New Updates on CBAM Implementation

Latest Updates on Carbon Border Adjustment Mechanism

The Carbon Border Adjustment Mechanism, abbreviated CBAM, has been effective since 1 October 2023 and is in line with the policy of the EU for climate neutrality. CBAM shall apply to imports into the EU of goods whose production is characterized by a given carbon emissions intensity. Companies that will be impacted by this change will need to start preparing over the coming years for new reporting requirements, registration needs, and added expenses related to CBAM. Here’s what you need to know, plus further details about our CBAM course at Export Edge to get you through these new regulations.

CBAM mainly applies to carbon-intensive goods imported from third-world countries outside the EU. Sectors within the scope include:

• Cement
• Iron & Steel
• Aluminium.
• Fertilisers
• Electricity
• Hydrogen

Whether your imports are within the ambit of CBAM depends upon the Customs duty classification and commodity code that fall under your imports. These are Combined Nomenclature or ‘CN’ codes. The EU has identified a list of such affected codes; thus, importers would need to check the classification for their goods and make their processes accordingly.

The CBAM will be introduced by the EU in two different phases:

1. 2023-2025: Reporting Phase Importers of the goods that will be covered under CBAM are under obligation to report quarterly, beginning in January 2024. These reports will show the quantity of the goods imported, the direct and indirect emissions of carbon related to these goods, and any carbon price paid in the country of origin. The first report, for the last quarter of 2023, must be submitted no later than 31 January 2024.

2. 2026: Full CBAM Rollout On 1 January 2026, importers will be obliged to purchase CBAM certificates that account for the carbon content in their imports. A major financial liability will thus be tagged on the price of the EU ETS carbon price. Customs will withhold any imports of CBAM-covered goods against which the importer is not registered as a CBAM declarant.

Presently, CBAM applies to only a few sectors. Yet, it is bound that this mechanism will further extend to other goods with more carbon content in the near future. It thus becomes very important that any business remains ahead in terms of compliance matters and future developments.

Latest Updates on CBAM and Irish Regulations

The Carbon Border Adjustment Mechanism (CBAM) has introduced several recent changes, aimed at enhancing compliance and emission reduction measures for businesses importing carbon-intensive goods into the EU. Below are the key updates reflecting the latest regulatory developments under S.I. No. 539/2024 – European Communities (Carbon Border Adjustment Mechanism) Regulations 2024:

Key Updates from the Irish Regulations

1. Mandatory Registration for Importers:

   • From 1 January 2026, the Irish Revenue Commissioners will restrict the importation of CBAM goods to only those registered as an authorised CBAM declarant.
   • Registration will commence in 2025 via the CBAM Registry.

2. Designation of EPA as Competent Authority:

   • The Environmental Protection Agency (EPA) has been appointed as the national authority for CBAM implementation in Ireland.
   • The EPA will oversee compliance, including audits and enforcement measures.

3. Penalties for Non-Compliance:

   • A €100 penalty per tonne of carbon dioxide equivalent will apply if an authorised CBAM declarant fails to surrender the required CBAM certificates by 31 May of the following year.
   • Additional penalties for failing to correct or submit CBAM reports during the transitional period include fines or imprisonment:
   • Summary Conviction: Class A fine or imprisonment up to 12 months.
   • Conviction on Indictment: Fine up to €500,000 or imprisonment up to 3 years.

1. EPA Enforcement Powers:

   • EPA officers can inspect, search, and seize premises, products, or records to ensure compliance.
   • The EPA can issue directions to enforce the Irish Regulations, with non-compliance considered an offence.

2. Review Period for CBAM Declarations:

   • The EPA may review CBAM declarations within 4 years of their submission deadline.

3. Focus on Accurate Carbon Reporting:

   • Businesses must ensure accurate carbon emissions reporting for imported goods during the transitional period and beyond to avoid fines or operational disruptions.

How These Updates Affect Businesses

Businesses importing CBAM goods must take immediate action to meet these updated regulations:

• Register as an authorised CBAM declarant before the 2026 deadline.
• Align reporting processes to meet the EPA’s stringent compliance measures.
• Prepare for financial obligations associated with purchasing CBAM certificates and penalties for non-compliance.

These changes underscore the importance of early preparation to avoid penalties and disruptions.

CBAM requires the following steps for preparation by a business:

Understanding these new regulations is not going to be easy. At Export Edge, we can help you give yourself a practical guide to this upcoming change with our CBAM course. This interactive course covers:

How to classify your products with commodity codes correctly.
How to prepare for new reporting and registration obligations.