Latest Updates on the EU Carbon Border Adjustment Mechanism (CBAM)

Since its implementation on October 1, 2023, the European Union's Carbon Border Adjustment Mechanism (CBAM) has operated smoothly during its transition phase. Over the past year, the EU has refined and optimized supporting documentation, including the release of a self-assessment tool in September and an updated quarterly reporting template in November. These developments mark steady progress toward the full implementation of CBAM.

Recently, key updates to CBAM have been announced, providing important guidance for its execution.

1. How can non-EU facility operators better transmit data to EU declarants?

Currently, non-EU facility operators can use the official CBAM communication template to standardize and share necessary reporting information with EU declarants.

Additionally, a new portal will soon be launched on the CBAM registration platform, offering non-EU operators a convenient channel for uploading and sharing data. Through this online platform, operators can easily register and submit facility and emissions data, enabling instant information sharing with EU declarants without the need for individual communication.

The platform will also allow operators to maintain confidentiality over sensitive business data, ensuring secure and efficient data sharing. EU declarants will be able to directly access and utilize the data within the platform, streamlining CBAM reporting obligations for both parties. The registration portal for facility operators will open on January 1, 2025.

2. Will shared data on the CBAM transition platform be treated confidentially?

The CBAM regulations include confidentiality mechanisms. The registration portal, set to launch on January 1, 2025, will provide operators with exclusive access. Operators can decide what information to disclose to specific declarants.

In summary, operators will have a degree of flexibility on the platform, allowing them to withhold sensitive business information from EU declarants if necessary.

3. What measures should declarants take if technical issues prevent timely submission of CBAM reports?

As of early 2024, the platform includes a “Request Delayed Submission” button to handle such scenarios. Declarants can use the "Request Delayed Submission (Technical Error)" option to request an extension.

From October 1, 2024, this feature has been updated to "Requested by NCA". Declarants facing technical difficulties must first contact their local National Competent Authority (NCA) to explain the issue. They can then submit an extension request via the "Requested by NCA" option, along with the identification number assigned by the NCA.

4. What should declarants do if suppliers fail to provide necessary data by the reporting deadline?

Starting July 1, 2024, declarants must report the actual emissions of each CBAM product imported into the EU. If actual emissions data is unavailable and declarants use default values instead, the CBAM report will be deemed inaccurate or incomplete.

Declarants are required to make every effort to obtain actual emissions data from their suppliers or producers. If they are ultimately unable to obtain the data, they must check the “Unable to Obtain Actual Data” option when reporting.

It is important to note that selecting this option will result in the CBAM report being classified as incomplete or inaccurate. Declarants must then provide the following to justify their situation:

1. Detailed Explanation: In the "Additional Information" section, outline the specific reasons why actual emissions data could not be obtained.

2. Supporting Documentation: In the "Supplementary" section, upload evidence showing the efforts and actions taken to obtain the data from suppliers and/or producers.

When assessing whether declarants have taken sufficient measures to submit accurate CBAM reports, authorities may consider the practical challenges in obtaining data from CBAM product producers. These challenges may be viewed as valid considerations during evaluations.

Authorities will also consider the declarant's efforts and resources dedicated to collecting data. These will be assessed in relation to the declarant's economic scale, the CBAM product's carbon footprint, and the frequency and duration of interactions with third-country producers or suppliers.

In summary, when actual emissions data cannot be obtained, declarants must demonstrate that they have made every reasonable effort. Authorities will also take into account the supplier or operator's capacity and ability to calculate actual emissions.

With only a year remaining before CBAM enters its full implementation phase in 2026, the EU is intensifying its scrutiny of data quality. Manufacturers are encouraged to improve their factory data management systems and work proactively with raw material suppliers to ensure data accuracy.

Furthermore, businesses should closely monitor updates to EU policies and developments in domestic carbon markets to better understand their obligations regarding carbon costs within their supply chains.