European Commission granted an opportunity to postpone the first report on CBAM

Companies that had difficulties submitting their first report under the carbon border adjustment mechanism (CBAM) due to technical problems with the relevant registry will receive a one-month extension. This is stated in the message of the European Commission.

Currently, during the transitional phase, importers have until January 31, 2024, to submit declarations for the fourth quarter of 2023.

Shortly before the expiration of this period, the EC granted the possibility of its extension. The relevant request can be submitted through the CBAM Transitional Register. For this purpose, starting from February 1, a new function will be available in the registry, which will allow to request a 30-day extension of the report submission.

The option is available if the report was not submitted by February 1, 2024.

The EC’s explanation came in connection with technical problems when submitting reports through the CBAM Transitional Register. According to the institution, the incident affected several EU customs systems, including ICS2, and the functions of the registry. On January 29, access to the latter was limited due to technical work. The European Commission is working to fix the problems.

As the European Commission explained, in accordance with the instructions provided to national competent authorities, no penalties will be applied to declarants who have encountered difficulties in submitting their first CBAM report. Delays due to system errors will, by definition, be considered justified if the submission is made promptly once the problems are overcome.

For declarants that have not faced technical difficulties, the EC recommends that they comply with the deadlines. According to the Implementing Regulation governing the transitional period, they can subsequently amend and correct their first three CBAM reports until July 31, 2024.

In general, CO2 IQ notes that reporting companies are experiencing difficulties with registration, system operation, and data entry into the CBAM register, which makes it difficult to submit the required data in a timely manner. In Germany, for example, registration became possible only in mid-January. In a preliminary statement, the German Emissions Trading Authority (DEHSt), as the national competent authority, explained that the delay in preparing reports will not lead to sanctions or other adverse consequences in this country.

As GMK Center reported earlier, CBAM can radically change trade flows. In particular, the introduction of the mechanism has put China in an uncomfortable position, as Europe is one of its key export markets. Some European producers believe that CBAM could lead to higher costs, which would undermine the region’s attractiveness.