The European Commission unveiled the Carbon Border Adjustment Mechanism (CBAM) reporting rules last week, which requires importers to gather data on the embedded emissions of their products.
The CBAM is aimed at levelling the playing field for carbon prices between European producers and those outside the EU.
The deadline to begin collecting this information is set for October of this year, with reporting obligations starting by the end of January 2024. This framework will persist through the transitional phase of CBAM, which continues until the end of 2025.
Under the newly adopted rules, importers will be required to report on the embedded emissions of goods imported into the EU.
Importers must also include both direct emissions (Scope 1 and 2), expressed as CO2e per tonne through the production process, and indirect emissions (Scope 3). This includes providing data on electricity consumption during production.
The comprehensive reporting aims to provide transparency and accountability, aligning with the EU’s commitment to environmental sustainability.
This includes information such as the country of origin, the production site’s location, and the location of the primary emissions source.
By aligning carbon costs, the EU seeks to prevent “carbon leakage,” where companies relocate emission-intensive production to regions with laxer environmental standards.
To support importers, the EU is developing tools, training materials, and guidance for seamless compliance.
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Aimed at levelling the playing field for carbon prices between European producers and those outside the EU, this move holds implications for global trade dynamics.
It also signifies a commitment by the EU to clamp down on excessive emissions globally.
Businesses that take note of these developments will get a head start in reporting – which will have an impact on their revenue as taxes kick in.
At ClearVUE.Business, we provide insight to companies to reduce their emissions and comply with reporting requirements easily.
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