. ANNEX V Payment of the penalty shall in no case release the authorised declarant from the obligation to surrender the outstanding number of CBAM certificates in a given year to the competent authority of the Member State where the declarant has been authorised. ANNEX IV The weight reflects the production mix of the fossil fuels in the EU. Therefore, the limits to the possibilities to trade CBAM certificates and to carry them forward is justified by the need to avoid undermining the effectiveness and climate objective of the CBAM and to ensure even handed treatment to operators from different countries. 52 63, 20 02 01(AC, END, INT from the global envelope), 20 02 03 (AC, AL, END, INT and JPD in the delegations), XX 01 xx yy zz Shared management with the Member States. The proposal respects the fundamental rights and observes the principles recognised in particular by the Charter of Fundamental Rights of the European Union. The Carbon Border Adjustment Mechanism (CBAM) is a carbon tariff on carbon intensive products, such as cement and some electricity, [1] imported by the European Union. However, those third countries should develop a roadmap and commit to implement a carbon pricing mechanism providing for an equivalent price as the EU ETS, and should commit to achieving carbon neutrality by 2050 [as well as?] Chapter VII National registries and central database. 1 To ensure a gradual transition from the current system of free allowances to the CBAM, the CBAM should be progressively phased in while free allowances in sectors covered by the CBAM are phased out. . The Union is committed to reducing its economy-wide GHG emissions by at least 55per cent by 2030 below 1990 levels, as set out in the submission to the UNFCCC on behalf of the European Union and its Member States on the update of the nationally determined contribution of the European Union and its Member States, Regulation (EU) 2021/1119 of the European Parliament and of the Council. This will ensure direct applicability of a number of provisions concerning goods imported in the Customs Union. . A total of 615respondents participated in the public consultation. For the preparation of this proposal, the Commission designed and implemented a stakeholders consultation strategy, which encompassed both public and targeted consultations. 1.For processed goods resulting from the inward processing procedure as referred to in Article256 of Regulation (EU) No952/2013, the reporting obligation referred to in Article 33(1) shall include the goods placed under the inward processing procedure that are listed in Annex I to this Regulation, even if the processed product is not listed in that Annex. Specify existing or envisaged prevention and protection measures, e.g. Respondents were also allowed to upload position papers. 25 In particular, stakeholders agree that an EU CBAM is needed due to existing differences of ambition between the EU and the rest of the world and in order to support the global climate efforts. For the purposes of this point 'added value of Union involvement' is the value resulting from Union intervention which is additional to the value that would have been otherwise created by Member States alone. (c)Articles 5 and 17 shall apply from 1 September 2025. . Therefore, importers should only be entitled to import CBAM goods after they have been granted an authorisation by competent authorities responsible for the application of this Regulation. Furthermore, President von der Leyen has underlined that carbon must have its price because nature cannot pay the price anymore. Most revenues generated by CBAM will go to the EU budget, . Default values for imported electricity shall be determined based on either specific default values for a third country, group of third countries or region within a third country, or if those values are not available, on EU default values for similar electricity production in the EU, according to point 4.2.2. Imported goods shall be considered as originating in third countries in accordance with non-preferential rules of origin as defined in Article59 of Regulation (EU) No952/2013. Verification of embedded emissions. 4.A decision of the competent authority authorising a declarant shall contain the following information. The report shall contain, in particular, the assessment of the possibilities to further extend the scope of embedded emissions to indirect emissions and to other goods at risk of carbon leakage than those already covered by this Regulation, as well as an assessment of the governance system. 29 Article 14 3.If the competent authority refuses to authorise a declarant, the declarant requesting the authorisation may, prior to an appeal, object to the relevant authority under national law, who shall either instruct the national administrator to open the account or uphold the refusal in a reasoned decision, subject to requirements of national law that pursue a legitimate objective compatible with this Regulation and are proportionate. . CBAM declaration. 4.The Commission is empowered to adopt implementing acts establishing the methodology for calculating the reduction in the number of CBAM certificates to be surrendered, regarding the conversion of the carbon price paid in foreign currency into euro at yearly average exchange rate in accordance with paragraph 1, and regarding the qualifications of the independent person certifying the information as well as elements of proof of the carbon price paid and the absence of export rebates or other forms of compensation on exportation being applied as referred to in paragraph 2. The results of the public and targeted consultations allowed the Commission to collect a significant number of views and opinions on the initiative. That mechanism is to serve as an essential element of the EU toolbox to meet the objective of a climate-neutral Union by 2050 in line with the Paris Agreement by addressing risks of carbon leakage resulting from the increased Union climate ambition. 