Carbon Border Adjustment Mechanism (CBAM) Compliance

Is your business ready for the EU's Carbon Border Adjustment Mechanism (CBAM)?

The Carbon Border Adjustment Mechanism (CBAM) is a piece of European Union legislation aimed at EU imports of carbon-heavy goods.

The CBAM intends to combat ‘carbon leakage’ (a situation where businesses relocate to countries with less stringent climate policies, thereby increasing global emissions) and encourage cleaner industrial production in nations outside the EU, while protecting its climate policy ambitions. This will be achieved by adding fees to import in-scope goods into the EU.

Question Mark

Is your business obligated under the Carbon Border Adjustment Mechanism?

The EU CBAM Regulation will obligate any businesses importing CBAM goods into the EU.

The industries considered ‘in-scope’ are importers of cement, iron, steel, aluminium, fertilisers, electricity, and hydrogen. For instance, this could include raw materials like iron ore or finished goods like steel beams.

Steel Product

What is the transitional period vs definitive period?

The EU CBAM legislation was officially passed in May 2023, and its transitional period began on 1 October 2023 and ran until 1 January 2026.

Until the end of the transitional phase, importers of any in-scope goods must submit CBAM reports containing import data for every quarter from 1 October 2023.

As of 1 January 2026, when the definitive period commences, reporting declarants will be required to purchase and surrender CBAM certificates alongside their reporting obligations.

Hydrogen

The ‘reporting declarant’ is the importer of the CBAM goods and, in principle, the responsible entity for submitting quarterly CBAM reports during the transitional period. This means that as the importer, you are responsible for accurately reporting the emissions associated with the goods you bring into the EU.

During the transitional period, affected businesses will be required to report on their embedded direct/indirect emissions, the quantity of affected goods, and their country of origin.

Quarterly CBAM reports must be submitted to the CBAM Transitional Registry, which the European Commission manages. The CBAM Transitional Registry is a standardised and secure electronic database containing a trader portal.

Shipping Containers

Valpak offers a comprehensive range of support services to help you meet your CBAM needs and ensure full compliance with the regulations. Our tailored support includes the following:

  • Compliance assessments: Evaluate your obligations under CBAM
  • Data management: Manage emissions data with precision, reducing administrative burden
  • Submission assistance: Support you in preparing the necessary reports for CBAM compliance, ensuring all submissions are accurate, timely, and complete
  • Support with CBAM adjustments: As the EU revises CBAM criteria over time, Valpak will keep you updated on changes and help adjust to new requirements, avoiding penalties or disruptions to trade
  • Carbon reduction strategies: With Valpak’s expertise in Life Cycle Assessments (LCAs) and Carbon Footprinting, we are well placed to recommend carbon-reducing strategies within your production and supply chains
Trees

Why choose Valpak?

Navigating the EU Carbon Border Adjustment Mechanism (CBAM) can be complex, but we offer a comprehensive, hands-on approach to ensure full compliance. Unlike some other providers that focus solely on carbon footprint calculations, we go further, handling the entire submission process on your behalf.

Our service includes:

  • End-to-end support – From data collection to final CBAM submissions, we manage the process for you
  • Expert data verification – Ensuring accuracy and compliance to avoid costly errors
  • Supplier engagement – Working directly with your supply chain to obtain and validate emissions data
  • Tailored solutions – A bespoke service designed around your business needs

Let us simplify CBAM compliance so you can focus on what matters most, growing your business. Get in touch today to see how we can help.

Take our survey: Help shape our CBAM Service!

We’ve launched our CBAM (Carbon Border Adjustment Mechanism) Service to help businesses meet upcoming compliance requirements and we want to understand the level of support you might need.

The survey is very short and takes less than two minutes to complete. Your input will help us tailor our service offering to meet demand and provide the right level of guidance.

FAQs

The EU CBAM impacts any businesses that import CBAM goods into the EU. The reporting obligation will stand if the UK business acts as an importer in its name in the EU.

The CBAM initially applies to imports of goods in the following sectors:

  • Cement
  • Iron and Steel
  • Aluminium
  • Fertilisers
  • Hydrogen
  • Electricity

These sectors were initially chosen due to their high risk of carbon leakage.

The EU CBAM Regulation applies to CN codes (Combined Nomenclature), an EU eight-digit coding system used to help the EU’s common customs tariff and provides statistics for trade within the EU and around the world. The list of goods that must be reported can be found in Annex I of the CBAM Regulation.

Reporting of embedded emissions in CBAM goods is compulsory during the transitional period. Reporting declarants may face penalties ranging between EUR 10 and EUR 50 per tonne of unreported emissions, underscoring the seriousness of non compliance.

