In a preparatory document dated 22 June, a copy of which has been made available to EUROPE, the European Commission specifies the conditions to be met by countries that may be exempted from the carbon border adjustment mechanism (CBAM). This version of the future regulation for the CBAM clarifies certain elements such as the scope of the mechanism, fines, and the transitional period, compared to the document EUROPE had access to at the beginning of June (see EUROPE 12733/9).
While many stakeholders question the possibilities of excluding the least developed countries from the CBAM, the European Commission plans to apply full or partial exemptions only to operators who have already paid a carbon price in the country of origin. It does not envisage reducing the burden of the CBAM according to a country’s level of development, but according to its environmental effort.
In the preparatory document dated 22 June, it specifies the conditions for a State to conclude a sectoral agreement with the EU. This will be possible if the third country applies an effective carbon pricing system to products exported to the EU and does not apply export rebates within that system.
According to an EU source, “it is an invitation to trading partners and countries around the world to work together with us, and to raise their ambitions”.
Implementation
Details of implementation have also been provided. For example, the European Commission believes that national bodies will be responsible for accrediting the persons responsible for verifying the information declared by importers.
In the old version, the central CBAM authority had to accredit them. The European Commission still reserves the right to adopt delegated acts to specify the conditions for accreditation.
In addition, in order to ensure the correct application of the regulation, the European Commission is detailing the price of fines imposed on operators in the event of fraud. These differ slightly from the previous text.
Where the European Commission had foreseen a single tariff for operators who fail to return the correct number of CBAM certificates to the competent authority, it now envisages several scenarios.
If an operator fails to return the correct number of certificates or imports goods into the EU without declaring them in accordance with the rules, he will have to pay a fine equivalent to 100% of the average price of a certificate, multiplied by the number of certificates he must return.
However, if the declarant has clearly defrauded or sought to defraud in his declaration, it will no longer be 100%, but 200% of the average price of a certificate.
In these different situations, the CBAM certificates due to the authority must still be returned, with the associated costs, in addition to the fine.
Entry into force
The timetable for the implementation of the mechanism is becoming clearer, with a transitional period of 3 years after the Regulation’s entry into force. During this period, a simplified system will be put in place to tax the carbon footprint of imports. Most of the final provisions of this text will have to apply by 1 January 2026.
The European Commission is due to present its proposal for a CBAM regulation on 14 July, as part of its ‘Fit for 55’ package.
See the preparatory document: https://bit.ly/3yv5lUA (Original version in French by Léa Marchal)