The Urgency of Carbon Emissions Data for UK Exporters of CBAM Goods

During the 3 month period to 30 September 2024, exporters of CBAM goods are likely to receive requests for detailed carbon emissions data from their European customers. This article explores the implications of this requirement and offers insights into how businesses can prepare.

The CBAM is a pioneering initiative by the EU aimed at preventing carbon leakage and ensuring that imported goods are subject to the same carbon costs as those produced within the EU.

The CBAM requires importers to report the carbon emissions embedded in their goods for the following sectors:

• Iron and steel
• Aluminium
• Cement
• Electricity
• Fertilisers
• Hydrogen

By 31 October 2024, importers of CBAM goods will need to file their returns for the 3 month period ending 30 September 2024, reporting actual carbon emissions data rather than using the default values which have been available to date. This requirement is part of the transitional phase of the CBAM, which began on 1 October 2023.

• Market access: Failure to provide the required emissions data could result in customers being non-compliant with EU regulations and changing supply chains to suppliers who can provide the data they need. For businesses reliant on the European market, this could result in loss of business and have significant financial implications
• Transparency and accountability: The CBAM promotes transparency and accountability in carbon emissions reporting. By providing accurate data, businesses can demonstrate their commitment to sustainability and environmental responsibility, which can enhance their reputation and competitiveness
• Preparation for full implementation: The transitional phase is a precursor to the full implementation of the CBAM, scheduled for 1 January 2026, following which EU importers will need to pay for CBAM allowances to cover their emissions.

1. Assess emissions: Conduct a thorough assessment of the carbon emissions associated with your products. This may involve analysing the entire supply chain to identify and quantify emissions at each stage of production
2. Engage with customers: Collaborate with your customers who are European importers to understand their reporting requirements and ensure that you provide the necessary data in a timely manner. Open communication can help streamline the reporting process and avoid potential issues
3. Engage with your third-party suppliers: Communicate your reporting needs to your upstream suppliers whose emissions you need to include within your own reporting. Start the process early so that you have time to identify the barriers to reporting and solve issues that arise
4. Implement reporting systems: Invest in systems and technologies that facilitate accurate emissions reporting. This may include software for tracking and calculating emissions, as well as training for staff involved in the reporting process
5. Stay informed: Keep abreast of updates and guidance from the European Commission regarding the CBAM. Regulatory requirements may well evolve during the transitional phase as the European Commission learns about the difficulties faced by importers who are trying to comply with the requirements.  Staying informed will help you to stay compliant and prepare for any changes

By taking proactive steps to assess, report, and reduce emissions, UK businesses exporting to Europe can not only comply with regulations but also protect their customer relationships and position themselves as leaders in sustainability. As the world moves towards a greener future, those who embrace transparency and accountability in their environmental impact will be best positioned for success.

Contact our expert, Jayne Harrold, if you have any questions or need further assistance. 

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