What is (CBAM)?
The CBAM (Carbon Border Adjustment Mechanism) is an innovative regulatory instrument implemented by the European Union , playing an increasingly influential role in the fight against carbon leakage. Its main objective is to prevent European companies subject to strict carbon tax regulations from being disadvantaged compared to those located outside the EU, where these regulations are less stringent or non-existent. It therefore aims to ensure that imported goods are subject to a carbon price equivalent to that imposed on domestic production within the European Union.
The themes covered
A quick reminder of the CBAM (Carbon Border Adjustment Mechanism)
The Carbon Border Adjustment Mechanism (CBAM) is designed to complement the EU Emissions Trading System (EU ETS). Indeed, if the EU imposes carbon taxes on European industries to reduce greenhouse gas emissions, there is a risk that companies will relocate their production to countries where these constraints do not exist, thus leading to “carbon leakage”. The CBAM therefore fills this gap by applying an equivalent tax to imported products.
Adopted in 2023, the CBAM initially targets certain high-carbon sectors, including steel, aluminum, cement, fertilizers, electricity and hydrogen. It entered a transition phase in October 2023, with a phased implementation until 2026, when it will come into full force.
Its main challenges
The challenges of the CBAM are multiple:
- Environmental: This involves reducing the global carbon footprint by encouraging all countries to adopt similar policies to limit CO2 emissions.
- Economical and competitive: The CBAM helps avoid distortion of competition between European producers and their foreign counterparts by imposing fair rules.
- Legal and commercial: This regulation is part of a dynamic of strengthening sustainability requirements, which could encourage commercial partners to adjust their own climate policies.
- Operational: Companies must set up systems to monitor and report carbon emissions associated with their imports, which represents a significant administrative challenge.
How to approach the different phases of regulation with MyTower during the transition phase and the operational phase
- Transition phase (2023-2025): During this phase, importers must start reporting carbon emissions associated with imported goods without yet paying the tax. MyTower helps companies collect and centralize emissions data, ensuring full transparency and gradual compliance.
- Operational phase (from 2026): Once the CBAM is fully implemented, importers will not only have to declare their emissions, but also purchase CBAM certificates corresponding to the emissions of their imported products. MyTower offers automated management tools to calculate costs, optimize compliance and ensure data traceability.
Why anticipate with MyTower?
By opting for a digital solution like MyTower, companies can turn this regulation into an opportunity. By anticipating the requirements of the CBAM, they will be able to:
- Reduce the risk of sanctions or fines.
- Ensure better preparation and integration of requirements into their supply chains.
- Improve their carbon footprint by optimizing their supply sources.
To support companies in complying with the CBAM, MyTower offers adapted digital solutions, facilitating the management and anticipation of regulatory obligations.
Webinar Replay: Everything you need to know about CBAM and its implications
You couldn't attend our live webinar on the Carbon Border Adjustment Mechanism (CBAM) ? Good news, the replay is now available! Webinar of October 15, 2024 – CBAM simplified – MyTower