24 Whilst the ultimate objective of the CBAM is a broad product coverage, it would be prudent to start with a selected number of sectors with relatively homogeneous products where there is a risk of carbon leakage. A system based on actual emissions on imported goods ensures a fair and equal treatment of all imports and a close correlation to the EU ETS. The committee shall be a committee within the meaning of Regulation (EU) No182/2011. The proposal/initiative requires application of the flexibility instrument or revision of the multiannual financial framework However, in order to preserve the possibility for importers to optimise their costs, this Regulation should foresee a system where authorities can re-purchase a certain amount of excess certificates from the importers. The study reviewed the logic of intervention, assessed a range of alternative options and their feasibility, provided technical advice on technical design elements and, provided support on the selection of sectors to be covered by the mechanism. Those records shall be sufficiently detailed to enable verifiers accredited pursuant to Article 18 to verify the embedded emissions in accordance with Article8 and AnnexV and to enable the competent authority to review the CBAM declaration in accordance with Article19(1). Council Regulation (EEC) No 2658/87 of 23. (22)Under the EU ETS, the total number of allowances issued (the cap) determines the supply of emission allowances and provides certainty about the maximum emissions of GHG. . Once the permanent system enters into force on 1 January 2026, importers will need to declare each year the quantity of goods imported into the EU in the preceding year and their embedded GHG. It should also explore possibilities for concluding agreements to take into account their carbon pricing mechanism. of the European Union ST/14222/1/20/REV1. . Importers would have the opportunity to claim a reduction of the CBAM based on their individual carbon footprint and any carbon price paid in the country of production. They shall be revised periodically through implementing acts based on the most up-to-date and reliable information, including on the basis of information provided by a third country or group of third countries. . All policy options are designed in a way that respects the EUs international commitments. The gradual introduction of the CBAM is aligned with the phase-out of the allocation of free allowances under the EU Emissions Trading System (ETS) to support the decarbonisation of EU industry. Chapter IX (Article 31) deals with the reduction of the CBAM obligation to reflect the transitional allocation of EU ETS allowances for free in installations producing, in the Union, the same kinds of goods which are covered by the proposal. This is used to ensure that imported products are treated no less favourably than domestic products produced in EU ETS installations. (54)The Commission should strive to engage in an even handed manner and in line with the international obligations of the EU, with the third countries whose trade to the EU is affected by this Regulation, to explore possibilities for dialogue and cooperation with regard to the implementation of specific elements of the Mechanism set out this Regulation and related implementing acts. 12.The Union, may conclude agreements with third countries with a view to take account of carbon pricing mechanisms in these countries in the application of Article 9. Such information shall not be disclosed by the competent authority without the express permission of the person or authority that provided it. (Article 31) deals with the reduction of the CBAM obligation to reflect the transitional allocation of EU ETS allowances for free in installations producing, in the Union, the same kinds of goods which are covered by the proposal. 58, from EFTA countries The European Commission proposed a carbon border adjustment mechanism (CBAM), which aims to level the playing field between EU and third-country producers by putting a carbon price on certain imported products, while phasing out free allocation of emissions allowances to European industry. egarding this monitoring to authorities lies with the importers. Therefore, importers should only be entitled to import CBAM goods after they have been granted an authorisation by competent authorities responsible for the application of this Regulation. This consists of the price resulting from the EU ETS for the sectors covered by the system. In 2021, China invested over USD 380 billion in developing . Declarants should have to report on a quarterly basis the actual embedded emissions in goods imported during the transitional period, detailing direct and indirect emissions as well as any carbon price paid abroad. It will require importers of certain goods to the EU to purchase digital certificates for each tonne of carbon emissions embedded in their goods, the price of which will be based on the average weekly price of the EU's Emissions Trading System (ETS) carbon permits. Having regard to the Treaty on the Functioning of the European Union, and in particular Article, Having regard to the opinion of the European Economic and Social Committee, Having regard to the opinion of the Committee of the Regions, The Commission has, in its communication on the European Green Deal, , set out a new growth strategy that aims to transform the Union into a fair and prosperous society, with a modern, resource-efficient and competitive economy, where there are no net emissions (emissions after deduction of removals) of greenhouse gases (GHG emissions) in2050 and where economic growth is decoupled from resource use. That means the weighted average of the CO, intensity of electricity produced from fossil fuels in the EU. 1.5.4.Compatibility with the Multiannual Financial Framework and possible synergies with other appropriate instruments. 1 This regulation applies to various goods covered by the EU CBAM, including . The authorised declarant can use that disclosed information to fulfil the obligation to declare verified information on embedded emissions when importing the goods produced in the installation registered in the central database to theUnion. of the multiannual financial framework, Subtotal HEADING 7 This measure has been designed to comply with World Trade Organization (WTO) rules and other international obligations of the Union. Sale of CBAM certificates. The registration shall be valid for a period of five years from the date of its notification to the operator of the installation. Do you want to help improving EUR-Lex ? 