Carbon Border Adjustment Mechanism – updated draft revealed

In connection with the preliminary agreement reached on 14 December 2022 between the European Commission and the European Parliament regarding the Carbon Border Adjustment Mechanism (CBAM), changes were introduced to the draft regulation that extend the scope of goods covered and the starting date. According to the current draft, the reporting regulations will apply from 1 October 2023.

List of goods

As we have previously informed, CBAM will apply to many categories of goods, in particular cement, electricity, fertilizers, iron and steel, aluminum. The December arrangements extended this scope by:

  • hydrogen (CN 2804 10 000),
  • screws, bolts, nuts, coach screws, screw hooks, rivets, cotters, cotter pins, washers (including spring washers) and similar articles of iron or steel (CN 7318),
  • other articles of iron or steel (CN 7326),
  • aluminum structures and parts of such structures (CN 7610),
  • aluminum tanks, reservoirs, vats and similar containers (CN 7611 – 7613),
  • stranded wire, cables, plaited bands and the like, of aluminium, not electrically insulated (CN 7614),
  • other articles of aluminum classified in section 7616 of CN.

During the transitional period, reporting obligations will apply to entities importing the listed products. Nevertheless, before the end of the transition period, the Commission will assess the scope of CBAM application and may decide to extend it to other product categories, e.g. organic chemicals and polymers.

Please note that ultimately (by 2030) the carbon tax is to cover all products classified in the EU Emissions Trading System (EU ETS).

When will the CBAM come into effect?

Originally, the CBAM regulations were to apply from 1 January 2023 in terms of reporting obligations. According to the latest version, they will apply from 1 October 2023. A transitional period will then begin during which businesses will be required to prepare reports on imports of goods covered by the CBAM regime – it will last until 31 December 2025.

Once the transition period is over, businesses will need to pay the carbon tax in accordance with the number of certificates they hold.

Importer authorization application

Starting 31 December 2024, an importer established in an EU country will be obliged to apply for the status of an authorized CBAM declarant before importing goods. The updated regulations also give the possibility to apply for the status of authorized CBAM declarant through the indirect customs representative.

Remember that the application should be submitted by the indirect customs representative also in the case of importers established outside the EU.

CBAM and indirect emissions

The new CBAM regulation has been extended to include emissions embedded in products. Indirect emissions are defined in the draft as emissions arising from the generation of electricity used to produce the goods to which CBAM applies. According to the new regulations, once the transition period is over and in the event of CBAM-related financial costs, importers will be obliged to purchase CBAM certificates in a quantity corresponding to both direct and indirect emissions for specific goods.

Work on CBAM is ongoing

For CBAM to enter into force, EU Authorities still need to reach a compromise on the phasing out of the free allocation to CBAM-covered industries under the EU ETS Directive. Appropriate solutions are still discussed to reduce potential export carbon leakage in the context of ensuring economic efficiency, environmental integrity and WTO compatibility of CBAM regulation.

Regardless of the status of the works, it is worth monitoring how CBAM regulation is shaped and with our help start preparing the supply chains for its introduction.


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Agnieszka Kisielewska_małe

Agnieszka Kisielewska

Partner I Tax adviser

Tel.: +48 600 097 363

Magdalena Wiszniewska (2)

Magdalena Wiszniewska

Senior Consultant

Tel.: +48 (22) 322 68 88