EU Begins Reporting Period for New Carbon Border Adjustment Tax
The EU’s Carbon Border Adjustment Mechanism officially entered its transitional phase Oct. 1, requiring traders to report, but not yet pay, taxes on carbon emissions associated with certain imports. During the transitional phase (see 2308170033), the mechanism will apply to imports of cement, iron and steel, aluminum, fertilizers, electricity and hydrogen. EU importers of those goods must report on the volume of those imports and the greenhouse gas emissions “embedded during their production,” the European Commission said Sept. 29.
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While the EU will ask importers to collect data for the fourth quarter of 2023, the first report under the mechanism isn’t due until Jan. 31. The commission also noted that “a number of flexibilities have been built into” mechanism during its first year, “such as the use of default values for the reporting of embedded emissions and the possibility to use the monitoring, reporting and verification rules of the country of production.”
The commission added the transitional phase “will serve as a learning period” for importers, producers and European governments. The transitional period will help the commission “collect useful information on embedded emissions in order to refine the methodology” before it takes full effect in 2026.