Overall, the majority of replies expressed support for the CBAM, with the remaining being roughly divided equally between limited and no support. , which establishes a system for GHGemission allowance trading within the Union (EU ETS) and delivers harmonised pricing of GHG emissions at Union level for energy-intensive sectors and subsectors, Regulation(EU)2018/842 of the European Parliament and of the Council As the EU raises its own climate ambition, and as long as less stringent climate policies prevail in many non-EU countries, there is a risk of so-called carbon leakage'. CBAM will complement the international environmental action of the Union and favour decarbonisation in third countries. On the basis of the above, the impact assessment concluded that option 4 provides clear benefits relative to all other options considered. That period shall be extended by two months at the initiative of the European Parliament or of the Council. Specifically, a transitional period will apply to facilitate the smooth roll out of the CBAM and allow traders and importers to adjust. Moreover, in several industrial applications they are in direct competition with steel products because of characteristics closely resembling those of steel products. Having regard to the opinion of the European Economic and Social Committee Lessons learned from similar experiences in the past, Compatibility with the Multiannual Financial Framework and possible synergies with other appropriate instruments, In the interinstitutonal agreement of 16 December 2020, signed in the context of the negotiations, the European Parliament, the Council and the Commission agreed that "the institutions will work towards introducing sufficient new own resources with a view to covering an amount corresponding to the expected expenditure related to the repayment" of NextGenerationEU. . The Commission should, as part of that evaluation, initiate collection of information necessary to possibly extend the scope to indirect emissions, as well as to other goods and services at risk of carbon leakage, and to develop methods of calculating embedded emissions based on the environmental footprint methods. Subject matter, scope and definitions, Article 1 Before the end of the transitional period, the Commission shall present a report to the European Parliament and the Council on the application of this Regulation. In particular, a study on the optimal design of the mechanism and its sectoral coverage was conducted with the support of external expertise to the Commission. 3.The competent authority shall set up the account as soon as the authorisation referred to in Article 17(1) is granted and notify the authorised declarant thereof. Summary of the CBAM regulation - KPMG Global The authorised declarant shall be entitled to avail itself of that disclosed information to fulfil the obligation referred to in Article8. The authorised declarant shall ensure that the total embedded emissions declared in the CBAM declaration submitted pursuant to Article6 are verified by a verifier accredited pursuant to Article18, based on the verification principles set out in Annex V. For embedded emissions in goods produced in registered installations in a third country in accordance with Article10, the authorised declarant may choose to use verified information disclosed to it in accordance with Article10(7) to fulfil the obligation referred to in paragraph1. On providing protection against carbon leakage, option 4 followed by 3 and 5 bring about a stronger positive impact, while options 1, 2 and 6 would be less effective. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article29(2). 4.Imported goods shall be considered as originating in third countries in accordance with non-preferential rules of origin as defined in Article59 of Regulation (EU) No952/2013. The objective of this transition period is to serve as a pilot and learning period for all stakeholders (importers, producers and authorities) and to collect useful information on embedded emissions to refine the methodology for the definitive period. The need to set a clear price for CBAM certificates makes a daily publication excessively burdensome and confusing for operators, as daily prices risk becoming obsolete upon publication. Supporting document to response to the European Commission's public (13)As an instrument to prevent carbon leakage and reduce GHG emissions the CBAM should ensure that imported products are subject to a regulatory system that applies carbon costs equivalent to the ones that otherwise would have been borne under the EU ETS. Of these, 6responses were duplicates, leading to 609valid contributions. A more targeted allocation to organic chemicals will require more data and analysis. 1.Embedded emissions in goods shall be calculated pursuant to the methods set out in Annex III. Article 21 is about the calculation of the price of the certificates, done by the Commission, on a weekly basis. A review of the CBAM's functioning during its transitional phase will be concluded before the entry into force of the definitive system. A third country or territory satisfying the conditions set out in paragraph 7, points (a) to (f), shall be listed in Annex II, Section B, of this Regulation, and shall submit two reports on the fulfilment of the conditions pursuant to paragraph 7, points (a) to (f), one before 1 July 2025 and another before 1 July 2029. 7.The guarantee shall be provided as a bank guarantee, payable at first demand, by a financial institution operating in the Union or by another form of guarantee which provides equivalent assurance. PDF EU carbon border adjustment mechanism - European Parliament the promotion of relevant instruments and incentives to better implement the polluter pays principle as set out in Article191(2) of the Treaty on the Functioning of the European Union (TFEU) and thus complete the phasing out of pollution for free with a view to maximising synergies between decarbonisation and the zero pollution ambition. By confirming that a price has been paid for the embedded carbon emissions generated in the production of certain goods imported into the EU, the CBAM will ensure the carbon price of imports is equivalent to the carbon price of domestic production, and that the EU's climate objectives are not undermined. Reasons for action at European level (ex-ante). The chapter also contains provisions on the main characteristics of the national registries and its accounts (Articles 14 and 16) and decisions of the authorities regarding the authorisation to import (Article17), the accreditation of verifiers (Article 18) and the review of CBAM declarations (Article 19). The Commission shall make available to the Member States a list of all competent authorities and publish this information in the Official Journal of the European Union. An operator may choose not to have its name, address and contact details accessible to the public. The CBAM Regulation was published in the EU Official Journal on 16 May 2023 and officially entered into force on 17 May 2023. European Commission Executive Vice President Frans Timmermans and Vice Premier of the People's Republic of China Ding Xuexiang held the fourth EU-China High Level Dialogue on Environment and Climate (HECD) in Beijing on 4 July 2023. . Before the end of the transitional period, the Commission will report to the European Parliament and the Council on the application of the Regulation and, if appropriate, will make a legislative proposal to extend the CBAM to other goods than those listed in Annex I and possibly also to other emissions, and introduce other possible changes to improve its functioning. 