EU Commission releases further guidance on CBAM implementation

3 min read

The EU's Carbon Border Adjustment Mechanism ("CBAM") reporting obligations started applying from 1 October 2023. As the first reports are due in January 2024, the Commission has released a list of some of the most frequently asked questions. 

The Questions and Answers document ("Q&A") addresses a number of questions received by the Commission about CBAM and will be regularly updated.1 The answers aim to explain the provisions in the CBAM Regulation and Implementing Regulation for the reporting period.2 The Q&A document has been published along with updated guidance documents for importers3 and installations.4

While the answers provided are not legally binding, the Commission's Q&A is a useful guide to those new to CBAM and can act as a first stop in understanding the complex needs for compliance with the novel CBAM system. 

Below we examine two of the topics covered by the Q&A. 

Setting out the timeline for further CBAM implementing and delegated acts 

In 2026, after an initial reporting period, the financial component of CBAM will start applying, requiring the purchase of CBAM certificates. 

In the Q&A, the Commission provides a general timeline of when some of the details needed for the next phase of CBAM will be made available. The Commission will be adopting secondary legislation over the coming two years under the following indicative timeline:

  • In mid-2024, implementing acts on the authorisation of declarants and the CBAM registry. 
  • In mid-2025, implementing acts on indirect emissions, verification, accreditation of verifiers, carbon price paid, customs-related information, continental shell, average ETS price, CBAM declaration, methodology and free allocations. Also during 2025, the Commission would notably adopt delegated acts for the selling and repurchasing of certificates and others, as needed, on exempted countries, anti-circumvention and electricity.5

Further clarification on default values and estimations

The Q&A document also adds some understanding to the use and methodology around default values and estimations. 

The Commission confirms that default values will be provided by the end of 2023, based on the research provided by the EU's Joint Research Centre that was published in September.6

The Q&A document confirms that after an initial period in which default values can be used (which ends 31 July 2024),7 estimated values may be used but a quantitative limit is applied: for complex goods, up to 20 per cent of the total embedded emissions may be determined using estimations (which includes the default values provided by the Commission).8

Once the CBAM has been fully rolled out, the Commission expects to provide default values by country or region.9

1 The full Questions and Answers document can be found on the European Commission's CBAM page. The version of the document examined here was released on 29 November 2023. 
2 Our previous client alerts on CBAM will also help you understand your obligations and the reporting requirements.
3 Guidance document on CBAM Implementation for importers of goods into the EU.
4 Guidance document on CBAM Implementation for installation operators outside the EU
5 Page 13 of the Q&A.
6 Page 23 of the Q&A.
7 In addition, until 31 December 2024, reporting declarants can use other methods that lead to similar coverage and accuracy of emissions data using (a) a carbon pricing scheme, (b) a compulsory emission monitoring scheme or (c) an emission monitoring scheme at the installation. See page 23 of the Q&A.
8 Page 22 of the Q&A.
9 Page 22 of the Q&A.

Ruth Benbow (Knowledge Manager, London) contributed to the preparation of this publication.

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