The European Commission introduced the ‘Fit for 55-package’: an European Union that is climate-neutral per 2050 and 55 percent less emission of greenhouse gases in 2030 (compared to 1990). Part of this program is an emission rights system for imported goods that might be harmful for the environment: Carbon Border Adjustment Mechanism (CBAM). In that way the EU may (in time) levy emission rights on goods that have a negative CO2-impact on the climate, that are imported into the EU. The Dutch budget 2023-legislation proposal contains a bill to convert this EU-legislation into national legislation.
What is CBAM?
Using CBAM, the EU will to limit the import of certain goods that are produced in an environmentally unfriendly way. You may still import these goods without consequences into the EU. By imposing emission rights, the European Commission creates a level playing field between imported EU and EU-produced goods.
To what goods does CBAM apply?
CBAM is applicable to the following product groups:
- cement
- aluminium
- fertilizers
- production of electric energy
- iron and steel
These do not only regard the raw materials. Also certain semi-finished products have been included, based on their product code. There is, therefore, a high chance that you will also be subjected to the CBAM!
What implications does CBAM present to you?
CBAM will lead to administrative and (in due course) financial obligations.
Your administrative obligations will be:
- Appointing an authorised representative for the import
- Validated reports that describe the CO2-emissions.
- CBAM-reports on a three-monthly basis reporting the goods and their CO2-footprint.
As per 2026 the financial consequences will be:
- Mandatory purchase of CBAM-certificates (one per ton CO2-emissionthat is enclosed ub the imported product). The Price of a certificate is linked to the stock market value of the certificates in the ETS (emission transaction system).
- After (administrative) start-up phase your authorised representative must purchase on behalf of your organization CBAM-certificates .
- The direct emission in the production process of the imported goods determines the number of the required CBAM-certificates. For this you need information about the emission at the non-EU producer. If these numbers are not available, alternative ways may be used to determine the quantity of CO2 used abroad by the producer.. This information is to be verified and certified by an independent third party in situ..
- Once the goods are imported, the authorised representative will take care of the CBAM-import formalities. The authorised representative collects emission data of the supplier, the European Commission or if this information is not available, on the basis of benchmarks.
- The authorised representative provides periodically information to the Nederlandse Emissie Autoriteit (the Dutch Emission Authority).
When will CBAM be live?
The introduction of CBAM will take place at a short notice. We would like to point out that the EU-proposal for the legislation is still not finalised. The Commission, the European Parlement and the Council still negotiate the final text. This may result in adjustments in the Dutch bill in due course.
For no wit only states that you until 2026 will only have administrative obligations: the authorised representative must file a return within one month after the end of each quarter.
As of 2026 the certificates must be purchased and fines will be imposed when not meeting the CBAM-requirements.
Do not wait and prepare already well!
The provision of administrative data may have huge impact on your supply chain and your administration. For that one must determine whether your supply chain partners and the goods that they supply you from outside the EU fall under the scope of CBAM and what consequences this may have for your administration. In that way you are prepared for any consequences of CBAM.
Contact us if you have any questions
Do you need assistance to determine the impact of CBAM on your enterprise or do you have any other questions about this topic? Call or mail us please. We are pleased to help you.
