On Tuesday, the European Commission published a draft Implementing Regulation for the Carbon Border Adjustment Mechanism (CBAM). The regulation sets rules for the reporting obligations during the CBAM transitional period that begins on October 1, 2023. It details the reporting obligations and information that will be sought from EU importers of goods subject to CBAM, as well as the provisional methodology for calculating embedded emissions released during the production process of covered goods.
The proposed rules offer some flexibility for calculating embedded emissions during the transitional period. Initially, companies have the choice of three reporting methods: (1) full reporting according to the "EU method"; (2) reporting based on equivalent third country national systems; and (3) reporting based on reference values. As of January 1, 2025, companies will have to use the EU method. This method requires the level of embedded emissions to be determined either through a calculation-based approach, where emissions from source streams are determined on the basis of activity data, or a measurement-based approach, consisting of a continuous measurement of the concentration of the relevant greenhouse gases themselves.
The Commission has opened public consultation for feedback on the Implementing Regulation. Business, academia, civil society and the general public can provide their feedback online until July 11. The final rules are to be adopted by the Commission later this summer.
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