In our previous article we discussed what the Carbon Border Adjustment Mechanism (CBAM) would mean for importers in specific industries located in the UK or EU.

Whilst still in a transition period for the EU and not yet in force in the UK, we advise all those who might be affected to understand the possible duties and requirements they might have to comply with.

What is the Carbon Border Adjustment Mechanism (CBAM)?

Importers will be required to pay a price on imported goods from a third country to cover the emissions as though they had been produced under the EU pricing rules. If a non-EU importer can show they have already paid a carbon price, then that price will be deducted from the costs to the EU importer.

The goal of the scheme is to help tackle climate change and to try and prevent carbon leakage*.

*Carbon leakage is where a manufacturer moves production to another country with a lower carbon price or less stringent emissions regulations.

General Duties

Importers of eligible goods currently need to register and report on the emissions created in the production of those products. Eventually, when the scheme fully comes into force, importers will have to pay for and surrender certificates to cover the emissions.

Manufacturers have no direct duties but may be asked to provide emissions data to importers.

Recent updates

From 31st December 2024, importers established in the State must apply for the status of ‘authorised CBAM declarant’ through an application for an authorisation to the EPA before importing goods.

Where an importer is not established in the State, a customs representative must submit the application for an authorisation. 

Importers with authorised CBAM declarant status must use the CBAM registry each year by 31st May to submit a CBAM declaration for the preceding year, starting in 2027 for the year 2026 reporting. 

Guidance

More information and guidance can be found below.

• EU Carbon leakage.
• Carbon Border Adjustment Mechanism from the Taxation and Customs Union.
• UK CBAM from the Department for Energy Security and Net Zero.
• Regulation (EU) 2023/956 establishing a carbon border adjustment mechanism.
• Regulation (EU) 2023/1773 laying down the rules for the application of Regulation (EU) 2023/956 as regards reporting obligations for the purposes of the carbon border adjustment mechanism during the transitional period.