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CBAM Carbon Border Adjustment Mechanism for Importers (Declaration Form)
Manufacturers and Importers CBAM Report (Report) The latest announcement from the European Union
The Carbon Border Adjustment Mechanism (CBAM)
is a new tax system for EU tariff border importers who import goods that exceed a certain emission level or high-emission goods and have a demand for imported goods. For certain imported goods with high carbon emissions and control, carbon credits must be purchased to offset carbon leakage within the permitted range of carbon emissions.
What is carbon leakage?
Based on the perspective of regional economics, how to achieve an equal status of carbon tax costs for overseas and domestic industries on the basis of regional and overseas balance, and establish a set of carbon tax benchmarks for the regional economy to be protected and outside the regional economy, and prevent overseas goods that have not been taxed on carbon costs from entering the EU for circulation, resulting in carbon leakage without carbon taxation.
By establishing a CBAM carbon border adjustment mechanism, the EU can offset the embodied carbon emissions of imported products, allowing foreign goods to meet the same regulations that domestic manufacturers must meet. This prevents companies within the EU from circumventing carbon emission regulations by importing goods through third-country suppliers.
European Commission Achieving Climate Neutrality
On July 14, 2021, the European Commission passed a series of legislative proposals outlining how climate neutrality measures are expected to be achieved in the EU by 2050, including the medium-term target of reducing greenhouse gas emissions by at least 55% by 2030. The sub-project proposes to amend a number of elements of the EU's climate legislation policy, including the EU CO2 emissions trading system, efforts to share regulations, transport and land use legislation, to regulate in a practical way the way the European Commission expects to achieve the EU's climate goals under the European Green Deal. Under the European Union Emissions Trading System (EU ETS), industrial facilities considered to be at significant risk of carbon leakage will be subject to special regulations to support their competitiveness. Carbon leakage refers to what can happen when a company avoids importers moving production to other countries with less stringent emission restrictions due to costs associated with climate policies.
This could lead to an increase in global or EU emissions due to its total emissions. The risk of carbon leakage may be higher in certain energy-intensive industries as a result. To maintain the competitiveness of industries covered by the EU ETS, industries and related supply chain production that are considered to be exposed to significant carbon leakage risk impacts are granted a higher proportion of free allowances compared to other industrial industries.
After the implementation of the CBAM EU carbon border adjustment mechanism, it is expected to cover more than 50% of the emissions of ETS-covered goods. The products covered are:
List of CBAM declaration objects
Before 2030, the scope of CBAM may be extended to all product groups currently covered by the European Union Emissions Trading System (EU ETS), such as: crude oil, petroleum products, inorganic chemicals, industrial gases, synthetic rubber, non-ferrous metals, aviation, transportation, etc.
CBAM manages the tax number related to steel products, and the list of goods that have been included in the management is as follows:
※Take steel products as an example
The CBAM EU Carbon Border Adjustment Mechanism (Carbon Tariff) is implemented in two phases:
CBAM transition stage (the first phase is mainly based on declaration only)
Reporting Declarant: importer, customs declaration agent.
1. The CBAM transition period for CBAM filers before the formal pricing and taxation of the EU Carbon Border Adjustment Mechanism is from October 1, 2023 to December 31, 2025.
2. From 2026, the official period of the system will begin, that is, the implementation of voucher calculation fees will begin.
3. Traders or importers need to obtain carbon emission data from manufacturers and fill in the carbon emission data delivered by manufacturers, and must request carbon emission data information from manufacturers before they can report to the EU CBAM. During the transition period, if you fail to file CBAM in accordance with the regulations, you will be fined.
CBAM reporting obligor
During the transition period, EU importers are required to file quarterly returns and should submit CBAM reports within one month after the end of each quarter.
Taiwanese businesses should submit the information of CBAM products exported to the EU in the fourth quarter of 2023 to EU importers before January 31, 2024.
CBAM reporting obligor and requesting information request
From October 1 to December 31, 2025, EU importers are only required to submit quarterly (three-month) CBAM reports, with the declaration period completed within one month after the end of each quarter, and the first (second) report of the transition phase (adaptation period) should be submitted by January 31, 2024 (no purchase certificate is required for the transition phase). The first phase of the transition period focuses on the "adaptation", "habit" and "data establishment" of importers' reports, relevant information, and data declaration of commodity carbon content, as a revision of the EU CBAM in the future, and formulate a more reasonable and fair carbon tax mechanism. In short, the first phase of the transition period is mainly to provide importers and third-country suppliers with reasonable and objective information for reference, and to enable importers to adapt to the system.
