Carbon Border Adjustment Mechanism (CBAM)

With Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023, published in the Official Journal of the European Union on 16 May 2023, a new tax instrument has been introduced for the EU budget — the so-called Carbon Border Adjustment Mechanism (CBAM). This regulation is a key component of the European Green Deal and part of the “Fit for 55” package, which aims to reduce greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels and to achieve climate neutrality by 2050.

The new environmental levy is designed to ensure that EU efforts to reduce greenhouse gas emissions are not undermined by an increase in emissions outside its borders due to the importation of goods produced in non-EU countries. The CBAM introduces a carbon price on certain imported products, corresponding to the price paid by EU producers under the EU Emissions Trading System (EU ETS).

The Regulation provides for two phases of implementation:

1. Transitional phase – from 1 October 2023 to 31 December 2025.
   During this phase, no tax will be applied to imported goods, but importers will be required to collect and report data on the quantities and embedded emissions of products subject to CBAM. National authorities (in Italy, the Ministry of the Environment and Energy Security) will begin authorizing the obligated entities.

2. Definitive phase – starting 1 January 2026, when the mechanism will become fully operational.
   The first CBAM declaration, concerning goods imported during the 2026 calendar year, must be submitted by 31 May 2027.

Initially, the mechanism will apply only to a limited number of carbon-intensive sectors, including cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen.

During the transitional phase, beginning 1 October 2023, operators identified under Article 2 of Implementing Regulation (EU) 2023/1773 (importers or indirect representatives) must collect data quarterly and submit reports to the European Commission. The first report, covering the fourth quarter of 2023, must be submitted by the end of January 2024.

From 1 January 2026, authorized operators will have to submit annual CBAM declarations stating the quantity of imported goods and the corresponding embedded carbon emissions. They will then be required to surrender a number of CBAM certificates equal to the reported emissions, with the price of each certificate based on the average EU ETS allowance price (€ per tonne).

Given the significance of these new rules, all stakeholders are encouraged to stay updated by consulting the website of the Ministry of the Environment and Energy Security as well as the dedicated page of the Italian Customs and Monopolies Agency.