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The CBAM covers mostly emissions of CO 2 but includes perfluorocarbons for aluminium products and nitrous oxide for some fertilisers . For the iron and steel sector , only CO 2 emissions are relevant .
The European Commission will designate additional products further along the value chain of CBAM goods for potential inclusion in the regulation no later than by the end of 2024 . Starting in January 2028 and subsequently every two years , the Commission will evaluate the overall effectiveness of CBAM and deliberate on the potential inclusion of additional sectors within CBAM .
What are the CBAM obligations for importers ?
To fulfil their CBAM obligations , importers or indirect customs representatives must register as authorised CBAM declarants prior to the import of CBAM goods into the EU . For each calendar year , regulated companies must calculate the emissions embedded in imports following the methodology set out below and report the results through the CBAM declaration by May 31 of the following year . Within these declarations , the importers may also claim a reduction of CBAM certificates to be surrendered when a carbon price has been effectively paid in the country of origin . The information contained in the CBAM declarations must be validated by third-party verifiers that are accredited under the EU ETS regulation . Importers must get access to the CBAM registry , the platform where data on embedded emissions is communicated to authorities and where CBAM certificates are bought , surrendered , and excess certificates are sold back to the authorities .
The obligation to surrender CBAM certificates is phased in until 2034 . For the transitional period , no CBAM certificates need to be purchased . Starting with the definitive period in 2026 , importers need to surrender CBAM certificates . The number of CBAM certificates to be surrendered increases proportionally to the phase-out of free allocations in the EU ETS : in 2026 regulated companies have to surrender CBAM certificates for 2.5 % of their embedded emissions . This
Emission intensity [ t CO 2 e / t product ]
6
5
4
3
2
1
0
Indirect emissions
Direct emissions
Belarus United States
Türkiye
EU27 United Kingdom
Brazil South Korea
Taiwan share gradually increases until it reaches 100 % in 2034 ( cf . figure 3 ).
How to calculate embedded emissions
The EU defined detailed rules for the calculation of embedded emissions . Generally , CBAM declarants must consider direct emissions from the production process as well as indirect emissions from the generation of energy used in the production process . The CBAM Directive lists some goods ( also from the iron and steel sector ) for which only direct emissions are to be considered as the production facilities benefit from EU compensation for higher electricity prices due to carbon pricing . For the actual calculation of direct emissions , obliged entities can follow either of the methodologies : 1 . The calculation-based approach where raw materials and inputs used in production are combined
China Japan
Ukraine
Serbia Russia South Africa
India
Figure 2 GHG emission intensity for CN code 7217 10 – Wires of non-alloy steel . Value for Belarus is based on the secondary production route . Source : Vidovic et al . ( 2023 ).
16 Green Steel World | Issue 9 | November 2023