European CBAM shows first reporting problems

Only a small proportion of European companies have met the deadline for submitting their first carbon-intensive imports, demonstrating further difficulties for the EU in implementing carbon border adjustment mechanism (CBAM). This was reported by the Financial Times.

According to the German Emissions Trading Authority (DEHSt), provided to the FT, less than 10% of the 20,000 companies in Germany that had to report their emissions did so on time. The Swedish Environmental Protection Agency reported that 11% of the expected reports were submitted.

«We expect a much higher number of reports than have been received so far. The most important reason is that most importers are still unaware of the obligations,» said Jürgen Landgrebe of the German Federal Environment Agency, of which DEHSt is a part.

However, the official added that this was not a surprise, given that the implementation of CBAM is in a transitional period.

The European Commission reported that almost 13 thousand reports had been submitted by the end of February this year. Most of them concerned imports from China, a country that has criticized the European measure.

In its initial estimate in 2021, the Commission stated that 239,000 import transactions were expected to be covered by the mechanism each year. A senior EU official said that it was difficult to judge how many reports would have to be submitted quarterly, as the estimates were only made on an annual basis.

EU officials downplayed the apparent underreporting given the novelty of the mechanism. They also said that proposals to simplify the system would soon be made based on the first feedback from companies.

During the transitional phase, importers had to submit declarations for the fourth quarter of 2023 by January 31, 2024. At the end of January, the EC granted a 30-day extension to companies that had difficulties submitting the first report due to technical issues.

As GMK Center reported earlier, the German Emissions Trading Authority (DEHSt) is launching an information campaign on CBAM compliance. It is being carried out by the BDI industrial federation and the German Chamber of Commerce and Industry DIHK together with the agency. As noted, many companies are unaware of their obligations under the mechanism, including the need to register and report even minor imports of products subject to it.