CBAM Q4-2023 Report Deadline: Your Compliance Checklist

The First CBAM Report Is Done — Time to Learn

The first quarterly report under the European Union's Carbon Border Adjustment Mechanism (CBAM) transitional period was due on January 31, 2024. Covering the October-December 2023 period, this report was mandatory for all declarants importing in-scope products into the EU. Reports were submitted electronically through the European Commission's CBAM Transitional Registry (European Commission, 2023a).

Important lessons have emerged from this first reporting period. For exporters and importers alike, evaluating these experiences is critical for preparing for upcoming quarterly reports.

What Was Required in the First Report?

According to Commission Implementing Regulation (EU) 2023/1773, each CBAM quarterly report must contain the following information (European Commission, 2023b):

Mandatory Data Elements

1. Total quantity of imported goods — In tonnes, by product type
2. Total embedded emissions — In tonnes of CO2 equivalent, including direct and indirect emissions
3. Country of origin and installation details — The facilities and countries where goods were produced
4. Calculation method applied — EU method, equivalent national method, or default values
5. Carbon price paid in the country of origin — If applicable, the amount paid under a carbon tax or emissions trading system

In-Scope Product Groups

The first report covered products in the six sectors listed in Annex I of the CBAM Regulation:

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

Specific Combined Nomenclature (CN) codes are defined for each product group. Correct CN code matching by importers is the first critical step in reporting.

The Transitional Registry: Practical Details

The CBAM Transitional Registry is the online platform developed by the European Commission where reports are submitted electronically. To access the system:

• Authorized declarant status from the competent authority in the relevant EU Member State is required
• Each Member State's national CBAM authority registers declarants
• Report entry can be done via XML upload or manual form completion

Technical Points to Watch

• The system expects separate data entries for each product import — bulk entry functionality is limited
• Incorrect CN code matching triggers system errors
• The calculation method used for embedded emissions must be documented
• Correction options after submission are limited — entering with accurate data is critical

Common Errors from the First Period

Widespread issues observed across the industry after the first reporting period:

1. Difficulty Accessing Embedded Emissions Data

The most common issue was the inability to obtain actual emissions data from production installations. Most producers outside the EU did not yet have the capacity to share data in CBAM-compliant formats.

Practical solution: The Commission permits the use of default values during the transitional period. However, after July 31, 2024, default value usage was limited to a maximum of 20 percent of total embedded emissions (Commission Implementing Regulation 2023/1773, Article 4).

2. CN Code Matching Errors

Importers struggled to match CN codes from customs declarations with CBAM product categories. Sub-categories for iron and steel products are particularly complex.

Practical solution: Review the CN code list in Annex I of the CBAM Regulation with your customs broker. Consult the national CBAM authority in ambiguous cases.

3. Inclusion of Indirect Emissions

For certain product groups (especially aluminium and cement), indirect emissions — emissions from electricity consumed during production — needed to be included in reporting. Many declarants overlooked this requirement.

Practical solution: Check direct and indirect emission requirements for each product group in Annex III of the Implementing Regulation.

4. Documentation of Country-of-Origin Carbon Price

Documenting the carbon price paid in the country of origin proved challenging, particularly for imports from non-EU countries. Because many countries have carbon pricing mechanisms structured differently, presenting information in the format CBAM expects became complicated.

Practical solution: The Commission's CBAM FAQ document contains detailed guidance on how to calculate the country-of-origin carbon price (European Commission, 2023a).

Compliance Checklist for Upcoming Reports

The following checklist can be used for the remaining transitional period quarterly reports:

Pre-Report Preparation (Throughout the Quarter)

• List all in-scope imports for the quarter with their CN codes
• Record country of origin and production installation details for each import
• Request embedded emissions data from production installations — send the request at the start of the quarter
• If actual emissions data is not forthcoming, determine which default values to use
• Check indirect emission requirements by product group
• Prepare documentation for carbon price paid in the country of origin

Report Preparation (End of Quarter)

• Compile all import data in the Transitional Registry format
• Document the embedded emissions calculation method for each product
• Flag items where default values were used and check the proportion
• Cross-check CN code matching against CBAM Annex I
• Run the report through an internal review before entering it into the Transitional Registry

Post-Submission

• Monitor report approval status through the Registry
• Record any feedback from the Commission or national authority
• Create improvement notes for the next quarter
• Update the plan for transitioning from default values to actual data

Upcoming Dates and Transitional Period Timeline

Important: Starting July 31, 2024, default value usage is restricted to 20 percent. Build actual emissions data collection capacity from suppliers before this date.

Strategic Perspective for Exporters

The CBAM transitional period carries no financial burden, but it is an operational preparation period. Three strategic points for exporters:

Data-sharing capacity creates competitive advantage. EU importers will prefer suppliers that can share embedded emissions data quickly and reliably. Building this capacity now is the key to maintaining market access when the definitive period begins in 2026.

The window for transitioning from default values to actual data is narrowing. From July 2024, default value usage is restricted. If you cannot produce actual emissions data, your importer may be forced to report with higher emission values — which negatively impacts your competitiveness.

National carbon pricing developments should be monitored. The carbon price paid in the country of origin can be deducted from CBAM certificate costs in the definitive period. Turkey's emissions trading system planning is directly relevant in this context.

Action Item: Send emissions data request letters to your suppliers now, ahead of the second quarterly report. While default values are accepted during the transition, your goal for each successive report should be to increase the proportion of actual data.

References

1. European Commission (2023a). CBAM Frequently Asked Questions — Guidance for the Transitional Period. European Commission Directorate-General for Taxation and Customs Union.
2. European Commission (2023b). Commission Implementing Regulation (EU) 2023/1773 — Rules for reporting obligations and calculation methods during the CBAM transitional period. Official Journal of the EU, L 228, September 15, 2023.
3. European Parliament and Council (2023). Regulation (EU) 2023/956 — Carbon Border Adjustment Mechanism Regulation. Official Journal of the EU, L 130, May 16, 2023.
4. European Commission (2023c). CBAM Transitional Registry — User Guide and Technical Documentation.

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