CBAM Q3 2024: Is your company ready for the new reporting requirements?

What is CBAM?

The EU Carbon Border Adjustment Mechanism ensures a fair price for carbon emitted during the production of carbon-intensive goods entering the EU. It aims to encourage cleaner industrial production in non-EU countries.

The CBAM applies to importers of CBAM goods. These are goods in the 6 categories:

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

Key changes for Q3 2024 reporting

• Reporting period: July 1, 2024 to September 30, 2024
• Deadline: October 31, 2024
• Actual embedded emissions: Importers must now report actual embedded emissions instead of using default values
• Application scope: All products released into free circulation during the Q3 period
• Data collection: Importers need to obtain emissions data from manufacturers

New reporting requirements

The quarterly report must include the following information:

1. The quantity of CBAM goods, broken down by type of goods and specified by facility in the country of origin where the goods were produced;
2. The actual total embedded emissions (tons of CO2) per ton of each type of goods. These are the emissions calculated from primary data for the specific production process of the imported goods;
3. The total indirect emissions. These are the emissions from the generation of electricity consumed during the production process. This includes electricity generated outside the production facility;
4. The carbon price that applies to embedded emissions in the country of origin

For the importer and manufacturer, guidance documents have been published by the EU that provide information on CBAM and on the methodology for determining embedded emissions and reporting. These guidance documents can be found here. In addition, the commission has offered a communication program that importers can use to retrieve information on emissions from the manufacturer. They need that information to meet the reporting requirement. Use of this template is not mandatory but can help the importer request the correct information. The rules include an EU methodology for determining emissions and describe the parameters to be reported.

Reporting methods

1. Full reporting according to the CBAM: Importers must report actual embedded emissions. The determination of these embedded emissions must be done by manufacturers based on the detailed CBAM methodology as prescribed by the CBAM regulation.
2. Reporting based on an equivalent method: For production facilities in countries with emission monitoring and reporting methods that result in comparable coverage and accuracy, the option exists to report emissions based on that equivalent method. This may include the following:
   1. A recognised carbon pricing system.
   2. A mandatory emission monitoring system from the country of origin.
   3. An installation-level emission monitoring system validated to meet EU requirements.

The Reporting Based on an Equivalent Method is only applicable in 2024. As of 2025, this method is no longer applicable.

Supply chain transparency: a key challenge

A common problem is that it is difficult for many companies to understand the entire production chain. This problem arises particularly when goods are sold multiple times. This is because the chain of sellers does not always want the buyer to know where the seller sourced its products.

Preparing for the Q3 2024 report

1. Familiarise yourself with new requirements
2. Establish communication channels with suppliers
3. Review Annex 2 of Regulation (EU) 2023/956 for product-specific requirements
4. Choose the most suitable reporting method
5. Update internal systems for data collection and reporting
6. Begin collecting data for goods imported from July 1, 2024
7. Educate suppliers about CBAM data requirements
8. Perform sanity checks on received emissions data

Increased enforcement actions

National authorities, such as the Belgian National Competent Authority for CBAM, have begun cross-checking submitted CBAM reports with customs declarations. Companies failing to report have been contacted to rectify infringements, signalling potentially stricter enforcement.

Looking beyond Q3: Long-term CBAM strategies

While the transition period serves as a learning curve, CBAM compliance will grow more complex over time. Businesses should:

• Develop efficient and robust CBAM compliance management systems
• Stay in close contact with suppliers and manufacturers
• Understand long-term CBAM implications
• Develop effective strategies, including possible mitigation measures