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EU CBAM unveiled: A status update and roadmap

The European Union (EU) is taking decisive steps to address the global challenge of climate change with its climate policies. However, concerns about "carbon leakage," where carbon-intensive production relocates to regions with less stringent environmental regulations, threaten to undermine these efforts. To combat this, the EU has introduced the Carbon Border Adjustment Mechanism (CBAM).


Implemented in a transitional phase starting in October 2023, CBAM initially applies to specific imports of goods, identified by their CN code (the EU's eight-digit coding system), within carbon-intensive sectors like:


  • Electricity

  • Iron and steel

  • Cement

  • Aluminium

  • Fertilisers

  • Hydrogen


Operators report to importers, while importers report to relevant national authorities, who in turn report to the European Commission.


Importers are the central stakeholders responsible for collecting the relevant carbon emissions information, ensuring its accuracy, and reporting it to the relevant competent authority within the EU Member State where goods pass through EU customs.


Reporting will be done by a reporting declarant, which could be the importer themselves or one appointed by the importer.


This means that while upstream operators, suppliers and producers located outside the EU have the responsibility to provide carbon-related data to EU importers, it remains the responsibility of importers to ensure they receive this data from their suppliers.


EU CBAM data requirements


During this transitional period, importers report embedded greenhouse gas (GHG) emissions without financial payments. Every quarter, each importer must submit a CBAM report containing information on:

  • Imported quantity of CBAM goods, with CN codes

  • Country of origin and installation where goods were produced

  • Production methods and qualifying parameters

  • Direct and indirect embedded emissions linked to the goods imported, at production and installation level, in tonnes of CO2e (carbon dioxide equivalent) per tonne of each type of good

  • Carbon price due in the country of production, referencing the legal act governing the carbon price


EU CBAM calculation methods


Flexibility exists in reporting methodologies until the end of 2024, after which only the EU method will be accepted. This means that at the moment, companies will have the choice of reporting in three ways:

  1. Full reporting according to the new methodology (“EU methods”)

  2. Reporting based on an equivalent method (“Other methods”)

  3. Reporting based on default reference values (only until July 2024)


But as of January 2025, only the EU methods will be accepted.

eu cbam reporting timeline

What are the EU methods for CBAM?

According to EU CBAM, there are two allowed “EU methods”:

  • The calculation-based approach: Emissions from source streams are determined based on activity data. This method uses the quantities of all fuel consumption and relevant materials, along with corresponding emissions factors, to estimate a footprint.

  • The measurement-based approach: Continuous measurement of the concentration of the relevant GHGs themselves. This method requires the operator to measure the concentration and flow of the flue gas for each emission source.


In addition, reporters are allowed to utilise "default values" for input materials or subprocesses contributing to less than 20% of the total emissions of complex goods. These default values reflect average emissions intensities of each exporting country and for each good - with a mark-up to ensure environmental integrity. The size of this mark-up will be informed by the data collected during the transitional period.


This means that operators are responsible for providing the following information to importers:


  • Total direct emissions of the installation, appropriately attributed to individual products

  • Quantities of specific input materials (called the “precursors”) and the embedded emissions of these precursor materials

  • Indirect emissions from the generation of electricity consumed during production, attributed to the goods produced

  • Relevant carbon prices which are due to produce the good within its own jurisdiction, if relevant


Having systems in place to report this information to customers will make operators, like producers and suppliers, significantly more attractive to EU importers.

eu cbam data requirements

What are the other methods for the CBAM transitional phase?

Recognising the limited amount of time that importers and producers have had to adapt their processes to the CBAM's requirements, additional flexibility has been applied regarding allowed monitoring methodologies until 2025.


Until the end of December 2024, companies can use the following “Other methods”:

  • A carbon pricing scheme where the installation is located

  • A compulsory emission monitoring scheme where the installation is located

  • An emission monitoring scheme at the installation


Until the end of July 2024, other non-prescribed methods can be used, including using the default values. But remember, from Q3 of 2024 until the end of 2025, emissions can still be reported based on default values, but only for complex goods and with a limit of 20% of the total embedded emissions. At this point, using default values would qualify as ‘estimation’.


EU CBAM reporting


The Commission has developed the CBAM Transitional Registry to help importers perform and report as part of their CBAM obligations.


Access to the registry should be requested through the National Competent Authority (NCA) of the Member State in which the importer is established.


Importers submit quarterly reports in the CBAM Transitional Registry no later than one month after the end of a quarter. Modifications may be made to the reports until two months after the end of the relevant reporting quarter.


Penalties will be imposed if reporting declarants haven’t taken necessary steps to comply with the obligations to submit a quarterly CBAM report of correct an incorrect or incomplete CBAM report. The penalties will range between €10 and €50 for each tonne of unreported embedded emissions, increasing in accordance with the European index of consumer prices. Furthermore, higher penalties will be applied when more than two incomplete or incorrect reports have been submitted in a row, or the duration of failure is longer than 6 months.


Complying with EU CBAM


If they haven’t already, businesses need to start preparing to adapt to the upcoming changes enforced by EU CBAM. For organisations to achieve a smooth roll-over during the transition period and minimise disruption to their business model, all importers and operators must be ready for the reporting requirements.


For operators, having efficient CBAM monitoring and reporting capability can serve as a competitive advantage to set organisations apart from competitors that don’t offer similar capability, or do so at a higher cost. Installation operators also have the potential to increase the competitiveness of their goods if they can evidence emissions that are lower than their competitors through methods such as Product Carbon Footprint assessments.


For importers, CBAM offers the opportunity to reconsider their supplier relations and reconfigure their supply chains to minimise carbon emissions, and therefore costs. The financial pressure CBAM puts on organisations importing carbon intensive goods into the EU can be used as incentive to address wider sustainability credentials and increase supply chain resilience.


With investors and consumers growing more eco-conscious, as well as ever-increasing regulatory pressure, organisations must take action to attract investment and stay compliant. Companies will need to assess their competitiveness based on not just financial margins, but a new metric too – the carbon content of their products. Producers will face greater pressures to lower emissions because importers will increasingly favour goods that have a lower carbon content as it will be less expensive for them.


Companies who are already reporting on their Scope 1 and Scope 2 emissions may be better positioned to add to their current systems and processes, compared to those who don’t have any measurements in place. However, all businesses, regardless of previous emissions disclosure, may need to adapt their measurements to comply with the EU methods.  


It’s worth noting that the UK government has already announced that it will introduce its own CBAM by 2027 and it’s expected that other jurisdictions will follow the EU on carbon border taxation. For example, the US is developing a Clean Competition Act (CCA) which includes 25 sectors. Tariffs would be payable on the difference between the actual emissions and US baseline emissions. This means that all product-led corporates will need to delve much deeper into the emissions performance of their supply chain soon.


For EU-based companies to meet the reporting standards now, they will need to collect information related to the country that the actual emissions relating to the development of their goods were generated. Understanding the geographical composition and source of their emissions will enable businesses to undertake a supply chain review and make conscious decisions regarding cost vs carbon trade-offs – which will inevitably ensure the resilience of their pricing model to the proposed changes.


EU CBAM useful resources



In the CBAM Transitional Registry User Manual, you can find an XSD file describing the full structure of the CBAM quarterly report, as well as a sample ZIP file, which may be uploaded in the Registry to fill in automatically the quarterly report’s data.


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