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CBAM, or the Carbon Border Adjustment Mechanism, is a system under which "taxes" are imposed on imported carbon-intensive goods and services into the European Union. This mechanism aims to reduce greenhouse gas emissions in product manufacturing and ensure fair competition for companies producing goods in countries with strict carbon regulations versus those without such regulations. The essence of CBAM is that goods produced outside the EU with high carbon emissions will incur additional taxes upon import into the EU. This tool aims to mitigate environmental impact and encourage the transition to cleaner products in countries lacking stringent climate regulations.

Benefits of Calculating Emissions According to CBAM Requirements for Producers

 

 

Access to the EU Market: Compliance with CBAM requirements allows manufacturers and suppliers to maintain access to the EU market, which is governed by CBAM. This is crucial for export-dependent companies and can contribute to their long-term sustainability.

 

Risk Reduction: Suppliers that do not adapt to new environmental requirements and do not reduce their carbon emissions may face additional taxes and fees, increasing their operational costs. Calculating emissions according to CBAM requirements enables suppliers to identify climate-related tax risks and develop timely solutions to mitigate them.

 

Compliance with International Standards: CBAM helps ensure compliance with international greenhouse gas standards. For many companies, especially those exporting their products, adherence to these standards is becoming increasingly important, given the growing interest from investors, clients, and partners in environmental sustainability.

 

Support for Green Trade: CBAM promotes the development of green trade and encourages consumers to choose environmentally friendly products. Suppliers offering low-carbon emission products gain a competitive advantage in the global market and can increase their sales volumes.

 

Incentives to Reduce Emissions: CBAM creates financial incentives for suppliers to reduce greenhouse gas emissions in their production processes. This not only helps companies comply with CBAM requirements but also reduces their carbon footprint, potentially saving them money in the future.

 

 

 

Companies Subject to CBAM Requirements

 

 

During the transition period, greenhouse gas emissions calculations according to CBAM are necessary for producers of the six most carbon-intensive product categories:

 

  • Iron and steel
  • Cement
  • Aluminum
  • Fertilizers
  • Electricity
  • Hydrogen

 

For each of these categories, importers must provide data on direct and indirect energy-related greenhouse gas emissions associated with the production of the products (embedded emissions). Requirements for the content of importer reports, as well as recommendations for emissions calculations for each category of goods, are presented in the EU Commission Regulation 2023/1773.

HPBS Services for CBAM Greenhouse Gas Emissions Calculations

 

We offer the following stages of work depending on the needs of the client:

  • Analysis of Production Chains: Identify sources of greenhouse gas emissions that fall under CBAM requirements.
  • Emissions Calculation: Calculate direct and indirect energy-related greenhouse gas emissions according to CBAM methodologies for producers.
  • Report Preparation: Prepare reports that meet CBAM requirements for submission by importers of products into the EU.
  • Emission Reduction Strategy Development: Develop strategies to reduce greenhouse gas emissions in product manufacturing to lower carbon intensity.
  • Cross-Border Carbon Tax Calculation: Calculate the cross-border carbon tax considering current prices of carbon units under the EU ETS and compensations in the product's country of production.
  • Implementation of Automated Calculation Platform: Implement the PERIX platform for greenhouse gas emissions calculation with a custom set of calculation modules tailored to the company’s specifics and CBAM requirements.
  • Report Verification: Verify reports and provide a conclusion on the compliance of the documentation with CBAM requirements.

 

By providing comprehensive support and expertise, HPBS ensures that companies can effectively navigate the CBAM requirements, thereby maintaining their market presence in the EU and contributing to global sustainability efforts.

 

 

 

Additionally:

What is CBAM?

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