CBAM adopted by EU Parliament

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CBAM adopted by EU Parliament

EP adopts broader scope and expedited implementation of CBAM

After the European Parliament had postponed its vote on the CBAM during the plenary session on 8 June 2022, it has now - on 22 June 2022 - adopted its position on the regulation establishing the Carbon Border Adjustment Mechanism (CBAM).

EU Parliament adopts position on the CBAM

In a session held on 22 June 2022, the EU Parliament voted to adopt its position on the CBAM. The adopted position of the EU Parliament appears to be for the most part derived from the previously released report from the Committee on the Environment, Public Health and Food Safety (ENVI). The position of the EU Parliament can be summarized as follows:

  • Extended product scope: The scope of CBAM products should be extended to include organic chemicals, plastics, hydrogen and ammonia.
  • Broad emission scope: In addition to direct emissions, the calculation of embedded emissions of CBAM in-scope products should also include “indirect emissions” (being emissions of the electricity used during the production process of the in-scope products).
  • Extended transitional period: The CBAM transitional period is to still start on 1 January 2023, but is to end on 1 January 2027 (instead of 1 January 2025/6 previously proposed by the EU Commission and the ENVI Committee respectively).
  • Earlier full implementation of CBAM: The full implementation of CBAM by 2032 - three years earlier than proposed by the EU Commission. This is to be aligned with the full phase-out with free allowances under the EU ETS.
  • Central CBAM authority: A single central EU CBAM authority is to be responsible for the implementation of the CBAM in lieu of local authorities in each EU Member State.
  • Financial assistance to least developed countries: The revenues generated by the sale of CBAM certificates should be allocated to the EU budget, and the EU must subsequently provide financial support, at least equivalent in financial value to the revenues generated by the sale of CBAM certificates, to support least developed countries' efforts to decarbonize their manufacturing industries.

Next steps

The EU Parliament will start negotiations with the EU Council on the CBAM and the proposed changes thereto in order to reach agreement on a final legal text.

Impact on business

EU importers of products covered by the CBAM are strongly advised to resume their preparations for the reporting obligations that will take effect in the transitional period starting from 1 January 2023.

An initial exposure assessment of the affected product portfolio is recommended; along with the establishment of responsible CBAM business functions, and a system for calculation of emissions embedded in the production of affected products. This should include (where possible) the indirect emissions created during the production process of these products.

How we can help

Deloitte’s Global Trade Advisory specialists are part of a global network of professionals who provide specialised assistance in global trade matters, including CBAM. Our professionals can support in carrying out an initial CBAM quick scan and broader supply chain reviews in the light of the CBAM implementation, transitional period and compliance requirements.

For more information about the impact the CBAM can have on your business and our capabilities in this regard, please contact one of our experts.

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