32 2.Determination of actual direct embedded emissions for simple goods. Choice of the instrument. deals with how customs authorities should deal with the procedures for the administration of goods at the border (Article 25). The amount of the penalty will be based on penalties in the EU ETS. The CBAM will therefore start in 2026 and be fully phased in by 2034. The CBAM is a climate measure which should prevent the risk of carbon leakage and support the Unions increased ambition on climate mitigation, while ensuring WTO compatibility. view more: from 65: Hotel du Faubourg Moutiers The family-run Hotel du Faubourg is located in Moutiers, near the 3 Valles ski resort and La Vanoise . That mechanism is to serve as an essential element of the EU toolbox to meet the objective of a climate-neutral Union by 2050 in line with the Paris Agreement by addressing risks of carbon leakage resulting from the increased Union climate ambition. These features are still under development; they are not fully tested, and might reduce EUR-Lex stability. The CBAM should be based on a declarative system where an authorised declarant, who may represent more than one importer, submits annually a declaration of the embedded emissions in the goods imported to the customs territory of the Union and surrenders a number of CBAM certificates corresponding to those declared emissions. However, if importers decide to claim to use the actual emissions from the production process, the monitoring creates additional costs for the business. (3)Tackling climate and other environmental-related challenges and reaching the objectives of the Paris Agreement are at the core of the European Green Deal. 64, 01 01 01 02(AC, END, INT - Indirect research), 01 01 01 12 (AC, END, INT - Direct research). However, while the EU ETS sets an absolute cap on the GHG emissions from the activities under its scope and allows tradability of allowances (so called cap and trade system), the CBAM should not establish quantitative limits to import, so as to ensure that trade flows are not restricted. , while the full study is also published by the Commission Moreover, during an initial transitional phase, where importers may not be able to produce yet the data required by system on actual emissions, a default value could also apply. The world is facing a profound climate crisis and the challenges of climate change require a global response. The Union is extremely active in international fora to strengthen environmental global rules and to accompany trade partners and less developed countries on a path to decarbonise. (28)Whilst the ultimate objective of the CBAM is a broad product coverage, it would be prudent to start with a selected number of sectors with relatively homogeneous products where there is a risk of carbon leakage. Indirect management by entrusting budget implementation tasks to: third countries or the bodies they have designated; international organisations and their agencies (to be specified); the EIB and the European Investment Fund; bodies referred to in Articles 70 and 71 of the Financial Regulation; bodies governed by private law with a public service mission to the extent that they provide adequate financial guarantees; bodies governed by the private law of a Member State that are entrusted with the implementation of a public-private partnership and that provide adequate financial guarantees; persons entrusted with the implementation of specific actions in the CFSP pursuant to Title V of the TEU, and identified in the relevant basic act. 3.The Commission is empowered to adopt implementing acts concerning the principles of verification referred to in paragraph 1 as regards the possibility to waive the obligation for the verifier to visit the installation where relevant goods are produced and the obligation to set thresholds for deciding whether misstatements or non-conformities are material and concerning the supporting documentation needed for the verification report. A CBAM is an alternative to those measures and would therefore have to replace them over time. The Commission announced its intention to propose a CBAM in the European Green Deal. Competent authorities. In this context, a CBAM is proposed with the overarching objective of addressing the risk of carbon leakage in order to fight climate change by reducing GHG emissions in the Union and globally. The complete removal of free allocation in the absence of a CBAM leads to the highest employment losses. Implementing acts will provide more detail on the application of penalties. The choice of policy option 4 for material products and the carbon emission factor for electricity would introduce a proportionate mechanism to address climate change by reducing GHG emissions in the Union and avoiding that these emissions are replaced by emissions outside the Union. Embedded emissions in goods other than electricity shall be determined based on the actual emissions in accordance with the methods set out in Annex III, points2 and 3. 5.If the competent authority determines that a declarant has failed to comply with the obligation to submit a CBAM report as specified in paragraph 1, the competent authority shall impose the penalty and notify the declarant: (a)that the competent authority has concluded that the declarant fails to comply with the obligation of submitting a report for a given quarter; (c)of the amount of the penalty imposed on the declarant; (e)of the action the competent authority considers the declarant should take to comply with its obligation under point (a) depending on the facts and circumstances of the case; and. It shall take effect the day following the publication of the decision in the. Moreover, while the EU ETS applies to installations based in the Union, the CBAM should be applied to certain goods imported into the customs territory of the Union. The reporting obligation shall not apply to import of: processed products resulting from the outward processing procedure as referred to in Article 259 of Regulation (EU) No952/2013; imported goods qualifying as returned goods in accordance with Article203 of Regulation (EU) No952/2013. 