The EU has introduced new rules for importers of products as part of their Carbon Border Adjustment Mechanism (CBAM), a carbon tax on imported goods. This move aims to ensure that the carbon price paid by European producers is in line with those outside the EU.

Starting in October this year, companies will need to gather data about the emissions associated with the products they import. They have to begin reporting this data by the end of January 2024. These rules will be in place during CBAM’s transition period, which goes until the end of 2025.

CBAM will first apply to specific products from industries that use a lot of carbon, like steel, cement, and electricity, among others. During the transition phase until 2026, importers only need to report the emissions from the products they bring in.

The main reason for CBAM, which was approved by the EU earlier this year, is to prevent “carbon leakage.” This means stopping companies from moving their production to countries with weaker environmental rules.

CBAM will make sure that the cost of carbon for EU products matches the cost of products made in other countries. Companies importing goods to the EU will need to buy CBAM certificates to make up the difference in carbon costs.

With these new rules, importers must provide information about the emissions linked to the products they bring into the EU. This includes details like where the products come from, where they were made, and where the main source of emissions is located. They need to report both the direct emissions produced by making the goods and the indirect emissions, like electricity used in the production process.

The EU Commission has also given guidance to help importers and producers outside the EU follow these new rules. They are working on tools to help importers calculate and report emissions, along with training materials and online sessions.

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