When is the 2023 Q4 CBAM Reporting Deadline?
The original deadline for submitting the 2023 Q4 CBAM report was on January 31, 2024. However, that’s no longer the case. Technical issues have complicated submissions for many companies. Therefore, the European Union (EU) has pushed back the deadline.
How can companies that import CBAM goods take advantage of the new deadline? On February 1, 2024, the EU is adding a new feature on their website. Companies will be able to request delayed submission on the Transitional Registry, which will give them an extra 30 days to submit their CBAM report.
Companies who haven’t run into technical issues are still encouraged to submit their report by the end of the standard reporting period. If they do so, they’ll be able to modify and correct their first three CBAM reports until July 31, 2024.
What is CBAM?
CBAM stands for Carbon Border Adjustment Mechanism. It’s an EU tool designed to put a fair price on the carbon emitted during the production of carbon-intensive goods that enter the union. CBAM confirms that producers have paid for imported embedded carbon emissions at the same rate as domestic production.
The primary goal of CBAM is to stop carbon leakage. Carbon leakage results when EU-based companies shift their carbon-intensive production abroad or replace EU products with more carbon-intensive imports. This harms EU-based manufacturers, undermines the EU’s climate goals, and encourages environmentally harmful or inefficient manufacturing methods.
CBAM is currently in a transitional phase where it only applies to six industries: cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen. These “CBAM goods” were chosen because they are often carbon intensive to produce, and they are considered to have a high risk of carbon leakage. This phase will last until mid-2025.
During the early transitional phase, companies are allowed to use default reference data as part of their reporting. These default values represent a rough world average created by the European Commission’s Joint Research Centre. This is only until July 2024, when the EU will require a more stringent methodology.
Need help getting accurate data? That’s where Glassdome comes in. Check out our emissions tracking solution to see how we can help you satisfy CBAM requirements and get more efficient while you do it.
What’s the Difference Between the GHG Protocol and CBAM?
ESG regulation never stops evolving, and the Greenhouse Gas (GHG) Protocol and Carbon Border Adjustment Mechanism (CBAM) are no different. Companies aren’t sure how to navigate and implement new regulations and standardized frameworks.
One of the most common question we hear is this: If your company is already following the GHG Protocol framework, do you comply with CBAM?
The GHG Protocol and CBAM (pronounced see-BAM) are closely linked, but they serve different purposes and address distinct climate action challenges.
The GHG Protocol is a voluntary tool that organizations can use to measure and manage their emissions. CBAM is a European Union regulation (part of The European Green Deal) designed to address carbon leakage and ensure fair competition in the international trade of goods. Figure 1 is a overview of the key differences between the GHG Protocol and CBAM:
Figure 1. Differences between the GHG Protocol and CBAM.
The GHG Protocol is voluntary, developed by non-profit organizations, considers Scope 1, 2, and 3, and covers a broad spectrum of emissions. CBAM is mandatory for several types of importers to the EU, developed by the EU, does not consider all of scope 1, 2, and 3, and is aimed solely at carbon leakage. They both apply to business, focus on greenhouse gas accounting and emission measurement and reporting, and are the result of international collaboration.
The key overall difference between the two methodologies is that CBAM is not focused on determining GHG emissions at the corporate level, but rather at the product level.
So while the GHG Protocol and CBAM share commonalities in their application to businesses, their focal points diverge.
Before we dive into details, let's look at how the transitional phase of CBAM works. If you want to navigate the regulations and stay compliant, you need to understand the workflows and governance system.
Today, CBAM only applies to a specific set of goods imported into the EU: cement, iron and steel, fertilizer, aluminum, electricity, and hydrogen.
Figure 2 illustrates the transitional phase of CBAM.
Figure 2. The Governance System and Workflows Included Under the Transitional Phase of CBAM.
- The importer gets CBAM goods from global installations outside the EU.
- Customs declare each import in the usual process.
- Customs authority informs the EU Commission via CBAM Transitional Registry of the import. This serves to verify the thoroughness and precision of quarterly CBAM reports.
- Reporting declarant requests embedded emissions data from CBAM goods' operators.
- Declarant submits quarterly CBAM report to CBAM Transitional Registry.
- The Commission exchanges information with EU authorities and determines which reporting declarants need to submit CBAM reports. The Commission also performs spot checks and addresses irregularities within the reports.
- The importer, if penalized, informs the operator to prevent future issues.
Got it? Let's get started on the differences between the GHG Protocol and CBAM.
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Carbon Regulations Heating Up: CBAM, SEC, FAR
As concerns about climate change continue to grow on a global scale, governments and regulatory bodies are taking substantial measures to address environmental issues.
In this blog post we’ll cover the 3 regulations receiving the most attention from Glassdome customers around the globe:
The European Union Carbon Border Adjustment Mechanism (CBAM)
The EU’s CBAM is an ambitious initiative aimed at addressing carbon leakage and guaranteeing European industries a level playing field on the global market. With the first emissions being calculated as of October 1, 2023, CBAM will require importers to pay a carbon border tariff equal to the carbon cost borne by European industries.
This regulation seeks to prevent the relocation of carbon-intensive production outside the EU to regions with lenient environmental regulations. Consequently, companies exporting products to the EU will face new compliance challenges and potential financial consequences. The first imported products to be impacted are: cement, fertilizer, iron & steel, aluminum, electricity, and hydrogen.
The SEC’s GHG Inventory Proposal
The SEC’s proposed rule seeks to improve and standardize climate-related disclosures for investors, including greenhouse gas emissions, climate risks, and transition strategies to a low-carbon economy. This initiative aims to increase transparency and enable investors to make informed decisions based on the climate-related risks and opportunities presented by companies.
Thousands of publicly traded companies will be impacted by the proposed rule, which will require them to provide comprehensive and consistent information regarding their climate-related performance and resilience.
Federal Acquisition Regulation (FAR) Case 2021-015
The FAR case concentrates on mandating that federal contractors disclose greenhouse gas emissions and climate-related financial risks associated with their supply chains. This regulation aims to promote sustainability throughout the federal government’s procurement process and encourage transparent climate reporting from suppliers.
To comply with the FAR and ensure eligibility for government contracts, businesses that receive federal contracts over $7.5m annually will be required to track and report Scope 1 and 2 emissions, while those who receive $50m+ annually will also have Scope 3 requirements.
Why a Sustainability Platform is Crucial
As the regulatory environment surrounding carbon emissions and climate disclosures becomes more stringent, some manufacturers are getting ahead of the curve. With their emissions data logged and managed in the Glassdome cloud, they’re reducing administrative burden with a focus on 3 outcomes:
Product Environmental Footprints
The Glassdome Lifecycle Assessment (LCA) platform enables manufacturers to precisely measure their carbon footprints, identifying emission hot spots and potential regulatory risks.
Organization-Wide GHG Emissions Inventory
With a comprehensive assessment platform, businesses can generate detailed reports on Scope 1, Scope 2, and even Scope 3 emissions by integrating data directly from suppliers.
Risk Mitigation and Strategy Development
By obtaining insight into climate-related risks, businesses can develop resilient strategies for transitioning to a low-carbon economy. For example, EV battery-makers are using the Glassdome platform to compare suppliers’ emissions intensities – giving sustainable manufacturers a leg up on the competition.
Stay ahead of the curve and demonstrate to customers, investors, and regulators your commitment to sustainability. Take the first step toward a compliant and sustainable future.
Contact us at [email protected] for more information on how Glassdome can help your business thrive in an era of stricter climate regulations