Carbon Border Adjustment Mechanism (CBAM)

After long tripartite talks with the Commission and the Council, the European Parliament has just adopted the new Carbon Border Adjustment Mechanism (CBAM).

As part of its “Green Deal” or “Fit for 55,” the EU has set a target of reducing CO2 emissions by 55% by 2030.

Today, European companies that comply with EU environmental standards are competing with companies in countries outside the EU where environmental legislation is not as stringent with regard to CO2 emissions.

The new mechanism will provide “carbon offsets” for certain goods imported into the EU, provided that they are Carbon-intensive approachMACF will not apply if the imported goods have been “carbon offset” in their country of production.

The products involved include iron and Steel, cement, fertilizer, aluminum, electricity, hydrogen energy.

EU hopes encourage Producers in non-EU countries should switch to technologies that emit less CO2 and non-EU countries should strengthen their environmental policies.

The MACF is modeled after the EU Emissions Trading System (ETS) and is currently only available to companies in the EU. The European carbon market allocates greenhouse gas emission quotas to companies. If these quotas are exceeded, companies must pay a surcharge, the amount of which is determined by the market (about 90 euros per ton of CO2).

Once MACF is implemented, third-party importers of goods into Europe will have to purchase the certificate From national authoritieswhose price is Linked to the CO2 price in the European carbon marketThe Commission calculates the price of CBAM certificates as the average of the closing prices of EU ETS allowances on the auction platform, in accordance with the procedure laid down in Regulation (EC) No 1031/2010. Each calendar weekCustoms authorities will not authorize the removal of Authorized CBAM Declarant.

To account for these emissions, manufacturers based in non-EU countries must provide European importers with data on the CO2 emissions generated during the manufacturing of the imported products. Otherwise, importers will be able to apply default values ​​for the relevant sectors – and then determine the figure more accurately through a cross-checking process.

This mechanism will October 1, 2023During the transition period set by the European Commission, which ends at the end of 2025, importers will Just declare CO2 emissions of imported products. No carbon offsets are paid during this reporting period.

The European Commission must adopt implementing acts setting out the detailed conditions for the application of the MACF and delegated acts to complete the Regulation.

Finally, the combination of free quotas for EU companies and “carbon offsets” for foreign companies provides double protection for EU companies, which would violate World Trade Organization (WTO) rules. Free quota In the European market The plan starts in 2026 and ends with their Disappeared in 2034.

DS Avocats Customs and International Trade team are on hand to provide you with any additional information.

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