Carbon Border Adjustment Mechanism has started

Written by Senior customs officer, National project manager (CBAM), Sture Skinnar and Senior customs officer, CBAM specialist, Tuula Tasala-Lappalainen

Phase 1. of the Carbon Boarder Adjustment Mechanism (CBAM) started on 1 October 2023

The Carbon Boarder Adjustment Mechanism (CBAM) is applied to certain goods deriving from energy-intensive production processes (CBAM-goods) when imported to the European Union. The CBAM-goods include e.g. certain iron and steel products, aluminum and cement products, hydrogen, electricity and fertilizers. (The complete goods-list is available through the links below, as well as the legislative documents, guidance documents and training material provided by the EU Commission and Finnish Customs, respectively.) The goal of CBAM is to impose an emission-based price-factor on goods imported to the EU to reflect their actual embedded emissions of greenhouse gas. Thus, the CBAM will also work as a driver for third countries, and their operators of installations, to reduce their emissions.

Phase 1. of the CBAM-implementation consists of a transitional period lasting from 1.10.2023 to 31.12.2025. During the transitional period the importers of CBAM-goods are obliged to submit quarterly reports of their import of CBAM-goods to the EU Commission. The report shall include the quantity of the imported goods, the direct and indirect embedded emissions of the goods, carbon price paid in the country of origin (if any), and possible rebates or compensations related to these costs. The report is to be submitted in the EU Commission’s CBAM Transitional Registry system. The annual deadlines for the transitional period reports are 31 January, 30 April, 31 July and 31 October.

From 1 January 2026 onwards, the import of CBAM-goods require an authorization to act as an authorized CBAM-declarant. The customs authorities in the member states will not allow other persons than authorized declarants to release CBAM-goods for free circulation in the EU. The authorization is applied for in the EU-member state where the importer is established and is valid for imports throughout the whole EU. Newly established operators will additionally be obliged to provide a full guarantee covering their first two CBAM-years.

As there will be need for these authorizations already from the beginning of 2026, the application processes are opened as from 31.12.2024. This provides the importers and the competent authorities enough time to prepare for the obligations entering into force 1.1.2026. The year 2025 will work as Phase 2. of the implementation.

Phase 3., the so called CBAM-definitive period, starts on 1.1.2026. In addition to the above-mentioned need for authorization, the importer is also obliged to buy emissions certificates, i.e. CBAM-certificates. One certificate corresponds to one ton of emissions of greenhouse gases embedded in the imported goods. The number of the certificates required is determined by the embedded emissions resulting from the goods manufacture. The authorized CBAM declarants submit an annual declaration to the Commission by 31 May each year. For the 2026 imports, the first declaration must be submitted by 31 May 2027. During the definitive period, there is no longer any obligations to lodge quarterly reports, but the importer must ensure, that he always has at least 80 % of the needed total amount of certificates on the CBAM-account made available to him in the CBAM-registry. The authorities will monitor this obligation on at least a quarterly basis.

 How to prepare for the CBAM obligations:

  • Do you import goods covered by the CBAM regulation, or is it likely that you will start such imports in the close future?

  • The information on embedded emissions you need for the transitional period reports cannot be obtained elsewhere than from the manufacturer of the goods.

    • If the seller is not the manufacturer, the process will be more complicated, but does not alter the above mentioned.

  • Ensure that your company has an EORI number, which you need for reporting CBAM goods and later on for applying for authorization and lodging of CBAM-declarations.

  • Create a process for reporting.

  • Gather the import data to be reported from 1 October 2023 and onwards, and prepare to report to the EU Commission.

  • To avoid sanctions, please report the data on time.

  • A number of flexibilities will be available to apply at the beginning of the transitional period. For example, it will be possible to use default values instead of actual emission data, but only for the first reporting periods. It is wise to start the process of obtaining real data as soon as possible.

  • Prepare yourself for the time after the transitional period: apply for authorization as authorized CBAM-declarant in due time during 2025.

  • Stay updated on the progress of the situation:

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