Sustainability managers have been concerned about the use of default emission values in the European Union's Carbon Border Adjustment Mechanism (CBAM). Launched in October 2023, the CBAM transitional phase has introduced changes in how companies report their carbon footprint. To simplify emission calculations for specific goods like cement, steel, and aluminum, the EU introduced "default values." These values, applicable at the product category level, can be used for up to 20% of complex goods with limitations. However, it's important to note that these defaults are temporary and will be phased out by January 1st, 2025. After this date, importers will need to transition to the full EU methodology for calculating emissions in their CBAM reports.
The European Commission introduced these default values in late 2023 to simplify calculating the carbon footprint of imported goods during the initial phase of the Carbon Border Adjustment Mechanism (CBAM). CBAM, a part of the EU Emissions Trading System, aims to level the carbon playing field for domestic and imported products, particularly for goods with high embedded emissions like steel, cement, and aluminum. Importers can utilize these default values during the CBAM transitional phase, which emphasizes data collection and reporting. While the use of default values has limitations and will eventually be phased out, it offers a temporary solution for businesses complying with CBAM regulations.
Introduced in December 2023, these default values have played a significant role in determining the embedded emissions in imported goods during the transitional phase of the Carbon Border Adjustment Mechanism (CBAM). This initiative, which is an integral part of sustainable trade and climate change mitigation, allows importers to use these default values to calculate the carbon footprint of specific goods. This has been particularly helpful during the initial stages of CBAM, where the focus lies on data collection and emission reporting. While the use of default values has limitations and will eventually be phased out, it offers a simplified approach for businesses complying with CBAM regulations in the short term.
While the use of default values provides a temporary reprieve, it's essential for businesses to prepare for a future where these values are phased out. By January 1st, 2025, importers will need to switch to the full EU methodology for emission calculations in their CBAM reports. This will require a more comprehensive understanding of the EU Carbon Border Adjustment Mechanism (CBAM), the role of the EU Emissions Trading System, and the importance of accurate emission reporting. As we move towards a more sustainable trade environment, understanding these aspects will be crucial in the fight against climate change.
In conclusion, while companies can still use default emission values in CBAM during the transitional phase, it's crucial to remember that this is a temporary measure. As sustainability managers, preparing for the full implementation of the EU methodology for emission calculations is key to ensuring compliance with CBAM regulations and contributing to climate change mitigation.
Screen around 100 CSRD solutions in minutes not weeks, and create an individualized list of solutions.