1.Any declarant shall, prior to importing goods as referred to in Article2, apply to the competent authority at the place where it is established, for an authorisation to import those goods into the customs territory of the Union. Countries and territories outside the scope of this Regulation, 1.Section A- Countries and territories outside the scope of this Regulation. Article 24 Article 5 Subsidiarity (for non-exclusive competence). (55)As the CBAM aims to encourage cleaner production processes, the EU stands ready to work with low and middle-income countries towards the de-carbonisation of their manufacturing industries. 25 The customs authorities shall not allow the importation of goods unless the declarant is authorised by a competent authority at the latest at the release for free circulation of the goods. A total of 615respondents participated in the public consultation. . It shall not affect the validity of any delegated act already in force. On 13 June 2023, the European Commission published a draft Implementing Regulation outlining detailed rules for reporting obligations during the transitional period of the EU Carbon Border Adjustment Mechanism (CBAM), which runs from 1 October 2023 to 31 December 2025. under HEADINGS 1 to 7 1.Minimum data to be kept by an authorised declarant for imported goods: 1.Data identifying the authorised declarant: (b)the unique identifier assigned by the competent national authority; (a)type and quantity of each type of goods; 2.Minimum data to be kept by an authorised declarant for embedded emissions in imported goods based on actual emissions. The CBAM will therefore start in 2026 and be fully phased in by 2034. What is CBAM? - UK in a changing Europe They would also be entitled to claim a reduction of the CBAM for any carbon price paid in the country of production (which is not rebated or in other way compensated upon export). Free allocation of allowances under the EU ETS and obligation to surrender CBAM certificates. Article 20 concerns in detail the sale of certificates by the competent authorities. That means the weighted average of the CO2 intensity of electricity produced from fossil fuels in the EU. It shall also contain the assessment of the possibility to further extend the scope to embedded emissions of transportation services as well as to goods further down the value chain and services that may be subject to the risk of carbon leakage in the future. For that reason the impact assessment did not carry out a SME test, neither did it perform a separate SME consultation, although the views of, and implications for, SMEs have been assessed as part of the Commissions Online Public Consultation. Book-keeping requirements for data used for the calculation of embedded emissions. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article29(2). In particular, the actual selection should take into account basic materials and basic products covered by the EU ETS with the objective of ensuring that imports of energy intensive products into the Union are on equal footing with EU products in terms of EUETS carbon pricing, and to mitigate risks of carbon leakage. It could also result in different prices for operators of different countries. The Commission is empowered to adopt implementing acts concerning the standard format and the procedure for submitting the CBAM declaration and the arrangements for surrendering CBAM certificates provided for in paragraph 2, point (c). The Commission announced its intention to propose a CBAM in the European Green Deal. (EU ETS) and is meant to avoid that the emissions reduction efforts of the Union are offset by increasing emissions outside the Union through relocation of production or increased imports of less carbon-intensive products. (48)Integration of third countries into the Union electricity market is an important drive for those countries to accelerate their transition to energy systems with high shares of renewable energies. , EU leaders agreed on the recovery instrument NextGenerationEU. In that context, the European Parliament, the Council and the Commission agreed that , the Institutions will work towards introducing sufficient new own resources with a view to covering an amount corresponding to the expected expenditure related to the repayment of NextGenerationEU. Carbon Border Adjustment Mechanism - Taxation and Customs Union The following principles shall apply for verifications requested according to Article 8: (a)verifiers shall carry out verifications with an attitude of professional scepticism; (b)an emissions report shall be considered as verified and fit for purpose only if the verifier finds with reasonable assurance that the report is free of material misstatements and of material non-conformities regarding the calculation rules of AnnexIII; (c)installation visits by the verifier shall be mandatory except where specific criteria for waiving the installation visit are met; (d)for deciding whether misstatements or non-conformities are material, the verifier shall use thresholds given by the implementing acts adopted in accordance with Article 8. 4.The recipient of the notification referred to in paragraph 3 may lodge an appeal of the notification. . The CBAM will be gradually introduced for a few selected products. Carbon leakage occurs if, for reasons of costs related to climate policies, businesses in certain industry sectors or subsectors were to transfer production to other countries or imports from those countries would replace equivalent but less GHGemissions intensive products. (7)The Union has been pursuing an ambitious policy on climate action and has put in place a regulatory framework to achieve its 2030 GHG emissions reduction target. 4.Where the imported goods are processed products resulting from the outward processing procedure as referred to in Article259 of Regulation (EU) No952/2013, the authorised declarant shall report in the CBAM declaration only the emissions of the processing operation undertaken outside the customs territory of the Union, provided that the processed product is listed in AnnexI to this Regulation. A more stringent cap implies a stronger carbon price signal. (9)The initiative for a carbon border adjustment mechanism (CBAM) is a part of the Fit for 55 Package. However, to allow producers, importers and traders to adjust to the new regime, the reduction of free allocation should be implemented gradually while the CBAM is phased-in, in order to ensure that they are not cumulative. The Commission should be tasked to calculate and publish that average price. It shall not affect the validity of any delegated act already in force. 5 35 For that, it is necessary to firstly monitor the effect of the CBAM. 1.The authorised declarant shall ensure that the total embedded emissions declared in the CBAM declaration submitted pursuant to Article6 are verified by a verifier accredited pursuant to Article18, based on the verification principles set out in Annex V. 2.For embedded emissions in goods produced in registered installations in a third country in accordance with Article10, the authorised declarant may choose to use verified information disclosed to it in accordance with Article10(7) to fulfil the obligation referred to in paragraph1. It would operate alongside the other policy tools in the 'Fit for 55' package by addressing the risks of so-called carbon leakage resulting from the EU's increased climate ambition.