Reporting Obligation for importers of carbon intensive goods – applicable as from 1st October 2023
The EU’s Carbon Border Adjustment Mechanism (CBAM) is an EU regulation entering into force in Malta as from the 1st October 2023 and applicable to importers of goods whose production is carbon intensive and at most significant risk of carbon leakage: cement, iron and steel, aluminium, fertilisers, electricity and hydrogen.
The EU’s Carbon Border Adjustment Mechanism (CBAM) is a tool to put a fair price on the carbon emitted during the production of carbon intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries. It enters into force directly through Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishing a carbon border adjustment mechanism. The gradual introduction of the CBAM is aligned with the phase-out of the allocation of free allowances under the EU Emissions Trading System (ETS) to support the decarbonisation of EU industry.
The reporting obligations and information sought from EU importers of CBAM goods, as well as the provisional methodology for calculating embedded emissions released during the production process of CBAM goods were further specified in an Implementing Regulation adopted by the Commission on 17 August 2023.
The CBAM will enter into force in its transitional phase as of 1 October 2023 with the first reporting period for importers ending 31 January 2024. It will initially apply to imports of certain goods and selected precursors whose production is carbon intensive and at most significant risk of carbon leakage: cement, iron and steel, aluminium, fertilisers, electricity and hydrogen. During the transitional phase, importers of goods in the scope of the new rules will only have to report greenhouse gas emissions (GHG) embedded in their imports (direct and indirect emissions), without making any financial payments or adjustments. Indirect emissions will be covered in the scope after the transitional period for some sectors (cement and fertilisers), on the basis of a defined methodology outlined in the Implementing Regulation published on 17 August 2023 and its accompanying guidance.
This will give adequate time for businesses to prepare in a predictable manner, while also allowing for the definitive methodology to be fine-tuned by 2026. While importers will be asked to collect fourth quarter data as of 1 October 2023, their first report will only have to be submitted by 31 January 2024.
The Implementing Regulation details the transitional reporting obligations for EU importers of CBAM goods, as well as the transitional methodology for calculating embedded emissions released during the production process of CBAM goods. The legislation is also accompanied by detailed guidance to help EU importers and third country producers comply with their obligations in the transitional phase.
The Malta Resources Authority (MRA) is the competent authority for the Carbon Border Adjustment Mechanism (CBAM) in Malta. It is expected that importers and indirect customs representatives are notified, via the appropriate customs systems, of the reporting obligations due during the transitional period.
If you require further guidance or details in relation to this process, please do not hesitate to contact us so that we may assist you.
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