CBAM: A crucial tool in the fight against climate change
Sustainability
What is CBAM?
CBAM, or Carbon Border Adjustment Mechanism, is an initiative that applies tariffs to imports based on the carbon emissions associated with the products. This mechanism seeks to prevent carbon leakage by ensuring that imported goods meet the same environmental standards as locally produced goods. It is a measure to ensure competitiveness and consistency in climate policies. This mechanism seeks to ensure that companies are not penalised or compete unfairly because of differences in environmental regulations and carbon costs between regions.
Objectives:
It has been created to address the concern of ‘carbon leakage,’ which occurs when companies move their production to regions with less stringent environmental regulations to avoid restrictions on greenhouse gas (GHG) emissions. This phenomenon can diminish the benefits of climate policies implemented in certain regions, as emissions are shifted rather than reduced.
With this mechanism, countries seek to ensure that foreign companies producing goods with high carbon content are subject to compensatory measures or tariffs at the border. This ensures that imported products meet the same environmental standards as those produced domestically, thus avoiding competitive inequality and promoting consistency in international climate policies. The CBAM is part of efforts to address climate change on a global scale.
Who does it affect?
The Carbon Border Adjustment Mechanism may affect several stakeholders, mainly:
- High-carbon emitting companies: Companies that produce high-carbon goods could be affected, as they may be subject to tariffs or border adjustments based on their carbon emissions. The sectors currently required to comply with the CBAM are:
Aluminium, iron and steel, cement, fertiliser, hydrogen and electricity.
- Countries with strict climate policies: Nations that have implemented more rigorous environmental policies could benefit from CBAM, as it helps prevent carbon leakage and ensures that imports meet the same standards.
- Countries with more permissive environmental policies: Regions with less stringent environmental regulations could be affected if their companies are subject to higher tariffs or adjustments on their exports to countries with CBAM.
- Consumers: CBAM could have an impact on the prices of imported products, as companies could pass on part of the cost of border adjustments to consumers.
- International trade agreements: The CBAM could lead to discussions and negotiations regarding trade agreements, as it could be interpreted as a trade barrier, affecting trade relations between countries.
It is important to note that the CBAM is a complex measure and its implications could vary depending on how it is designed and implemented.
CBAM deadlines
The CBAM aims to ensure that the carbon price of imports is equivalent to that of production in the EU, thus avoiding distortion of climate objectives. This mechanism was designed to comply with World Trade Organisation rules, ensuring fair implementation that is compatible with international trade.
During the transitional period, which runs from 1 October 2023 to 31 December 2025, quarterly reporting obligations are established for importers of products affected by the CBAM. However, the submission of CBAM certificates for embedded emissions is not required during this period.
From 1 January 2026, the permanent CBAM system will come into force. Importers will have to declare annually the quantity of goods imported and the implicit greenhouse gas (GHG) emissions. CBAM certificates corresponding to the reported emissions will be required, with their price calculated based on the weekly average auction price of emission allowances in the EU Emissions Trading System (EU ETS).
During the period 2026-2034, a gradual transition will take place, phasing out free allocation in the EU ETS while gradually introducing the CBAM.
How can Grup Carles help you develop your emissions reduction strategy?
Although the Carbon Border Adjustment Mechanism (CBAM) represents a new challenge for many companies, at Grup Carles we have extensive experience in implementing sustainability solutions and are ready to help you face these changes. Our team of sustainability consultants is fully up to date on CBAM requirements and ready to apply their expertise to your benefit.
From calculating your carbon footprint to creating Environmental Product Declarations (EPDs), at Grup Carles we specialise in offering comprehensive sustainability-related services. Understanding the importance of measuring and reporting on the environmental impact of products, in this case their carbon footprint, we are committed to helping you comply with CBAM requirements efficiently and effectively.
Our global team of experts will be at your disposal to develop strategies that reduce your exposure to CBAM prices before the 2026 implementation deadline. We are proud to be in this position to guide our clients through the implementation of new CBAM compliance systems and thus reduce their carbon footprint.
At Grup Carles, we not only calculate carbon footprints and create strategic reduction plans, but we also carry out life cycle analyses using specialised software to calculate the carbon footprint of products. Our active dedication to environmental engineering and consulting allows us to offer you customised solutions that fit your specific needs. Trust us to be at the forefront of sustainability and ensure that your company is prepared to successfully face the challenges of CBAM.
Discover how we can help you make your project a sustainable reality.
