The European CBAM : an attempt to regulate carbon imports

The European CBAM begins its first transitional step

The Carbon Border Adjustment Mechanism (CBAM) is a legislative tool aiming to impose fair prices on foreign goods which do not respect the EU policies regarding carbon emissions. Its first aim is to entice low emission imports and improve the European positive impact on Climate through its global value chain. Then, this policy is supposed to balance the prices between imports and equivalent domestic goods that are often facing more constraints of production.

As most of the companies and public authorities could not adapt themselves to the change, the Commission decided in 2023 to set a transitional period to give them sufficient time to improve their mode of production. This phase has been set to last for at least 2 years. The first goods concerned by this new regulation are the high risk of carbon leaks goods such as cement, iron and steel. During this period, companies are also exempted from a full analysis taking into account any gas without GreenHouse Effects.

Ultimately, companies or non-EU partners intending to engage in activities covered by the CBAM will need to apply for the status of “authorised CBAM declarant” via the CBAM Registry. This requirement will become mandatory starting January 1, 2026. Registration will allow entities to comply with the reporting obligations and carbon cost adjustments imposed under the CBAM framework, ensuring a more level playing field between EU and non-EU producers. It is important to note, however, that electricity generated within the Exclusive Economic Zone (EEZ) of any EU member state will be exempt from this regulation.

This exemption recognizes the jurisdictional rights of member states over their EEZs and helps maintain consistency within the internal energy market. As the deadline approaches, companies are strongly encouraged to familiarize themselves with the procedural requirements to avoid disruptions in their trade activities.

A review of the two last years will be provided to analyse the efficiency of the reform and the malfunctions that may remain. The transitional phase is still used as a pilot to guide the companies and public authorities all along the process. However, most EU trade partners seem to stand to benefit from the implementation of the CBAM, such as Turkey and Chilewich are known for their low-emission production methods. In contrast, countries like India, Tunisia, and South Africa, which depend more heavily on high-emission exports, face around -0.2% decline in value-added in their CBAM industries.

What next ?

As the deadline is approaching, the needs of specialized analysts are expected to grow. Indeed, the know-how of carbon footprint experts, such as the Greenly startup, will be essential to obtain the ‘authorised CBAM’ status. Facing competition with China and the USA, the European Union expects to demonstrate its ability to lead the new low-emission trends of the global value chain.