Within the current transitional period of the Carbon Border Adjustment Mechanism (CBAM)  running until 31 December 2025, companies are facing various difficulties in their reporting obligations, including hurdles in gathering data on embedded emissions from their third-country suppliers.

As a rule, in the absence of actual data on emissions embedded in CBAM goods to support their declaration, EU importers may use default values for only 20% of the total embedded emissions in imported CBAM goods.

These default values, coupled with the challenges of gathering data on embedded emissions following a complex EU calculation methodology, has made it difficult – and in some cases materially impossible – for some companies to fulfill their reporting obligations relying on actual emission values.

Recognizing these difficulties, the European Commission has clarified in a Q&A document, that there should be some flexibility in the enforcement of sanctions by national competent authorities (NCAs) when a reporting declarant can demonstrate that all reasonable efforts have been made to gather data on embedded emissions from third-country operators.

 The Commission indicates that when assessing justifications, NCAs may consider the following factors:

• The means and resources dedicated by declarants to obtain the required data

• The frequency and duration of follow-up attempts

• The declarants’ operational capacity and the suppliers’ ability to calculate actual emissions

Still, the ultimate assessment will be conducted by NCAs who will decide on any leniency for situations of non-compliance. Although Member States are acknowledging the issue, the position taken so far varies widely between Member States.

In the Q&A document updated on October 24, it clarified that reporting declarants can specify directly in the CBAM registry the lack of actual data via a dedicated new option that exists for both direct and indirect embedded emissions. If this option is chosen, reporting declarants are expected to also provide justifications on why the actual emissions data is missing and upload supporting documents attesting unsuccessful efforts and steps taken to obtain data from suppliers and/or producers.

Furthermore, a new portal section of the CBAM Registry will allow installation operators outside the EU to upload and share their installations and emissions data with reporting declarants in a streamlined manner, instead of submitting it to each declarant separately. This should facilitate the provision of actual data in the future, as reporting declarants will be able to automatically populate their CBAM reports with this emissions data in order to comply with their reporting obligation. Registration for installation operators will open from 1 January 2025. 

In a related development, the EU Commission published a draft commission implementing regulation (implementing regulation) on the CBAM declarant authorization procedure.  According to Article 5 of Regulation (EU) 2023/956 (CBAM regulation), any importer based in the EU shall apply for the status of CBAM declarant before importing CBAM goods to the territory of the EU. From January 2025 onwards the request can be submitted, but the status of reporting declarant will be mandatory only after the definitive period begins (January 2026).

The Commission is also consulting stakeholders on the draft implementing regulation that will establish the CBAM Registry, an electronic database for submitting and managing CBAM declarations.