The European Commission recently launched the consultation phase on two essential draft regulations to strengthen the EU Carbon Border Adjustment Mechanism (CBAM) regulation’s operational structure. These include the draft Implementing Regulation for Authorized Declarants and creating a comprehensive CBAM registry. Stakeholders can submit feedback until November 28, 2024. These regulations clarify key aspects of the definitive CBAM implementation, set to begin on January 1, 2026.
Draft Implementing Regulation for Authorized Declarants
Starting January 1, 2026, all importers of goods within the CBAM scope must qualify as Authorized CBAM Declarants. This therefore includes importers of cement, iron and steel, aluminum, fertilizers, electricity, hydrogen, and certain downstream products. Importers who do not obtain Authorized CBAM Declarant status will indeed be prohibited from importing CBAM products into the EU.
The draft Implementing Regulation basically introduces a structured framework for applying to become an Authorized CBAM Declarant. Key highlights include:
- Application and Authorization Criteria: Importers must meet conditions that demonstrate financial stability, a positive compliance history, and also an adequate administrative structure to manage CBAM obligations.
- Ongoing Compliance and Monitoring: National CBAM authorities will further regularly reassess authorized declarants to confirm their adherence to CBAM rules.
- Revocation of Authorization: Conditions under which national CBAM authorities may revoke authorization, particularly in cases of non-compliance or business cessation.
- Data Protection and Confidentiality: The draft regulation concurrently mandates strict data protection measures to safeguard sensitive information within the CBAM system.
Establishing the CBAM Registry
The draft implementing regulation on the CBAM Registry proposes a centralized, secure electronic system to support CBAM reporting and verification processes. Key features include:
- Integration with Customs Systems: The CBAM registry will seamlessly connect with EU customs systems and utilize the Economic Operator Registration and Identification (EORI) system for entity verification.
- Risk Analysis and Circumvention Monitoring: Equipped with risk analysis tools, the registry will enhance surveillance and detect potential circumvention effectively.
- Data Exchange and Compliance: The registry’s digital infrastructure will facilitate efficient data sharing among national authorities, customs, and the Commission, adhering to personal data protection rules, thereby ensuring robust compliance tracking.
These developments will have substantial implications for EU importers and exporters within the CBAM framework. EU importers must secure Authorized Declarant status and comply with strict regulatory standards to continue to import CBAM-scope products. For exporters, understanding and aligning with CBAM requirements will be essential to maintain access to the EU market. Compliance with these new mechanisms will be crucial for businesses looking to trade within the EU’s evolving regulatory landscape.
By Nikola Ivkovic and Vasilije Boškovic, Associates, Gecic Law