In addition, in order to allow importers and third-country suppliers who cannot obtain accurate and reliable information or carbon emission data in a short period of time, the EU CBAM will provide the "default value" of commodity carbon emissions (i.e., carbon emission information that cannot be provided or calculated within the time limit) during the first quarter reporting period (the end of December 2023) for the declaration of carbon emission calculation assumptions.
CBAM Phase 1 Transition Period
The complete carbon border adjustment mechanism (carbon tariff)
will take effect on January 1, 2026, which means that it will not be managed in the way of the applicable transition period from 2026. Annual filings are required by an authorized filer, either directly or through CBAM. If you fill out the return directly, you must obtain a CBAM authorization. The price of CBAM certificates (certificates) will be linked to the average weekly carbon price of the EU ETS (around the end of October 2023, more than 80 euros per ton of CO2). With the gradual abolition of EU free carbon quotas, the EU ETS carbon price may rise further.
CBAM operation stage
(the second stage is declaration + accounting + deduction + purchase certificate)
The first annual return must be filed by May 31, 2027.
The following table provides an overview of specific emissions and greenhouse gases, covering and how to determine the CBAM scope for direct and indirect emissions for each section:
CBAM information form to be reported
The following must be stated in the CBAM report:
1.Origin of the goods,
2.method of production of the goods,
3.factory identification number (metal products, steel mills from which the steel originates),
4.whether exact or default values are used to calculate emissions
5.carbon price certificates in the country of origin, if a carbon price has been paid
SOP process for CBAM filing procedures
SOP process for CBAM filing procedures
CBAM reports calculate product emissions calculations
How should CBAM product carbon emissions involve trade secrets or key technologies (know-how) dealt with (announced default value)?
A. Sufficiently unclear or unwilling to disclose parameters, CBAM declares unclear raw materials, precursors, etc.
In response to CBAM's EU importer reporting obligations, each exported commodity must actually disclose information related to process technology, material proportion, energy use ratio, and accurate allocation and calculation of greenhouse gas emissions due to the manufacturing process of the product, and so that importers or traders can accurately understand and propose corresponding, reasonable, and applicable greenhouse gases (carbon) In essence, EU importers or manufacturers cannot find manufacturers that can meet the required quality indicators or technical indicators, but due to the declaration of CBAM, they obtain valuable technical parameters of Taiwanese companies or manufacturers, thus losing their original technical advantages, but in order not to lose the importer or trader (customer); Or, indeed, due to insufficient resources or time, it is impossible to provide corresponding relevant parameters and data information, resulting in the risk of being unable to provide customer reorders or being punished by CBAM authorities.
B. Announcement of the default value of the temporary CBAM EU carbon border adjustment mechanism
In order to allow the industry to have a period of adaptation in its operations, the first phase of two major stages has been set, that is, the early stage (transition period) allows the industry to adapt to habits and collect reasonable information for long-term effective control of carbon emission permit baselines. Based on the reference value, alternative methods can be used to estimate emissions and report, and CBAM will also announce and provide the average emission value of the 5% of companies with the worst emissions performance in the same industry in the CBAME jurisdiction as a reference for setting the setting. or the average emission value of the 10% of facilities with the worst performance in the carbon content (emissions) of the relevant products in each producing country is for reference only. This data is used as the "default value" of the announcement for this product, but the "default value" of this announcement is limited to July 2024.
CBAM declaration platform module interface content
The CBAM declaration window
confirms the country/region where the CBAM report is located to determine whether the CBAM report belongs to the customs or tax agency Although the CBAM carbon border adjustment mechanism is applicable to imported EU declaration items, some EU member states have set up "dedicated tax departments" to allocate resources for CBAM-related supervision operations.
CBAM Declaration Window
Taiwanese manufacturers adopt policies in response to the next phase of CBAM
The CBAM Carbon Border Adjustment Mechanism Committee will collect information obtained from various reports, establish statistical analysis, and refer to various database data for future use as a reference for decades during the implementation period, and establish feedback information on the regulations of the CBAM system and subsequent amendments to the relevant regulations, such as; Announcement defaults. Taiwanese manufacturers and their supply chains should try to cooperate with suppliers to develop paperwork tools that can provide importers or traders with accurate reporting information, and determine which data values from business activities will be used for relevant CBAM regulations or future research and development basis for improving raw material and process emissions.
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