Efficiently fulfill CO₂ compliance and reporting obligations

Implementation of the CBAM obligations

The Carbon Border Adjustment Mechanism (CBAM), also known as the CO₂ border adjustment system, is an EU instrument that primarily aims to determine fair prices for CO₂ emissions from the production of certain CO₂-intensive goods that are imported into the EU. Furthermore, the CBAM also serves to promote the implementation of cleaner industrial production in non-EU countries.

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In light of the increasing threat of climate change, CBAM was introduced as a tool to account for the carbon footprint of imported goods. This method ensures that companies that import products into the EU are held responsible for the associated CO₂ emissions by having to pay specific levies. During the transition phase, energy-intensive sectors will initially be particularly affected. These are:

Cement
aluminum
Iron and steel
Fertilizer
Electricity
Chemicals (hydrogen)

However, this information only applies to the transition phase; from 2026, it may be extended to other sectors.

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The initiative came into force in October 2023 and obliges companies to report on the imported goods concerned and the embedded emissions on a quarterly basis during the transition phase (from 2023 to 2025). The first three quarters may be based on the EU standard values and then primary data must be used by suppliers. From 2026, the annual reporting obligation and payment of the CO2 price will begin. This applies to all companies, regardless of their size, with an import value of €150 or more per shipment. The CBAM will therefore not only influence trade, but will also encourage companies to strengthen their emission reduction strategies, including thoughtful and efficient supplier engagement, and ensure their competitiveness in an increasingly low-carbon economy.

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With the introduction of the initiative, a new level of climate regulation has begun for companies, which for the first time now also specifically requires primary data from suppliers. The EU’s carbon border adjustment mechanism presents them with compliance challenges and the risk of massive fines of up to €500/tonne of CO₂. The CBAM is therefore also a relevant component of the “Fit for 55” package, which was introduced to achieve the climate targets by 2030 and is intended to accelerate the transition to a lower-emission economy.

In this crucial time, valantic supports you with tailor-made solutions to fulfill your CBAM obligations proactively and pragmatically.

CBAM and its goals

An overview of the EU's climate protection ambitions

The objectives of the CBAM are complex and encompass both environmental and economic aspects. One of the main objectives is to combat the phenomenon of carbon leakage. This involves companies relocating their production abroad in order to avoid the CO₂ price applicable to production in Europe and the costs of complying with strict environmental standards. The introduction of CBAM prevents companies from gaining a competitive advantage by importing carbon-intensive products from countries with lower environmental standards. This is ensured by the introduction of a CO₂ price for goods produced outside the EU. On this basis, it can be guaranteed that competition remains fair, carbon emissions are reduced and companies always have an incentive to invest in environmentally friendly practices.

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CBAM import

The certification requirements and processes

The import of carbon-intensive products requires the submission of corresponding certificates documenting the embedded CO₂ emissions of the respective goods. If these certificates are missing or incorrect information has been provided, financial penalties may be imposed. In order to purchase these certificates, companies must first apply for “Authorized Declarant” status, which enables them to fulfil the necessary obligations in connection with the CBAM and properly process the import of emission-intensive goods.

In general, the following requirements are worth mentioning:

CO₂ management for accurate and product-specific calculation of CO₂ emissions

Introduction of CO₂ management for the accurate and product-specific calculation of CO₂ emissions, taking into account primary data from the suppliers concerned.

Registration as CBAM declarant

Application for registration as a CBAM declarant in order to fulfill the legal requirements.

Submission of reports

Regular and timely submission of reports in accordance with the specified guidelines and deadlines to ensure transparency and compliance.

Purchase of CO₂ certificates

Active acquisition of CO₂ certificates on the market to cover our own emissions obligations and meet CBAM requirements.

Compliance with strict sanctions

Observance of strict sanctions and fines in the event of breaches of CBAM regulations to minimize potential risks and ensure compliance.

The correct calculation of the CO₂ price

CO₂ price of imported goods = average weekly price for EU ETS x number of allowances surrendered

With the introduction of the CBAM, it was determined that the price of the respective CBAM certificates should be based on the CO₂ price of European emissions trading. This is usually determined on the basis of emissions data and market factors. The price per CBAM certificate is based on the average weekly price for EU emission certificates, which is multiplied by the number of certificates to be surrendered. Each certificate represents one tonne of CO₂ or other relevant greenhouse gases released during the manufacturing process of the imported goods.

Important milestones and deadlines

When the CBAM came into force, important deadlines were set to ensure the transition phase and the first steps towards compliance with the new regulations. These milestones mark crucial times for companies and organizations to prepare for compliance with the CBAM requirements and fulfill their reporting obligations.

October 1, 2023

Start of the CBAM transition phase on October 2023: Companies must fulfill their reporting obligations

January 31, 2024

Submission of the first CBAM report by January 2024

July 31, 2024

Since July 31, 2024, supplier-specific emissions must be reported (EU standard values can no longer be used)

January 1, 2025

Application for status as an “approved CBAM applicant” by January 1, 2025

January 1, 2026

Start of the implementation phase on January 2026: Purchase of certificates

May 31, 2026

Submission of an annual report by May 2026

Our expertise for the correct implementation of CBAM

Solutions for your company

We offer comprehensive Carbon Border Adjustment Mechanism (CBAM) consulting services to help companies understand the implications of these new regulations and adapt their business practices accordingly. Our experts analyze your company’s individual needs and challenges and develop tailor-made solutions aimed at ensuring CBAM compliance. In addition, we identify potential for optimizing purchasing conditions to reduce costs while taking CBAM certificate costs into account. The following steps are part of our consulting services:

1

CBAM Readiness Check

Rapid assessment of the extent and scope of CBAM impact at item and supplier level, as well as quick check of existing purchasing strategies & patterns for the affected product groups.
2

CBAM action plan

Development of a pragmatic action plan and precise scenario analyses for affected product groups, products, suppliers and business units.
3

CBAM issue calculation

Calculation of relevant emissions and creation of a roadmap to improve data quality incl. supplier engagement and enablement.
4

CBAM Reporting & Governance

Establishment of a lean reporting and monitoring mechanism to fulfill CBAM reporting obligations.

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Do you need further information or specific advice?

We look forward to hearing from you! In an initial meeting, we will talk about your current challenges without obligation. Together we will find out how we can best support you and what a collaboration would look like.