The EU Carbon Border Adjustment Mechanism (CBAM)

The EU Carbon Border Adjustment Mechanism (CBAM)

BUSINESS CONTEXT

What is CBAM?

Carbon Border Adjustment Mechanism (CBAM) is the EU policy to prevent carbon leakage – companies within the EU shift carbon-intensive production to countries with less stringent climate policies.

It requires importers of certain goods to pay a tax or purchase emission allowances based on the carbon content of those goods. 

Affected Sectors: (structure 2 columns component same as below)

The CBAM specifically targets sectors that are highly carbon-intensive.

Image
CBAM pic.

Includes:

  • Cement
  • Electricity
  • Fertilizers
  • Iron & Steel
  • Hydrogen
  • Aluminum

Implications of the EU CBAM for Affected Businesses

  • Financial Implications
    Starting January 2026, businesses will need to purchase CBAM certificates corresponding to the emissions cost of imported goods. The cost aligns with the EU ETS pricing, essentially extending domestic carbon pricing to international imports.
  • Administrative Burden
    Businesses will face increased administrative responsibilities to track and report emissions accurately. This includes the potential verification of emissions by third parties to ensure compliance in the future.
  • Market Dynamics 
    The mechanism may influence market dynamics by making imports from regions with less stringent carbon regulations more costly, encouraging shifts in supply chains towards suppliers with lower GHG emissions and from regions where carbon missions are better managed, aligning with the global push towards decarbonization.

BV SOLUTION

BV CBAM Solution

  • Equip Your Team and Stakeholders with CBAM Knowledge
    Provides online or offline training sessions that:
    • Bring your team up-to-date with the latest CBAM regulations and requirements, boosting your team's regulatory confidence and preparedness.
    • Provide knowledge on data collection and specific embedded emissions calculation enable your staffs, importers, traders, vendors and suppliers to master the nuances of emissions reporting, ensuring accuracy and compliance with EU standards.
  • Engage Your Supplier & Build Capacity on Data Collection
    Our specialists work directly with your facility to determine necessary data, provide training on data collection, and build capacity within your suppliers.
  • Support on CBAM Communication Template Submission
    Our specialists provide hands-on support both remotely and onsite, facilitating precise data collection and correct filling of CBAM-related documentation for submission. 

How We Execute

How to Get Started with Our CBAM Solution

  1. Initial Discussion: Contact us to schedule an initial discussion where we assess the impact of CBAM on your operations and identify key areas of focus.
  2. Training Program Delivery: We delivery a training program to your team and external stakeholders to facilitate learning in handling CBAM reporting requirements.
  3. Data Collection and Reporting Implementation: We help set up the data collection systems and begin the process of filling in your CBAM Communication Template with continuous support.
  4. CBAM Report Submission: Assistance in preparing and submitting your CBAM Report. 
  5. Ongoing Support: As regulations evolve, we provide ongoing support and updates to ensure your compliance strategy remains robust and effective.

WHY BUREAU VERITAS

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