REPORTING

CBAM

Carbon Border Adjustment
Mechanism

The CBAM Era
in the European Economy

A new era is beginning for businesses and foreign trade with the introduction of the Carbon Border Adjustment Mechanism (CBAM). CBAM will transform the import-export world in Europe and is critical for a low-carbon economy and global climate targets.

On October 1, 2023, the reporting obligation of companies will begin with the transitional phase, while verification and carbon pricing obligations
will start on January 1, 2026.

What is CBAM?

The European Union aims to reduce emissions by 55% by 2030 compared to 1990 levels and to become the first climate neutral continent by 2050, with the European Green Deal signed as part of the fight against climate change.

In accordance with this crucial target, CBAM (Carbon Border Adjustment Mechanism) is designed to prevent carbon leakage in the import/export process.

CBAM is a mechanism through which the cost of emissions of carbon-intensive products manufactured in the European Union is applied to trade goods imported into EU countries.
While the transitional phase makes reporting mandatory, carbon pricing applied to imported products within the scope of CBAM will gradually increase until 2034.

Why is CBAM Significant?

Carbon Border Adjustment Mechanism plays a key role in the EU’s climate objectives by reducing the risk of carbon leakage and encouraging cleaner production in non-EU countries. It is critical for businesses exporting their carbon-intensive goods to the European Union to prepare for compliance with the Carbon Border Adjustment Mechanism.

Semtrio's CBAM consultancy service offers companies
an opportunity to adapt to the changing trade dynamics, gain competitive advantage in the sector, and realize their goals.

What Does Semtrio’s CBAM
Service Cover?

Assess the financial impact of CBAM on your export products.

Calculate your product-based direct and indirect emissions data.

Get strategic
consultancy for the transitional phase and financial obligation
phase.

Build your sustainability strategy in compliance with international regulations.

The Stages of the
CBAM Service

With our Carbon Border Adjustment Mechanism service, we calculate embedded emissions for your products within the scope of CBAM, enable you to prepare annual quarterly reporting, and provide strategic consultancy in line with new compliance and obligations.

Kick-off Meeting and CBAM Compliance Assessment

We identify the rules and requirements within the scope of CBAM for your sector. We collect technical data on your production processes by conducting a site visit and prepare the necessary documents.

Data Calculation and Summary Report

For quarterly emissions reporting, we calculate the direct and indirect embedded emissions of your business, determine the medium and long-term cost impacts of carbon pricing, and prepare a technical summary report.

Technical Assessment and the Finalization Phase

We finalize and deliver the report containing technical data such as product quantity, embedded emission value, indirect emission amount for your business, and the document covering CBAM obligations tailored to your sector.

Sectors Covered by
CBAM

In the first phase, 6 sectors with the highest risk of carbon leakage will be included within the CBAM. The scope of CBAM is expected to expand to cover all products under the EU Emissions Trading System (ETS) by 2030.

Cement

Iron and Steel

Electricity

Hydrogen

Aluminium

Fertilisers

CBAM Timeline

TRANSITIONAL PHASE

It covers the reporting obligation period between October 1, 2023 - December 31, 2025. Exporters will be subject to reporting for their products and emissions under CBAM.

PERMANENT SYSTEM

As of January 1, 2026, the financial obligation period begins. Once the permanent system enters into force, emissions released during the period will have to be verified by an accredited verifier.

Exporting companies will be required to purchase CBAM certificates for the emissions of their products in carbon-intensive sectors. The price of the CBAM certificate will be equivalent to the carbon price under the EU Emissions Trading System.

2025

Expansion of the CBAM scope to other ETS sectors, indirect emissions (i.e. electricity), and developments in international climate negotiations will be reviewed.

TRANSITIONAL PHASE

It covers the reporting obligation period between October 1, 2023 - December 31, 2025. Exporters will be subject to reporting for their products and emissions under CBAM.

2025

Expansion of the CBAM scope to other ETS sectors, indirect emissions (i.e. electricity), and developments in international climate negotiations will be reviewed.

PERMANENT SYSTEM

FREQUENTLY ASKED QUESTIONS

Do Your Products fall under the Scope of CBAM?

If you export your products with the EU legislation's GTIP/CN codes to the European Union, you are required to calculate the embedded emissions of these products and report them on a quarterly basis.

What is the Emission Scope of CBAM?

Scope-1 Direct emissions: Carbon emissions from the production processes of a product (including emissions from the production of heating and cooling consumed in the production process).
Scope-2 Indirect emissions: Emissions released during the production of electrical energy used during production.
Scope-3 Indirect emissions from inputs: Emissions released during the production of intermediary goods that are used as inputs in the production of a product and are also included in the CBAM product list.

Is Verification of Emissions Mandatory?

There is no obligation to verify emission data during the transitional phase. However, emissions will need to be verified by an accredited body once the permanent system starts in 2026.

How Are Embedded Emissions Assessed under CBAM?

During the transitional phase, both direct and indirect emissions must be calculated and reported. The company importing products within the scope of CBAM is obliged to report the embedded emissions resulting from the production process in the facility where the product is produced, as well as the embedded emissions that are emitted during the production of intermediary goods consumed in the production process.