CBAM: Impact on the Chemical Industry

 2 min

The Carbon Border Adjustment Mechanism (CBAM) is a central element of the EU strategy to prevent the shifting of CO2 emissions abroad and to protect the competitiveness of European companies as part of the European Green Deal. This measure aims to price CO2-intensive imports fairly and avoid carbon leakage. The mechanism is part of the Fit for 55 package, which aims to reduce greenhouse gas emissions by 55% by 2030 compared to 1990 levels.

The CBAM will be introduced in several stages. Since 1 October 2023, importers of certain goods have been obliged to submit quarterly reports to the EU Commission on the quantities imported, the CO2 emissions they contain and the CO2 levies already paid. The goods affected include iron, steel, cement and aluminium. From 2026, actual certificate trading will begin, with companies having to purchase corresponding certificates for every tonne of CO2 imported.

Reporting Obligations and Calculation Bases

By the end of 2025, importers must calculate the imported CO2 emissions based on actual values, whereby the support of manufacturers in other EU countries is required. The principle of identity requires the specific allocation of greenhouse gas emissions to the imported products. Two methods are permitted for the calculation: determination on the basis of material flows and laboratory analyses or continuous measurement of emissions in the exhaust gas flow. Estimates are not permitted. In the event that supplier data is missing, the worst-case approach must be applied.

A particular operational problem is the allocation of CO2 emissions when mixing identical chemical products with different CO2 footprints. A mass balancing method is used here to determine the specific CO2 footprint of the products. This method determines the total emissions of a production facility and breaks them down to individual production lines and products.

Next Steps and Recommendations

Companies should take early action to fulfil CBAM reporting obligations and avoid compliance violations. This includes involving and informing suppliers about CBAM requirements in a timely manner and minimising their administrative burden. By 2026, companies should ensure that they have certified actual values for their products so that they do not suffer any disadvantages in emissions trading due to the worst-case approach.

The chemical industry must prepare for the gradual inclusion of further products in the scope of the CBAM. Currently, important starting products such as nitric acid, ammonia and hydrogen are already covered by the scheme. An extension of the CBAM to other chemical products is planned by the end of 2025, with a first wave of extensions expected in 2027.

The introduction of the CBAM presents the chemical industry with numerous challenges, but also offers the opportunity to improve the sustainability of its supply chains through transparent and fair carbon pricing and to contribute to achieving the EU’s climate targets.

Source: Trade journal ‘Chemietechnik’

Photo: wutzkoh