EUROPEAN COMMISSION DIRECTORATE-GENERAL TAXATION AND CUSTOMS UNION Brussels, 17 August 2023 GUIDANCE DOCUMENT ON CBAM IMPLEMENTATION FOR IMPORTERS OF GOODS INTO THE EU This guidance document represents the views of the European Commission Services at the time of publication. It is not legally binding. Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË – Tel. +32 22991111 CONTENTS 1 SUMMARY 4 2 INTRODUCTION 5 2.1 About this document 5 2.2 How to use this document 6 2.3 Where to find further information 6 3 QUICK GUIDE FOR IMPORTERS 9 4 THE CARBON BORDER ADJUSTMENT MECHANISM 14 4.1 Introduction to the CBAM 14 4.2 Definitions and scope of emissions covered in the CBAM 15 4.3 Transitional period 4.3.1 Key reporting roles and responsibilities 4.3.2 What needs to be monitored by operators 4.3.3 What needs to be reported by reporting declarants 4.3.4 Reporting periods for operators and importers 4.3.5 Governance of the CBAM 4.3.6 Inward processing 16 17 18 19 20 22 23 5 24 CBAM GOODS AND PRODUCTION ROUTES 5.1 Foreword to sector specific sections 24 5.2 Identifying CBAM goods 5.2.1 Product specifications 5.2.2 Identifying goods in scope for the CBAM Regulation 24 25 25 5.3 Cement sector 5.3.1 Unit of production and embedded emissions for industry sector 5.3.2 Definition and explanation of goods covered 5.3.3 Definition and explanation of relevant production processes and routes 5.3.4 Additional reporting parameters 26 26 27 28 31 5.4 Chemicals sector – Hydrogen 5.4.1 Unit of production and embedded emissions 5.4.2 Definition and explanation of sector CBAM goods covered 5.4.3 Definition and explanation of relevant production processes and routes 5.4.4 Additional reporting parameters 32 32 33 33 35 5.5 Fertilizers sector 5.5.1 Unit of production and embedded emissions 35 36 2 5.5.2 5.5.3 5.5.4 Definition and explanation of sector CBAM goods covered Definition and explanation of relevant production processes and routes Additional reporting parameters 37 38 41 5.6 Iron and Steel sector 41 5.6.1 Unit of production and embedded emissions 42 5.6.2 Definition and explanation of sector CBAM goods covered 42 5.6.3 Definition and explanation of relevant production processes and emissions covered 47 5.6.4 Additional reporting parameters 56 5.7 Aluminium sector 5.7.1 Unit of production and embedded emissions 5.7.2 Definition and explanation of sector goods covered 5.7.3 Definition and explanation of relevant production processes and routes 5.7.4 Additional reporting parameters 58 58 59 61 65 6 66 REPORTING OBLIGATIONS 6.1.1 6.1.2 6.1.3 6.1.4 6.1.5 6.1.6 Reporting direct and indirect embedded emissions Units for reporting embedded emissions Embedded emissions Indirect emissions Adding precursor emissions Default emission factors for precursors 66 66 67 68 69 70 6.2 Reporting requirements 6.2.1 Reporting the quantity of goods imported 6.2.2 Reporting the quality of certain goods imported 6.2.3 Reporting direct and indirect embedded emissions 6.2.4 Units for reporting embedded emissions 6.2.5 Reporting the effective carbon price due 6.2.6 Information relevant for importers 71 71 71 72 72 73 75 6.3 Reporting template 6.3.1 Emission data communication from operators 6.3.2 Reporting by declarants 76 76 79 7 EXEMPTIONS FROM THE CBAM 83 ANNEX A LIST OF ABBREVIATIONS 84 ANNEX B LIST OF DEFINITIONS 86 ANNEX C DEFAULT VALUES 94 3 1 SUMMARY The Carbon Border Adjustment Mechanism (CBAM) is an environmental policy instrument designed to apply the same carbon costs to imported products as would be incurred by installations operating in the European Union (EU). In doing so, the CBAM reduces the risk of the EU's climate objectives being undermined by production relocating to countries with less ambitious decarbonisation policies (so-called ‘carbon leakage’). Under the CBAM, in its definitive (post-transitional) period EU authorised declarants representing the importers of certain goods will purchase and surrender CBAM certificates for the embedded emissions of their imported goods. As the price for those certificates will derive from the EU Emission Trading System (EU ETS) allowance price, and since Monitoring, Reporting and Verification (MRV) rules have been designed based on the MRV system of the EU ETS, this will equalise the price of carbon incurred between imported goods and goods produced in installations participating in the EU ETS. This guidanc