Preparing for the Carbon Border Adjustment Mechanism (CBAM)

From 2024, some exporters of certain carbon intensive goods into the EU may have new reporting obligations under the Carbon Border Adjustment Mechanism (CBAM). Based on the type of goods sold, UK and other non-EU businesses may be required to take additional action before the December 31^st, 2024, deadline. So, what is CBAM, and what do qualifying exporters need to have in place to meet these new requirements?

From 2023 – 2026, CBAM is in a transitional phase. From 2026 the definitive stage will begin. During the transitional phase, importers of in-scope goods will only have to report greenhouse gases (GHGs) embedded in their products, also known as direct and indirect emissions, without the need to buy and surrender certificates. This means exporters of in-scope goods should expect any EU clients to request the direct and indirect emissions associated with their products.

What do UK Exporters Need to do?

If you are a UK based exporter of any of the items listed by the EU, you will need to calculate the direct and indirect emissions of any qualifying products you export to the EU. Direct emissions are considered to be from the manufacture of products such as from raw material extraction and material transport. Indirect emissions are those arising from the electricity used in manufacturing the products.  These are combined to calculate the embedded emissions associated with those products. All these results must be available in a CBAM Communication Report to provide to the importers.

Any existing UK Emissions Trading Scheme (ETS) reporting can be utilised for this scheme up until December 31^st, 2024. After this deadline, direct and indirect embedded emissions need to be calculated and reported in line with CBAM guidelines.

Until December 31^st, 2024, importers can use the default values provided by the European Commission. However, there be instances where suppliers have earlier internal deadlines which exporters will have to meet. The exporter is obligated to report the relevant emissions to importers when requested and should have the information available in the expected format for the importer. It is vital that any exporters affected by CBAM have the information ready for their importers prior to the Q1 2025 reporting date, which importers must meet.

How Can we Help with Preparing for CBAM Compliance?

Circular Ecology can work with UK exporters to calculate the required emissions of the applicable products from the relevant categories:

This process involves working with the client to map out the relevant scope and then support the collection of the required primary data to carry out the assessment. This process is similar in nature to a carbon footprint assessment.