A (free) online check enables the identification of goods for which the EU carbon border adjustment reporting obligations will apply from October. Via the commodity codes, companies can screen their import portfolio to find out for which goods CBAM data must be recorded.
CBAM affects carbon-intensive imports
As part of the EU Green Deal, the new Carbon Border Adjustment Mechanism (CBAM ) will levy a CO2 price on EU imports of carbon intensive goods from 2026. In the transition period starting in October, reporting obligations for importing companies will apply.
This new EU regulation is likely to lead to a high administrative burden for affected companies. The first CBAM quarterly report for the fourth quarter of 2023 is already due on January 31, 2024.
In order to collect the necessary data in good time, companies should identify goods affected by CBAM in their import portfolio. A new online version of our CBAM Check is now available for this purpose.
Application areas of CBAM
Whether imports are covered by CBAM is determined by the commodity code used in the customs system and by the country of origin.
Recorded goods
For now, imports of goods from six sectors are covered by CBAM: iron & steel, aluminium, cement, fertilizer, electricity and hydrogen.
In the CBAM system, the goods to be registered are identified via the commodity codes as per Combined Nomenclature (CN).
While the 4-digit codes in the International Harmonized System (HS) already give a good indication for CBAM application, for some goods it is necessary to differentiate according to the 8-digit CN codes.
Depending on the sector, different goods categories are defined in the CBAM Implementing Regulation for the reporting purposes. The number of goods categories and commodity codes covered by CBAM varies by sector:
- Iron & Steel: Sintered ore, pig iron, ferroalloys (FeMn, FeCr, FeNi), crude steel, and iron or steel products – total 478 commodity codes
- Aluminium: unwrought aluminium and aluminium products – a total of 56 commodity codes
- Fertilizers: nitric acid, urea, ammonia, and mixed fertilizers – a total of 25 commodity codes
- Cement: Calcined clay, cement clinker, cement, and aluminous cement – a total of 6 commodity codes
- Electricity: 1 commodity code
- Hydrogen: 1 commodity code
If such goods are processed into finished products via inward processing and then imported into the EU, they also fall under CBAM.
The list is to be expanded in the future. To this end, a review by the EU Commission is due by the end of the transitional phase. Recently, the addition of polymers (plastics) was discussed.
Countries covered
In principle, EU imports of these goods from all third countries are covered by the CBAM rules. However, the following countries of origin are exempt:
- Countries participating in the EU Emissions Trading Scheme (ETS): Norway, Iceland, Liechtenstein
- Countries whose emissions trading is fully linked to the EU ETS: Switzerland
- Countries with their own carbon pricing, which is higher than the price in the EU ETS: Currently no country
- (for electricity) Countries that are so closely integrated into the EU internal electricity market that no technical solution for the application of CBAM rules is possible: Currently no country
While currently only imports from four non-EU countries are exempt from CBAM, it is expected that the list of these countries will grow over time.
Excemptions
All goods imported into the EU with a shipment value of less than 150 EUR and those for military use are exempt from the rules.
How does the CO2 IQ CBAM Check work?
According to these application areas, our CBAM Check consists of 2 steps for the identification of the goods and the specification of the countries of origin. Finally, the selected goods can be reviewed.
First step: Identify goods
The first step is for you to identify the goods that are imported into the customs territory of the EU. For this purpose, you need to know the CN codes or CN names of the imported goods.
If these are not already entered in the company systems, they can be taken from the customs declarations. Alternatively, online tools such as the Eurostat KN search engine are available.
You can identify the imported goods in our CBAM Check by:
- Direct input of the CN code or the CN name if these are known. In the corresponding input fields, these can be entered as free text and searched for in the drop down
- Search of matching goods by selecting the relevant CBAM sector and goods category. To narrow down the selection options, the matching goods group can also be selected according to the HS positions
The CBAM Check is based on the 2023 EUROSTAT data for CN codes. It covers all commodity codes from the CBAM sector related HS chapters (72, 73, 76 und 31) und HS positions (2601, 2507, 2523, 2716, 2804, 2808, 2814, 2834) and classifies these according to their CBAM application.
Second step: Determine countries
After the identification of the goods, you need to specify the relevant countries:
- EU import country of the goods, which can be entered as free text or selected via the drop-down. If none of the EU countries apply, “Other country” can be selected, in which case CBAM will not apply
- Non-EU country of origin of the goods, which can also be entered as free text or selected via the drop-down. Alternatively, “EU country or territories” can be specified, in which case CBAM is again not relevant
Once the EU country of import and non-EU country of origin are determined, you can see whether the CO2 border adjustment applies.
In this case, the greenhouse gases (GHG) to be captured are also displayed: carbon dioxide (CO2) for all CBAM goods, perfluorocarbons (PFCs) for some aluminium commodities, and nitrous oxide (N2O) for some fertilizers.
Final review of the selection
Via the field “Back to goods search” you add further goods. For each relevant goods and country specification, you have to run through these two steps.
Finally, you view all selected goods and country combinations via “Check selection”. The country specification can be changed at this point. Missing goods have to be added via the goods search.
Via “Send check results” you can request the result list after entering your contact details. You will then receive a list of the goods and countries of origin you entered with the results of our CBAM check by e-mail.
CBAM Check as a start for your reporting
The results list from our CBAM Check indicates those goods for which the CBAM reporting is to be set up from October 1. For these goods, importers should check whether the following data are available:
- Quantity of imported goods: For each quarter, the import quantity must be determined separately for each of the commodity codes and countries identified in our CBAM check. If the existing IT systems and applications do not currently provide such data, new data or applications are required. Manual recording of such data can be an interim solution.
- Emission and CO2 price data for the imported goods: For this, extensive data from the production plants and installations is needed. Such data needs to be requested from the manufacturers of the goods identified in our CBAM check. The EU has provided detailed instructions and a template for data collection.
Particularly in the initial phase, a great effort is to be expected in setting up the data for the goods affected by CBAM. With suitable technical solutions, these can then be maintained and updated.
These data must be constantly expanded when imported goods and countries of origin change over time. This requires a regular review of the import portfolio, for which our CBAM Check can be used.
Sources and further information:
- European Commission: Carbon Border Adjustment Mechanism
- European Commission: Guidance materials on reporting requirements
- European Commission: The Combined Nomenclature
- EU: Implementing regulation on reporting requirements
- EU: Regulation establishing a CO2 limit compensation system
- Zoll: Information on the customs tariff and how to determine the code number
Photo by Markus Winkler on Unsplash