7.The implementing acts referred to in the first subparagraph shall be adopted in accordance with the examination procedure referred to in Article 29(2). 2.Where a CBAM declaration in accordance with Article 6 has not been submitted, the competent authority of the Member State of establishment of the authorised declarant shall assess the CBAM obligations of that declarant on the basis of the information at its disposal and calculate the total number of CBAM certificates due at the latest by the 31 December of the fourth year following that when the CBAM declaration should have been submitted. 3.The competent authority shall communicate the information referred to in paragraph 2 to the Commission at the latest two months after the end of the quarter covered by a report. Determination of default values referred in Articles 7(2) and (3), Default values for imported electricity in Article 7(3), Specific default values for a third country, group of t, hird countries or region within a third country, Specific default values shall be based on the best data available to the Commission determining the average CO. per megawatt-hour of price-setting sources in the third country, group of third countries or region within a third country. The Commission is empowered to adopt implementing acts in order to determine the conditions for applying the CBAM to goods referred to in paragraph2. (b)Article 35 shall apply until 28 February 2026. complex goods means goods requiring the input of other simple goods in its production process; specific embedded emissions means the embedded emissions of one tonne of goods, expressed as tonnes of CO, emission factor, means the weighted average of the CO, intensity of electricity produced from fossil fuels in a geographic area. Where the imported goods are processed products resulting from the outward processing procedure as referred to in Article259 of Regulation (EU) No952/2013, the authorised declarant shall report in the CBAM declaration only the emissions of the processing operation undertaken outside the customs territory of the Union, provided that the processed product is listed in AnnexI to this Regulation. In 2030, total yearly revenues from the border measure alone are expected to amount to EUR 2.1 billion are expected to be raised by the border measure and EUR 7 billion from additional. Article 20 concerns in detail the sale of certificates by the competent authorities. 4.The authorised declarant shall keep records of the information required to calculate the embedded emissions in accordance with the requirements laid down in AnnexIV. The carbon price is determined by the balance of this supply against the demand of the market. On 14 July 2021, the European Commission presented a legislative proposal on the Carbon Border Adjustment Mechanism (CBAM) as part of its flagship 'Green Deal' policy package focused on climate change and the environment. 2.By way of derogation from paragraph 1, where transmission capacity for the import of electricity is allocated via explicit capacity allocation, the person to which capacity has been allocated for import and which nominates this capacity for import shall, for the purposes of this Regulation, be regarded as an authorised declarant in the Member State where the person declares the import of electricity. For processed goods resulting from the inward processing procedure as referred to in Article256 of Regulation (EU) No952/2013, the reporting obligation referred to in Article 33(1) shall include the goods placed under the inward processing procedure that are listed in Annex I to this Regulation, even if the processed product is not listed in that Annex. 5.Where the Commission, taking into account the relevant data, reports and statistics, including when provided by the customs authorities of Member States, has sufficient reasons to believe that the circumstances referred to in paragraph3 are occurring in one or more Member States, it is empowered to adopt delegated acts in accordance with Article28 to supplement the scope of this Regulation in order to include slightly modified products for anti-circumvention purposes. The Commission is also empowered to adopt implementing acts to further define the necessary elements of the calculation method set out in Annex III, including determining system boundaries of production processes, emission factors, installation-specific values of actual emissions and their respective application to individual goods as well as laying down methods to ensure the reliability of data, including the level of detail and the verification of this data. Article 27 the installation where the goods were produced; contact information of the operator of the installation where the goods were produced; name and contact information of the verifier: ID of accreditation, name of the Accredita. 23 Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article29(2). Where necessary, those acts shall provide that the default values can be adapted to particular areas, regions or countries to take into account specific objective factors such as geography, natural resources, market conditions, prevailing energy sources, or industrial processes. On March 10, 2021, the European Parliament ("EP") adopted a resolution "Towards a WTO-compatible EU carbon border adjustment mechanism" ("CBAM"). The GHG emissions to be regulated by the CBAM should correspond to those GHG emissions covered by AnnexI to the EU ETS in Directive 2003/87/EC, namely carbon dioxide (CO, ) as well as, where relevant, nitrous oxide (N. The custom authorities shall carry out controls on the goods in accordance with Article46 of Regulation (EU) No952/2013, including the 8-digit CN code, the quantity and the country of origin of the imported goods.