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On December 22, 2023, the European Commission announced significant updates regarding the Carbon Border Adjustment Mechanism (CBAM), a key component of the EU's climate strategy. The Commission has published default values for calculating embedded emissions in imported goods (excluding electricity) during CBAM's transitional period, which extends until the end of 2025. This is a crucial step in the implementation of CBAM, particularly during the early stages of the transitional period, where precise emission data may not be readily available.

During the initial three quarterly reports (Q4 of 2023 and Q1&Q2 of 2024), importers are permitted to report embedded emissions based on these default values, provided by the European Commission, without any quantitative restrictions.  However, from Q3 of 2024 until the end of 2025, while importers can still use estimations for complex goods, this is capped at 20% of total embedded emissions, with default values considered as estimations. The Commission plans to regularly revise these default values, factoring in data from the initial reporting period and input from both EU and non-EU producers.

Additionally, the Commission is enhancing the CBAM transitional registry, the dedicated online reporting tool, with new features. These include options for reusing specific goods' emission data in future reports, updating imported quantities from previous reports, and automating the reporting process through XML file integration. The Commission aims to further simplify reporting obligations and facilitate data submission from non-EU producers to the CBAM Registry.

Source: DG TAXUD