The European Commission published its draft implementing act defining the requirements for eligibility for certain deductions for CBAM obligations on May 13 as part of a four-week public consultation.
The rules of the EU Border Carbon Management Mechanism (CBAM) give importers the right to deduct from their annual CBAM obligations accrued on the basis of emissions associated with imported steel from their respective manufacturing processes in relation to carbon prices that have already been paid for goods in international jurisdictions.
As CBAM seeks to equalize carbon costs for domestic and exporting producers to sell to the EU, allowing deductions for carbon costs "actually paid" ensures that the carbon price "is not paid twice on the same emissions" - important for championing legal issues such as WTO compliance.
The draft implementation act and the appendix were published as part of a four-week feedback period open for responses from May 13 to midnight on June 10. The resolution sets out in detail the proposed rules regarding:
- Determining appropriate carbon prices that are "effectively paid for" and using standard carbon prices;
- How can various forms of "compensation" for specified carbon prices reduce the price that was "actually" paid, and how to account for these discounts in deductions;
- Currency conversion into euros using average annual exchange rates.;
- Requirements for evidence of how carbon price deductions were justified.;
- Required qualifications of an "independent person" responsible for evaluating and confirming the specified evidence.
As detailed in the draft documents, the Commission proposes to limit carbon price deductions to only those emissions that relate to CBAM obligations, which means that deductions will only be possible if CBAM declarations are submitted using actual values in accordance with the general data and evidence requirements in the comparison process. emissions with the level of goods. As with the product, in the future, the Commission will publish a set of "standard carbon prices" for third countries with their own carbon pricing rules. Importers will once again have the freedom to choose between deductions based on actual carbon prices and default prices, when the default price provides for a larger or equivalent deduction.
The EU certainly has the most advanced carbon trading system in the world under the EU ETS, but other countries have – or have announced their intention to develop – their own
