Importers of goods subject to the Carbon Based Import Adjustment Mechanism (CBAM) will be able to delegate the submission of declarations to a competent “CBAM representative”, calculate emissions under a simplified procedure and submit the annual declaration 3 months later.
Such proposals were made by members of the informal CBAM expert group at the European Commission's Directorate-General for Taxation and Customs Union (DG TAXUD) after its third meeting. The group includes representatives of EU member states' authorities, authorized declarants, industry associations, academics and other stakeholders. It was created to:
- to provide technical input on the implementation and improvement of the CBAM;
- to assist DG TAXUD in preparing and adopting the necessary documents;
- to facilitate the exchange of experience and best practices.
Simplification of the carbon adjustment mechanism for imports
The main provisions proposed as a result of the discussion are as follows:
1. The updated de minimis threshold will exempt importers with annual volumes of goods up to 50 tons from CBAM obligations. This will reduce the administrative costs of importers by a total of about €1.1 billion (including at least €831 million for small and medium-sized enterprises). At the same time, government spending will decrease by approximately €87.5 million.
The CBAM provides for the following provisions for small importers:
- they will be required to indicate their status as a CBAM small importer when submitting their customs declaration;
- they will be exempt from all obligations directly related to CBAM before reaching the established threshold.
At the same time, the European Commission will perform the following functions:
- collect and track data on each import declaration filed in the EU-27.
- monitor import volumes for each importer; if an importer exceeds the threshold, it will impose fines and a ban on further imports of goods subject to the CBAM until the end of the year or until an appropriate authorization is obtained;
- can quickly change the threshold if there are significant changes in trade patterns or emissions intensity.
2. A simplified authorization procedure for CBAM declarants means that consultation with the European Commission and national competent authorities (NCAs) will not be required. It also introduces the role of a “CBAM representative” to whom companies will be able to delegate the submission of declarations.
3. Simplified reporting and calculation of embedded emissions includes:
- abolition of the conditions limiting the use of default values – verification of embedded emissions applies only to actual values;
- the deadline for submitting the CBAM annual declaration and certificates will be August 31 (instead of May 31);
- additional information and access for verifiers will be available on the operator's portal;
- exclusion of process emissions from the system boundaries at the subsequent stages of production (downstream processing) for a number of steel and aluminum products and exclusion of precursor emissions produced in the EU. This applies to production processes in which the bulk of embedded emissions are determined by embedded precursor emissions.
4. Simplification of financial responsibility will be expressed in the following items:
- the start date for the sale of certificates is postponed to 2027 (to cover emissions in 2026);
- prices for certificates to cover emissions in 2026 will be set as the average quarterly EU ETS closing price for the quarter of imports of goods covered by the CBAM;
- the obligation to have a minimum number of certificates equivalent to 80% of embedded emissions at the end of each quarter was reduced by 50%;
- the calculation basis for taking into account the CBAM coefficient has been changed;
- the possibility of calculating the number of certificates based on default values or information provided in the previous CBAM declaration was added;
- a standard carbon price, “default carbon prices”, paid in third countries with discounts was introduced. The standard carbon price will be determined by the European Commission, if necessary (if data is available) for each country in euros per ton of CO2-eq. This is an alternative to the current approach with proof of the actual carbon price paid.
Recently, EcoPolitic reported that the European Parliament supported the European Commission's proposal to simplify the CBAM. The next step is to negotiate with the EU Council.
