CBAM: The Key to Balancing International Trade with a Fair Carbon Price

Updated on
July 12, 2024

What is it?

The Carbon Border Adjustment Mechanism (CBAM), established by Regulation (EU) 2023/956, is a measure of the European Union (EU) that seeks to ensure that importers of goods comply with the EU's carbon emission regulations.

Under this system, importers must acquire certificates that reflect the cost of carbon they would have paid if the goods had been produced in accordance with EU standards. The implementation of CBAM, also known as MAFC in Spanish, will be carried out gradually from October 1, 2023, to the year 2034, with January 1, 2025, being a key date that marks the end of the transitional period and the beginning of the definitive application period of CBAM.

What products are affected?

CBAM will initially apply to imports with high carbon intensity, such as: cement, iron, steel, aluminum, fertilizers, electricity, and hydrogen.

During the transitional period, both direct and indirect emissions associated with certain products will be assessed. Ongoing evaluation will determine the possible expansion of indirect emissions to other goods, such as derived products, chemicals, and polymers, as the transitional period progresses.

In which countries does it apply and how does it affect me?

CBAM applies to certain products imported into the EU from third countries, excluding Iceland, Liechtenstein, Norway, and special territories such as Ceuta and Melilla in Spain. A "third country" is considered to be one outside the EU's customs area, while countries within this customs area are defined in Regulation (EU) No. 952/2013, including nations like Belgium, Bulgaria, Czech Republic, Denmark (except the Faroe Islands and Greenland), Germany (except Heligoland and Büsingen), among others. Additionally, CBAM also applies to imports from the United Kingdom.

What is the roadmap for the implementation of CBAM?

During the transitional period (October 1, 2023 - December 31, 2025), importers will report emissions without making payments. The first three reports must be submitted on January 31, 2024, April 30, 2024, and July 31, 2024.

In the definitive period (January 1, 2026 - 2034), progressive notifications and payments will be introduced for importers, managing emissions with CBAM certificates, coordinated with the gradual phasing out of free allowances in the Emissions Trading System (ETS), expecting to finish before 2034.

The application for the future is planned for 2030, including all products detailed in the ETS, such as glass, ceramics, or cardboard.

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