The initial phase of implementing the Carbon Border Adjustment Mechanism (CBAM) has presented significant challenges for companies importing goods into the European Union (EU). According to regulations, these companies must report embedded emissions in imported products to discourage high-carbon footprint imports. This report examines the first difficulties encountered, provides new examples, and highlights lessons learned so far.
Access to the CBAM Reporting Platform
Gaining access to the CBAM platform remains challenging due to a decentralized process through national authorities, which varies significantly across EU member states. For example, companies in Germany undergo a rigorous digital identity verification process that takes several working days, while in France, this process is completed in just a few hours, creating inequities and delays for some companies. These discrepancies complicate navigation, and for companies with cross-border operations, efficient access is a major barrier.
Challenges with Report Submission by a Representative
According to reporting procedures, the document must be signed by an authorized individual. A Spanish electronics company faced challenges in designating the correct person, as the platform does not allow automatic delegation of responsibilities between the signer and declarant, creating additional obstacles that require platform updates for more flexibility.
High Administrative Burden
The administrative burden posed by CBAM is especially challenging for low-value transactions. For example, a supplier in the Czech Republic was required to report minor imports, such as screws and bolts, which, despite low unit values, fall under CBAM due to the €150 threshold. Small and medium enterprises are particularly affected by these requirements, as compliance costs are disproportionate to the actual value of the imported products.
Data Collection and Calculation of Embedded Emissions
Companies have faced difficulties obtaining data and calculating embedded emissions across supply chains. A Polish wood product importer, for instance, struggled to calculate emissions per EU methodology because their non-EU suppliers use a different calculation system. Alternative methods are allowed until the end of 2024, but transitioning to CBAM standards requires major improvements to avoid errors and inconsistencies.
Confidentiality of Commercial Information
Companies are also concerned about the confidentiality of commercial information, as CBAM reporting involves details about production processes and cost structures. A Dutch chemical company highlighted the difficulty of providing accurate data without risking sensitive information exposure. To mitigate these concerns, additional measures should be introduced to ensure data is protected and only used for regulatory purposes.
Uncertainty Regarding Default Values
The temporary allowance of default values presents compliance issues for companies that haven’t had sufficient time to implement precise calculations. A Romanian textile producer, for instance, would benefit from extending the use of default values for low-value imports to ensure compliance without incurring extra costs for implementing complex methodologies.
Conclusion and Next Steps
The first CBAM reporting has revealed several challenges that must be addressed to facilitate efficient compliance. It is essential for the platform to be optimized and for member states to collaborate to standardize access and reporting procedures. In future editions, we will continue monitoring implementation progress and provide concrete data on compliance in the Romanian market.