Prepared by Francesco Pizzo, Lorenzo Ontano, Marta Marrapodi
The European Commission drafted a proposal to amend the Regulation (EU) 2023/956, with the aim of simplifying and strengthening the Carbon Border Adjustment Mechanism (CBAM). This initiative intends to reduce the administrative burdens for stakeholders, particularly for small and medium enterprises (SMEs), while maintaining the environmental objectives of the CBAM. The proposal is based on the experience gained in the implementation of the CBAM Regulation since October 1, 2023, during the transitional phase.
The proposal includes, among the others, the simplification of some CBAM reporting obligations that are based on complex calculations and data collection processes. Additionally, it intervenes on the timing of the declaration submissions, the purchase of the CBAM certificates and the penalty system.
Below are outlined the main proposed changes:
- Simplification of reporting obligations
- Introduction of an exemption for importers of small quantities of goods subject to CBAM, i.e., quantities less than 50 tons per year. Exempted importers will not need to obtain authorization as CBAM declarants nor submit annual declarations.
- Authorized CBAM declarants will have the possibility to delegate reporting obligations to third parties (e.g., consultants, environmental experts), while remaining legally responsible.
- Deferral of the obligation to purchase CBAM certificates
- One-year postponement of the date for the purchase of the CBAM certificates, which is expected to begin on February 1, 2027.
- Changes to emission calculations
- Authorized CBAM declarants will be required to submit an annual CBAM declaration containing the calculation of embedded emissions based on standard values with a markup or actual values calculated by operators. The standard values will be calculated and made available by the EU Commission. Therefore, the verification of embedded emissions will only cover actual values.
- Considering the difficulties for declarants in obtaining information from their suppliers, the possibility of using predefined carbon prices calculated and made available by the EU Commission will be introduced.
- Deadline for submission of declarations
- The annual deadline for the submission of CBAM declarations and the delivery of certificates will be postponed to August 31 of the year following the one of reporting to provide companies more time to verify the relevant emissions and transmit the declaration.
- Penalty system:
- Competent authorities, in applying penalties, should be able to consider specific circumstances, such as the intentional or negligent behavior of the declarant. This would allow for the reduction of the penalty amount in case of negligible or unintentional errors.
The Commission will continue to monitor and evaluate the functioning of the CBAM, proposing any necessary modifications to improve its operation and collecting the necessary information for a possible extension of the CBAM’s scope to other products.
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