What is CBAM?

TABLE OF CONTENTS

• I. Scope of application (according to Annex I of the CBAM Regulation)
• II. Scope of validity
• III. Not included goods
• IV. Transitional period 
• V. The CBAM Module on the VERSO sustainabill platform 
• VI. Sending or answering a CBAM request

The EU's Carbon Border Adjustment Mechanism (CBAM) is a tool aimed at establishing a fair price for carbon emissions generated during the production of carbon-intensive goods imported into the EU. 

By verifying that a price has been paid for the carbon emissions embedded in the production of specific imported goods, the CBAM ensures that the carbon price of imports is equivalent to the carbon price of domestically produced goods.

The CBAM will be fully implemented from 2026 onwards. However, a transitional phase will be in effect from 2023 to 2025.

I. Scope of application (according to Annex I of the CBAM Regulation)

The CBAM will be applicable to specific direct greenhouse gas (GHG) emissions for products categorized under the Combined Nomenclature (CN) classification. These products belong to the electricity, cement, iron and steel, fertilizers, hydrogen, and aluminum sectors, as listed in Annex I of the CBAM regulation.

The following CN codes are affected 

• Cement (25231000, 25070080, 25232100, 25232900, 25233000, 25239000)
  
• Electricity (27160000)
  
• Fertilisers (28080000, 2814, 28342100, 3102, 3105)
  
• Iron and steel (72, 26011200, 7301, 7302, 730300, 7304 - 7308, 730900, 7310, 731100, 7318, 7326)
  
• Aluminium (7601, 7603 - 7608, 76090000, 7610, 76110000, 7612, 76130000, 7614, 7616)
  
• Hydrogen (28041000)
  

II. Scope of validity

• Goods originating in third countries, for release for free circulation
• Goods, downstream products from the above goods and goods intended for inward processing

III. Not included goods

• Goods with a total value per consignment of up to 150 euros
• Goods for personal use
• Returned goods
• Goods originating in: 

• Iceland
• Liechtenstein
• Norway
• Switzerland
• Büsingen
• Heligoland
• Livigno
• Ceuta
• Melilla

IV. Transitional period 

To facilitate businesses' adjustment to the CBAM, it is proposed to introduce an initial transitional period without obligations to surrender certificates from October 1, 2023, until the end of 2025. During this period, importers will be required to submit a CBAM report to the EU Commission every quarter.

The CBAM report must include information on the imported goods, such as volume, embedded direct and indirect emissions, and the carbon price due in the country of origin for the embedded emissions in the imported goods. 

Starting from July 1, 2024, standard values for emission data may no longer be used. Therefore, reporting companies must request specific emission data from their suppliers. This process will be conducted through the VERSO Supply Chain Hub via the CBAM-Request feature.

V. The CBAM Module on the VERSO sustainabill platform 

To learn more about the CBAM module, please see: How do I use the CBAM module?

VI. Sending or answering a CBAM request

Please see this article to learn: How do I send a CBAM Request?

Please see this article to learn: How to answer a CBAM request.