In the case of missing, incorrect, or incomplete CBAM reports, the National Competent Authority (NCA) may initiate a correction procedure, granting reporting declarants the possibility to rectify potential errors. If the reporting declarant does not take this action, penalties will follow.

Each EU member state has a National Competent Authority (NCA) that is responsible for checking the quality of the quarterly CBAM reports that companies within their respective states submit.

NCAs will engage with reporting declarants in their respective states, creating a dialogue to try and resolve any issues surrounding CBAM reporting submissions.

NCAs ensure that reporting declarants in their member state comply with CBAM rules and will enforce penalties for non compliance.

On 22 December 2023, The European Commission published default values that can be used by businesses to determine their embedded emissions in imported goods covered by CBAM during the transitional phase.

Default reporting values are particularly important during the transitional period as importers may not have all the necessary information to complete their CBAM reports accurately.

During the first three quarterly reports (Q4 of 2023 and Q1&Q2 of 2024), declarants may report their embedded emissions based on default values supplied by the European Commission without quantitative limit.

Moving forward from Q3 of 2024 up until the end of the transitional period at the end of 2025, declarants can report emissions based on estimations but only for complex goods and with a limit of 20% of the total embedded emissions.

The EU aims to set the default values higher than the average actual value to create an incentive for declarants to use actual values.

Reporting Period Submission Due By Modification Possible Until
2023: October – December 2024: 31 January 2024: 31 July
2024: January – March 2024: 30 April 2024: 31 July
2024: April – June 2024: 31 July 2024: 30 August
2024: July – September 2024: 31 October 2024: 30 November
2024: October – December 2025: 31 January 2025: 28 February
2025: January – March 2025: 30 April 2025: 31 May
2025: April – June 2025: 31 July 2025: 31 August
2025: July – September 2025: 31 October 2025: 30 November
2025: October – December 2026: 31 January 2026: 28 February

No, the EU CBAM (Carbon Border Adjustment Mechanism) does not currently cover finished goods. It only applies to certain basic materials and basic material goods that have high carbon emissions in their production. Precursor materials such as aluminium sheets or stainless steel are covered but finished goods including automobiles, packaged consumer electronics, cookware, and machinery are exempt.

That being said, the European Commission may extend CBAM to cover finished products in later phases.

The de minimis exemption applies to consignments in which the total intrinsic value of the CBAM goods does not exceed EUR 150. If the overall value of the total CBAM goods in one consignment is below EUR 150, then the de minimis exemption applies and there is no CBAM obligation.

The European Commission proposed to simplify CBAM as part of its Omnibus packages announced in February 2025. These changes may include:

  • A de minimis threshold exemption of 50 tonnes will focus the regulation on big importers and relieve small importers, such as SMEs and individuals, of the regulatory burden.
  • Easier compliance criterion for CBAM obligations, including simplified declarant authorisation, emissions calculations and the management of financial liability, will streamline third-party outsourcing.
  • Stronger anti-abuse provisions and joint strategies with national authorities will ensure that big importers comply with the regulation.

The UK CBAM is set to come into effect on 1 January 2027. The legislation will be open for technical consultation from 24 April 2025 to 3 July 2025, after which the government will review it in accordance with its new EU deal ahead of its official introduction later this year. A full list of the obligated commodity codes included in the draft is available on the government website.

Yes, there are some notable differences between the UK and EU CBAM regulations, although these may change as the UK and EU link their Carbon Schemes as part of their new collaborative deal. As the regulations stand, the notable differences between the UK and the EU are the following:

  • No transitional period: financial obligations will start in 2027, leaving UK-importers with little time to prepare for the scheme in stark contrast to its European counterpart.
  • A different obligation threshold: UK companies with an import value over £50,000 in the twelve months prior, or with an expected import value exceeding £50,000 over the next thirty days, at any point from 1st January 2027, will be obligated. In contrast, companies with an import value of 150 euros are obligated in the EU, with a proposal to increase the threshold to 50 tonnes in 2026.
  • Different obligated commodity codes: electricity will be excluded from the UK CBAM but glass and ceramics will be included in an effort to account for more carbon-intensive imports.
  • Different carbon prices: UK carbon prices are expected to be lower than EU carbon prices as they reflect quarterly UK ETS and CPS pricing.

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Contact us to understand CBAM and learn how we can simplify your path to compliance.

Valpak has proven to be an invaluable partner in helping us negotiate the complexities of CBAM (Carbon Border Adjustment Mechanism) reporting. Navigating the complicated requirements of CBAM was a daunting task, but Valpak’s expertise made the process seamless and efficient. Their team were able to remove the burden of an intricate reporting process by completing it on our behalf and ensuring our compliance with the regulations.

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