint of your products or making CBAM declarations,contact us for personalized advice.
Challenges and opportunities for companies under CBAM
The CBAM presents both challenges and opportunities for businesses:
Operational adaptation will be one of the biggest challenges, especially for carbon-intensive industries. Companies will need to adjust their production processes and bear the new additional costs related to carbon emissions.
On the other hand, CBAM offers significant opportunities for those willing to invest in technological innovation and decarbonizing the supply chain. Complying with this new regulation will enhance competitiveness and reduce global emissions. Transitioning to a more sustainable model will allow companies to not only reduce their carbon footprint but also improve their long-term competitiveness.
Strategies to prepare for CBAM
Affected businesses should take action now to avoid surprises in 2026. Key strategies include:
- Conducting carbon audits to understand the emissions of their products.
- Incorporating clean technologies into production processes.
- Optimizing the supply chain to align with regulations.
Anticipating the transition will allow companies to stay competitive and comply with regulations, minimizing costs and maximizing innovation opportunities.
How can we help you in SUARDIAZ Group?
Complying with CBAM regulations not only requires adapting to operational and customs procedures but also staying up-to-date with changes and updates in regulations. At Suardiaz, we offer a full customs management service to help you meet CBAM requirements. If you need assistance with certificate management or customs clearance under the new regulatory framework, contact us via email or phone to discover how to optimize your operations and adapt to new regulations.
