By Tiphaine Bernard, Amynthe Levasseur, and Stanislas Roquebert
Attorneys at LightHouse LHLF Law Firm

After more than a decade of waiting for France and an extensive legislative process at the European Union level, Regulation 2023/956 establishes the Carbon Border Adjustment Mechanism (CBAM).

But what is CBAM exactly?

It is a carbon pricing (or tax) for products imported into the EU, equivalent to the one applied to European industries under similar manufacturing conditions. More concretely, it is a “carbon tax” levied upon the importation of products manufactured in third countries into the EU. It will be based on the comparable cost of carbon emissions that would have been emitted to produce the relevant products within the EU.

Who does this apply to?

At the moment, the mechanism applies to sectors that pose a high risk of carbon leakage. These include electricity, steel, cement, aluminum, nitrogen fertilizers, and hydrogen, which account for over 45% of the European Union’s emissions in sectors covered by the Emissions Trading System (ETS). However, importers in other ETS sectors should be prepared. The mechanism is intended to be expanded and is expected to eventually cover all of these sectors.

So, you are subject to the mechanism if:

• You import goods listed in Annex I of Regulation 2023/956 into the EU customs territory
• These goods do not originate from countries listed in Annex III of the same regulation
• The value of the shipment is over 150 euros.
• The goods will be placed into free circulation.

When does this take effect?

The transitional phase of the mechanism, which focuses on information reporting, begins on October 1, 2023 (that’s tomorrow!). Payment is not required during this phase.

Every quarter, importers must submit a CBAM report within one month after the end of each quarter. Starting from January 1, 2026, the status of “Authorized CBAM Declarant” will be required for all imports of CBAM products, under the risk of customs goods blockage.

CBAM certificates covering 80% of emissions at the end of each quarter must be purchased by the importer to meet the minimum stock conditions by the end of March 2026.

So, what should you do?

The key word is “ANTICIPATE.”

• Create your account on the dedicated platform.

• Calculate your imported emissions and submit your CBAM reports on time.

• Apply for the “Authorized CBAM Declarant” status starting in January 2025.

• Purchase CBAM certificates to meet the minimum stock conditions by March 31, 2026.