Gecić Law experts will participate in multiple sectoral training sessions on the EU’s new Carbon Border Adjustment Mechanism (CBAM) in October and November. The Ministry of Environmental Protection and the Chamber of Commerce of Serbia initiated the training program within the Swiss Program on Capacities for Trade Policies (C4TP) framework. CBAM training sessions will hence take place in several cities in Serbia during the next two months. These sessions are particularly tailored to the economic sectors affected by the CBAM regulation.
On Monday, the program started its first full-day workshop at the Chamber of Commerce in Belgrade. Our counsel, Branko Gabrić, a leading expert on CBAM, led the training. His presentation specifically informed the audience of the particularities of CBAM for the fertilizers industry. The subsequent discussion and Q&A session sparked significant interest. The program was of practical help to the attendees due to its targeted approach. Many attendees said the training filled a considerable knowledge gap and consequently reduced the confusion on the practical aspects of CBAM compliance.
The discussion underscored several crucial points for the industry. Participants focused on the urgency of preparing for CBAM. This includes a proposal for forming a robust database to implement the correct methodology effectively. Additionally, preliminary estimates indicate that the average emissions in Serbia exceed two tons of carbon dioxide per ton of fertilizer. Further, the EU ETS’s cost of emitting a ton of carbon dioxide currently stands at approximately EUR 85. Consequently, as CBAM reaches full implementation, its implications are expected to be profound, significantly affecting the competitiveness in the EU market. CBAM is, therefore, not merely seen as a sustainability instrument but as a financial levy that may lead to significant changes in the industry. Finally, participants feel the transitional period may not be sufficient. While EU businesses have had nearly twenty years to adapt, non-EU companies will be given a mere two.
CBAM entails levying tariffs based on embedded carbon dioxide emissions in certain products imported into the EU. The aim is to level the playing field and prevent carbon leakage in countries with less ambitious climate policies. Initially, it will apply only to select product categories in iron and steel, cement, fertilizers, aluminum, and electricity production.
The CBAM regulation officially took effect on May 17, 2023. It started its implementation in its transitional phase on October 1, 2023. During this phase, which will last until December 31, 2015, the obligations pertain only to quarterly CBAM reporting. The carbon dioxide emissions embedded in products are vital to the CBAM reports. The monitoring and reporting methodology and process is a significant challenge for the manufacturers, who must adapt to the new regulation. Untimely or inaccurate CBAM reports may lead to penalties ranging from EUR 10 to EUR 50 per ton of unreported emissions. Importers into the EU must file the Q4 CBAM report by January 31, 2024.
