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What is CBAM?

20 sie 2023

CBAM = Carbon Border Adjustment Mechanism, i.e. a mechanism for adjustment of the prices of cement, electricity, fertilizers, cast iron and steel, aluminum and hydrogen at EU borders.

According to the World Meteorological Organization[1], Europe experiences  climate warming twice as much as other continents. For this reason, the EU undertakes radical measures to deliver its promises to reduce CO2 emissions. Being aware that the effects of stringent requirements may reduce the competitiveness of domestic entrepreneurs, the EU introduces solutions to protect the internal market from the flood of imported products (or electricity) produced in conditions that do not meet EU emission standards or destroying the EU's efforts to combat climate warming.


CBAM was established by EU Regulation [2], which means that we apply it directly in the laws of the Member States (they do not need to be implemented).


The CBAM system assumes that high-emission goods (such as cement, electricity, fertilizers, cast iron and steel, aluminum, hydrogen) will only be allowed to be imported into the EU by authorized importers. It will be necessary to apply for the status of authorized CBAM notifiers, which will be registered in a special register, receiving a unique account number. Member States will sell CBAM certificates to such authorized entities on a dedicated platform. Certificate prices will change weekly. On the other hand, each authorized CBAM applicant, by May 31 of each year, will submit declarations regarding the amount of CO2 emissions embedded in imported goods and at the same time submit for redemption via the register the number of certificates that will correspond to the amount of these emissions. The first settlement will have to be made in connection with the submission of the declaration for 2026 (i.e. by May 31, 2027). However, one should note that the first reports will concern the last quarter of 2023 (the reporting should be completed by the end of 2025). Financial penalties will be imposed for failure to submit certificates for redemption as well as for trading in commodities without fulfilling CBAM obligations.


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