The chaos that has prevailed in the fertilizer sector over the past few days has prompted the European Commission (EC) to speed up its decision by adding article 27a to its regulation on Carbon Dioxide Emissions Regulation (CBAM), which allows it to temporarily suspend the subject of CBAM products in "serious and unforeseen circumstances."
Article 27a was included in the amendment to EU Regulation 2023/956, which was published by the European Commission on December 17, but has not yet been adopted by the legislative bodies (Parliament and Council). After significant opposition from fertilizer producers due to the detrimental effects of CBAM combined with pre-existing tariffs, the EU began actively using Article 27a for the first time.
Wednesday's announcement was also accompanied by a "CBAM mechanism guide," marking the first public discussion of article 27a and its implications by the European Commission.
Article 27a states that when the inclusion of a product in CBAM "causes serious damage to the internal market of the Union due to serious and unforeseen circumstances affecting the prices of goods," the EU has the right to "exclude this product from Annex 1 until these serious and unforeseen circumstances are resolved." eliminated". passed".
"This introduces additional uncertainty regarding the implementation of CBAM, and some traders may adjust prices (or not fully set prices for CBAM) to take into account the possibility of applying Article 27a to their product," said Crick.
The CBAM Regulations currently do not allow for the suspension or withdrawal of goods from the scope of CBAM. Thus, the EC "included, as part of the proposal adopted on December 17 last year, a new article 27a that would allow the Commission to temporarily seize goods."
It is important to note that article 27a may be applied retrospectively. Once it is passed by other legislators, the affected products can be retroactively excluded from the scope of the CBAM.
This means that in the worst-case scenario, the European Commission has the right to retroactively exclude any CBAM product from the scope of CBAM on any date starting from January 1, 2026, when "serious and unforeseen circumstances" were recognized as having begun.
Provided there are no objections from the European Parliament or the Council, the EU can invoke article 27a for up to five years, as well as "tacitly extend it for further periods of identical duration," the article says.
Starting in 2027, when CBAM certificates can be purchased, CBAM declarants will be reimbursed for the cost they paid for the certificates when article 27a was not applied, this was mentioned in the questions
