How does the Carbon Border Adjustment Mechanism (CBAM) have regulations and an implementation roadmap?

The Carbon Border Adjustment Mechanism (CBAM) is a policy of the European Union (EU) aimed at preventing carbon leakage and promoting global emission reduction measures.

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Here are the regulations and implementation roadmap of CBAM:

CBAM Regulations

1. Scope of Application

- CBAM applies to imported goods into the EU that have high carbon emissions. Initially, this mechanism focuses on specific industries such as steel, cement, fertilizers, aluminum, and electricity.

2. Emission Calculation and Reporting

- - Importers will be required to report the carbon emissions related to the production of the products they import into the EU.
  - Businesses must provide specific data on carbon emissions during the production process of these goods.

3. Certification and Payment

- Importers will need to purchase CBAM certificates equivalent to the carbon emissions of imported goods. The price of these certificates will be based on the carbon price in the EU Emissions Trading System (EU ETS).
- Certificates will be purchased and paid for annually, based on the reported and verified emissions.

CBAM Implementation Roadmap

1. Transition Phase (2023-2025)

- From October 1, 2023: CBAM starts applying to key industries such as steel, cement, fertilizers, aluminum, and electricity. During this phase, importers will have to report the emissions related to imported goods, but will not yet need to purchase CBAM certificates.
- End of 2025: The EU will reassess the effectiveness and impact of CBAM during the transition phase and make adjustments if necessary.

2. Official Implementation Phase (from 2026)

- From 2026: Full CBAM regulations will come into effect. Importers will have to start purchasing CBAM certificates based on the carbon emissions of imported goods.
- Scope Expansion: Depending on the assessment results, the scope of CBAM may be expanded to cover more industries and goods.

CBAM CBAM is an important part of the EU’s strategy to achieve the Net Zero goal by 2050, while also promoting global changes in reducing greenhouse gas emissions.