What is CBAM?
The Carbon Border Adjustment Mechanism (CBAM) is a regulatory initiative introduced by the European Commission to tackle climate change and reduce global carbon emissions. It aims to prevent carbon leakage, which happens when companies move production to countries with less strict emission regulations, which can undermine global emission reduction efforts. CBAM aims to create a level playing field by imposing a carbon price on imports of certain goods from outside the EU, ensuring that imported products face the same carbon costs as those produced within the EU.
Why is CBAM Important?
Getting CBAM reporting right is crucial for several reasons:
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Environmental Impact:
- Accurate reporting and compliance help reduce global carbon emissions by ensuring that imported goods reflect their true environmental cost
- By enforcing a carbon price on imports, CBAM encourages companies worldwide to adopt greener production methods.
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Regulatory Compliance:
- Non-compliance with CBAM regulations can result in significant financial penalties and disruptions to business operations.
- Adhering to CBAM requirements demonstrates a company's commitment to sustainability and corporate responsibility.
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Market Competitiveness:
- Compliance with CBAM ensures that companies can continue to operate smoothly within the EU market.
- It helps businesses maintain a competitive edge by aligning with the EU's stringent environmental standards.
When Do CBAM Requirements Take Effect?
The CBAM requirements in the EU will be implemented in phases. The first phase began in 2023, with a focus on monitoring and reporting embedded emissions in imported goods. From 2026 onwards, full implementation is expected, where importers will need to purchase CBAM certificates corresponding to the embedded emissions of their imports. This phased approach allows companies time to adapt and prepare for full compliance.
Alongside the EU's CBAM requirements, the UK has announced its own plan to introduce a Carbon Border Adjustment Mechanism (CBAM). Starting on 1 January 2027, this new tax will apply to carbon-intensive goods like aluminium, steel, cement, ceramics, fertilisers, glass, and hydrogen. The goal is to help the UK meet its 2050 net zero target. The UK government is currently gathering feedback from importers and businesses. After reviewing these responses, a formal plan is expected by late 2024 or early 2025, followed by draft legislation for further consultation.
CAS and CBAM Reporting
Our customs management solution, CAS, has been created to streamline various customs processes. However, it currently does not include carbon data. Recognising the importance of supporting our customers through this transition, we have introduced the CBAM Preparation Report.
The CBAM Preparation Report is a feature within CAS that helps bridge the gap between our existing data capabilities and the requirements of CBAM reporting. This report is specifically formatted to comply with the guidelines of the European Commission, providing a solid foundation for companies to create their complete CBAM submission.
How Does the CBAM Preparation Report Work?
The CBAM Preparation Report includes all the required fields for CBAM reporting, as specified by the European Commission. The report will only include filled-in data that is available in CAS, serving as a critical starting point. You will need to gather additional information related to emissions from within your organisation or directly from your suppliers to complete the report.
Why Use the CBAM Preparation Report?
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Compliance Made Easier:
By providing a structured format that aligns with regulatory requirements, the CBAM Preparation Report simplifies the initial steps of compliance. -
Time-Saving:
Accessing pre-existing data in CAS reduces the time and effort required to compile reports from scratch. -
Accuracy:
Utilising data from CAS ensures that the information included in your CBAM reports is accurate and consistent. -
Efficiency:
With the report generation feature, you can quickly produce the necessary documents, allowing more time to focus on collecting the additional required data.
In conclusion, the CBAM Preparation Report within CAS is designed to simplify your compliance journey with the new CBAM regulations. As the phased implementation of CBAM progresses, our report will be an invaluable starting point in helping your business adapt and maintain market competitiveness, while demonstrating a strong commitment to sustainability and regulatory compliance. Streamline your CBAM reporting and contribute to global efforts in reducing carbon emissions.
Get in Touch
If you need more information or assistance with CBAM reporting, feel free to reach out to us. Our team is ready to help you navigate these regulations and make the reporting process as seamless as possible.
