Carbon Border Adjustment Mechanism

CBAM

What is the EU Carbon Border Adjustment Mechanism (CBAM)?

The EU Carbon Border Adjustment Mechanism (CBAM) is a climate measure and part of the EU Fit for 55 package initially applying to 6 sectors, including electricity. The aim of CBAM is to address the risk of carbon leakage by ensuring equivalent carbon pricing for imports and domestic (EU) production that is subject to carbon costs under the EU ETS.

From January 2026, importers into the EU will be required to report on the emission content of goods (including electricity) and purchase CBAM certificates for non-EU products.

A transitional period began on 1 October 2023. During this period, importers of electricity into the EU are required to submit a quarterly report of the embedded emissions in the imports. You will not have to make any monetary payments until 2026, at which point you or your customs representative will be expected to buy and surrender CBAM certificates corresponding to the quantity of embedded emissions in the goods.

More updates and the latest information can be found on the website of the European Commission here. The link to the transitional registry, guidance documents and webinar (eLearning) recordings can also be found here.

CBAM obligations for imports into the Netherlands

When you have been allocated capacity for electricity import into the Netherlands on the BritNed cable and you have nominated this, you are required to report CO2 emissions embedded in the imported electricity.

The Dutch Emissions Authority (NEa) have provided an update regarding Carbon Border Adjustment Mechanism (CBAM) obligations for electricity imports into the Netherlands.

Read the update here: CBAM Update – Dutch Emissions Authority

The CBAM Impact Study

In early 2024, a group of interconnectors, including BritNed, commissioned AFRY Management Consulting to create a report on the impact of the EU Carbon Border Adjustment Mechanism (CBAM) on electricity imports from Great Britain.

The published reports offers an impartial evaluation of the possible consequences of the EU CBAM. The full report and the executive summary of the impact study are below.

EU CBAM Impact Study Summary Report

EU CBAM Impact Study Executive Summary

The study has identified two issues with the method of application of CBAM to electricity imports from GB:

  • Risk of significant over-statement of emissions assumed for electricity imports from GB, as values based on carbon intensity of historic fossil fuel generation are likely to be applied.
  • Excessive carbon price exposure for imports from GB, linked to practical obstacles to demonstration of a carbon price having been paid in GB by emitting generation and exposure of GB zero-carbon generation to carbon costs.

These issues unduly increase the cost of electricity imports into the EU from GB, presenting the following adverse outcomes:

  • Putting at risk development of offshore grid/cross-border infrastructure needed for the energy transition;
  • Harming delivery of decarbonisation policies by presenting barriers to low carbon projects; and
  • Frustrating efficient market operation by unduly blocking flows that would otherwise be economic.

Latest updates from the European Commission

The latest information can be found on the website of the European Commission (button below) along with a link to the transitional registry, guidance documents and webinar (eLearning) recordings.

Reporting during the transitional period

The European Commission has developed the CBAM transitional registry to help importers perform and report as part of their CBAM obligations. Importers must provide a CBAM report on a quarterly basis, to the European Commission via the CBAM Transitional Registry on the European Commission website.

The definitive CBAM period

The definitive period will begin on 1st January 2026. As appose to quarterly reporting, one report should be submitted annually by 31st May, with the first report to be submitted in 2027.

During the definitive period importers will need to report on the emission content of goods and purchase equivalent CBAM certificates for non-EU imports.

If importers can prove that a carbon price has been paid (e.g. through UK ETS) during the production of the imported goods, the corresponding amount can be deducted.

How do I report if my company is not based in the EU?

When the importer is established outside of the EU, an indirect customs representative will be responsible for the reporting on your behalf. More information can be found in the guidance document on CBAM for installation operators outside the EU on this webpage.

Support

BritNed is not endorsing any of these companies, as we find out about parties that may be able to support your reporting requirements, we will list them here:

Customs Support: https://www.customssupport.co.uk/what-to-include-cbam-reports 

CarbonChain: https://www.carbonchain.com/cbam