News: Border Carbon Offsetting (CBAM) as a new obligation for importers

The CBAM, or Border Carbon Offset Mechanism, is a European Union instrument established by Regulation 2023/956 establishing a border carbon offset mechanism. The aim is to reduce greenhouse gas emissions and promote fair competition.

The CBAM applies to selected carbon-intensive goods such as:

  • cement;
  • electricity;
  • fertilisers;
  • iron and steel;
  • aluminium;
  • hydrogen; and
  • products of the above goods.

As of 1 January 2026, importers of the above commodities into the European Union will have to pay for the greenhouse gas emissions resulting from their production. Payment will be made through the purchase of CBAM certificates.

However, the CBAM is being introduced in two phases and importers already have certain obligations. During the transitional period (from 1 October 2023 to 31 December 2025) there is a notification obligation. This means that importers must report quarterly on the emissions contained in imported goods.

The reporting obligation applies to:

  • Importers who submit a customs declaration;
  • persons authorised to lodge a customs declaration; and
  • the indirect customs representative.

The reporting obligation covers information on the import of goods and the carbon emissions associated with them.

The notification report is to be submitted electronically through the CBAM Trader Portal (CBAM’s temporary registry). The first report was to be submitted no later than 31 January 2024 for the period 1 October 2023 to 31 December 2023.

If you have any questions on carbon offsetting or would like assistance in compiling and filing a notification report, please contact us.

Your LTA team