The Carbon Border Adjustment Mechanism (CBAM) is a measure to ensure that imported goods pay a price for their carbon emissions that is comparable to the price paid by EU domestic producers under the EU Emissions Trading System (EU ETS). The CBAM Regulation entered into force on 17 May 2023. During the transitional period (1 October 2023 – 31 December 2025), declarants must submit quarterly CBAM reports to the CBAM Transitional Registry no later than one month after the end of the relevant quarter.

On 13 June 2023, the European Commission communicated a draft implementing regulation (IR) on reporting obligations. Below, we review the key elements of the draft IR. Interested parties can submit their comments to the Commission until 11 July 2023.


The CBAM Regulation entered into force on 17 May 2023. During the transitional period (1 October 2023 – 31 December 2025), declarants must submit quarterly CBAM reports that include: (i) the total quantity of imported goods; (ii) the direct and indirect emissions embedded in the imported goods; and (iii) any carbon price effectively paid in the country of origin for the embedded emissions. The CBAM Regulation empowers the Commission to adopt an implementing regulation  on reporting obligations. On 13 June 2023,the European Commission published a draft IR on reporting obligations, which will be applied during the transitional period.

To understand the basic features of the CBAM, please see our previous alert.

Key elements of the draft IR

Quarterly reports: Declarants placing CBAM goods on the EU market must submit quarterly CBAM reports. Those reports must be submitted by a reporting declarant, who could be one of the following persons: (i) an importer who lodges a customs declaration to release CBAM goods for free circulation; (ii) an importer who declares the import of CBAM goods; or (iii) an indirect customs representative.

Reporting elements: The CBAM report must include the following information:

  • Imported goods: (i) the total quantity of imported goods; and (ii) the type of goods as identified by the EU CN code.
  • Embedded emissions: (i) the country of origin of the imported goods; (ii) the installation where they were produced; (iii) the production route used and information on specific parameters qualifying the indicated production route chosen; (iv) for steel goods, the identification number of the specific steel mill; and (v) the amount of specific direct emissions of the goods (see Annex III).
  • Indirect emissions: (i) electricity consumption; (ii) confirmation of whether the declarant is reporting actual emissions or default values; (iii) the corresponding emissions factor; and (iv) the amount of specific indirect emissions (see Annex IV).
  • Carbon price paid in the country of origin for the embedded emissions: (i) form of carbon price; (ii) the country of origin; (iii) any rebate or other form of compensation available in the country that would have resulted in a reduction of that carbon price; (iv) reference to the legal provisions that form the basis for the carbon price, the rebate or any other form of compensation; (v) the type of product as identified by the CN code; (vi) the quantity of embedded emissions covered by the carbon price; (vii) the quantity of embedded emissions covered by any rebate or other form of compensation, including free allocations, if applicable; and (viii) the monetary amount.

Calculation of embedded emissions: The draft IR provides flexibility regarding the methods that can be used to calculate embedded emissions of CBAM goods during the transitional period. Reporting declarants will have the choice of reporting in one of the following three ways (but, as of 1 January 2025, only the EU method will be accepted):

  • Reporting according to the EU method (see Annex III), using (i) the calculation-based approach or (ii) the measurement-based approach;
  • Reporting based on equivalent third country national systems; or
  • Reporting based on another method.

Review of CBAM reports: The European Commission may check CBAM reports to assess compliance with the reporting obligations within three months after the last CBAM report is submitted. Further, the competent authorities of EU member states where a reporting declarant is established must review and assess the data, information and list of reporting declarants. After 31 December 2025, the competent authorities may initiate a correction procedure in cases of incomplete or incorrect CBAM reports or a failure to submit a CBAM report.

Penalty: A penalty will be imposed if the reporting declarant has not taken the necessary steps to comply with the reporting obligations or to correct the CBAM report. The penalty for each tonne of unreported embedded emissions will be between €10 and €50. This is significant, especially when compared with the price paid by EU producers for actual emissions: the price for a tonne of carbon under the EU ETS is around €100, but most allowances are given out free of charge.

CBAM Transitional Registry: The Commission will establish an electronic database, the CBAM Transitional Registry, to collect the information reported during the transitional period. The CBAM Transitional Registry will enable communication, checks and information exchange between the Commission, the competent authorities, the customs authorities of the member states and reporting declarants.

Looking ahead                                                        

The Commission opened a four-week public consultation on the draft IR. Stakeholders are invited to provide their feedback on the draft IR by 11 July 2023. After reviewing feedback from stakeholders, the Commission will submit the draft IR to the CBAM Committee, which consists of one representative from each EU member state and is chaired by the Commission, and consult with the CBAM Committee. The CBAM Committee provides an opinion in the form of a vote. The Commission will be able to adopt the proposal as it is unless a qualified majority of the member states (55% of EU countries representing at least 65% of the total EU population) vote against it.

Our previous publications on CBAM