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Carbon Border

Adjustment Mechanism

Background

2

Carbon Border

Adjustment Mechanism

Following the formal adoption of the Carbon Border Adjustment Mechanism (better

known as CBAM) by the European Parliament on 18 April 2023, the Regulation

entered into force the day following its publication in the Official Journal of the EU 16

May 2023 (EUR-Lex - 32023R0956 - EN - EUR-Lex (europa.eu)).

The CBAM addresses carbon leakage from products and goods, derivatives, and

certain precursors imported into the European Union and aims at equalizing the

carbon cost of imported products with that of domestic products. Annex I of the

Regulation includes the full list of products/goods and precursors with related HS

code.

ABOUT

EU importers are required to apply for the status of authorised CBAM declarant.

In the event importers appoint indirect custom representatives, the latter will need to

apply for the authorisation. Each authorised CBAM declarant will be issued with a

CBAM account number.

CBAM Registry and the Common Central Platform are two key elements of the

CBAM Regulation. The Registry includes data on authorized CBAM declarants,

operators and installations in non-EU countries. The Common Central Platform will be

used for the sale and repurchase of CBAM certificates.

HOW DOES IT WORK?

During this period importers of goods falling within the scope of the CBAM will

have to report greenhouse gas emissions embedded in their imports without

surrendering CBAM certificates.

This transitional period is geared towards information collection to ensure

preparedness for the definitive system and to create awareness on what will be

required from exporters and importers alike. Importers will have to report on a

quarterly basis the embedded emissions in goods imported during the previous

quarter of the calendar year, setting out direct and indirect emissions as well as

any carbon price effectively paid abroad.

This reporting-only process will run through the end of 2025, with the last CBAM

report, for the three months ending 31 December 2025 needing to be submitted

by 31 January 2026.

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What to expect in

the transitional

period

Carbon Border

Adjustment Mechanism

Certain third countries that have an emissions trading scheme linked to the EU

scheme or that participate to the EU scheme are exempt.

This is the case for Members of the European Economic Area and Switzerland.

Additional third countries that have a cap and trade system or a carbon tax will be

considered for exemption should the EU recognise those systems as equivalent.

EXEMPTIONS

The CBAM Regulation covers imports of cement, iron and steel, aluminum,

fertilizers, electricity, and hydrogen for emissions of carbon dioxide, nitrous oxide

and perfluorocarbons.

Cement, fertilizers, and electricity will be covered, and in the future taxed, for

direct and indirect emissions while iron, steel, aluminum, and hydrogen will only

be covered, and in the future taxed, for direct emissions. taxed for cement,

fertilizers, and electricity.

The CBAM scope will likely cover additional sectors and products, and it is

expected to cover all sectors included in the EU ETS (European Union Emissions

Trading Scheme) by 2030.

Industries and sectors can be added during the transitional period.

4

Industries and

products

Carbon Border

Adjustment Mechanism

Cement Iron & Steel Aluminum

Fertilizers Hydrogen Electricity

5

Why choose SGS

Carbon Border

Adjustment Mechanism

Development and implementation of an accounting methodology

and system to monitor and report emissions, in line with CBAM

Regulation requirements. Quarterly support for reports to CBAM

declarants.

ON-GOING SUPPORT THROUGHOUT THE TRANSITIONAL PERIOD

Bespoke technical trainings for industry and products.

TECHNICAL TRAINING

Is your accounting system meeting CBAM requirements?

Assessment of current GHG emission accounting and alignment

with CBAM requirements.

GAP ASSESSMENT

From 2026, GHG emissions third-party independent accredited

verification.

EMISSIONS VERIFICATION

We are market leaders in EU ETS verification with more than 15 years'

experience verifying GHG emissions of installations across all CBAM

covered sectors.

We have a global presence and can provide a range of CBAM related solutions in your

language with local experts.

We provide a one stop shop solution for all your CBAM needs, from accounting to

gap assessment to verifications.

SGS is the world’s leading inspection, and certification company. We are recognized

as the global benchmark for quality and integrity.

With more than 97,000 employees, we operate a network of more than 2,650 offices

and laboratories around the globe enabling reach and local support.

For more information, contact Industries.Environment@sgs.com

OUR SERVICES

SGS Headquarters

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