CBAM Regulation

What is the CBAM Regulation? A Complete Guide to the CBAM Regulation

 

Climate change is the greatest challenge of our time. The European Union has set an ambitious goal: to be climate-neutral by 2050. But there is a problem – many products used in the EU are made in other countries where climate regulations are less strict. If the EU forces its industry to be green, and then allows cheap, “polluted” products from elsewhere, it makes no sense.

CBAM (Carbon Border Adjustment Mechanism) is the answer. It represents an EU regulation that regulates carbon emission taxes on products imported into the EU – ensuring that products are made according to similar climate standards, regardless of whether they are produced in the EU or elsewhere.

For manufacturers in the EU – especially those who supply our markets – the CBAM regulation represents an opportunity and a challenge. An opportunity to show that their products are manufactured responsibly, a challenge to adapt to new requirements and documentation. CBAM will be gradually introduced from 2023, and by 2026 it will be in full application.

The EU is constantly evolving, and more and more manufacturers in our markets import into the EU. CBAM will become increasingly important as time approaches. Manufacturers who prepare now will be in a better position.

This guide provides a comprehensive overview of the CBAM regulation – what it represents, why it is important, what requirements it sets, how it is implemented, how it is monitored, and how Mobes Group can be your partner in ensuring that your company is CBAM compliant.

What is the CBAM Regulation?

CBAM (Carbon Border Adjustment Mechanism) is an EU regulation that regulates carbon emission taxes on products imported into the EU. The full name is Regulation (EU) 2023/956 – On the carbon border adjustment mechanism (CBAM).

Basic characteristics:

• CBAM is a binding regulation for all companies that export products to the EU. It is not an option.
• CBAM covers numerous industrial products – steel, aluminum, cement, fertilizers, electricity, and others.
• The regulation was developed by the European Union as part of its “Fit for 55” climate policy – reducing carbon emissions by 55% by 2030.

History and development:

CBAM was proposed in 2021 and adopted in 2023. The regulation is applied gradually:

• 2023-2025: Transitional period (data collection, reporting)
• 2026: Full application (payment of CBAM certificates)

CBAM is revolutionary – for the first time, the EU is regulating carbon emissions at its border.

The main goal of the CBAM regulation:

• Reduction of carbon emissions globally
• Protection of EU production from “carbon leakage” (transferring production to countries with lower standards)
• Encouraging other countries to raise their climate standards
• Ensuring fair competition
• Finding carbon emissions in the value chain
• Encouraging cleaner production

Key characteristics of the CBAM regulation:

• Global application – Applies to all products from any country.
• Gradual application – Starts with a transitional period.
• Transparent – It is clear what is required.
• Market-based – Companies that are cleaner pay less.
• Flexible – The ability to use credits from the EU ETS system.

Key Benefits of the CBAM Regulation

The implementation of CBAM brings companies numerous benefits (if they are prepared):

• Access to EU markets – Without compliance, they cannot sell in the EU.
• Better reputation – Reputation as an environmentally responsible company.
• Cost reduction – If emissions are low, CBAM taxes are low.
• Access to financing – Investors prefer green companies.
• Competitive advantage – Companies with lower emissions have an advantage.
• Preparation for the future – New regulations will be even stricter.
• Customer trust – Customers prefer green products.
• Long-term stability – Preparedness for the climate transition.

Why is the CBAM Regulation Important?

• Climate changes are real – Solutions are needed.
• The EU is serious – CBAM is part of the “Fit for 55” package, a comprehensive approach.
• Carbon is precious – As soon as carbon starts being paid for, production becomes different.
• Global competition – CBAM will be applied in other parts of the world as well.
• The future of production – Manufacturers who do not adapt will be marginalized.
• Legal obligations – The law is the law; compliance is an obligation.

Key Principles of the CBAM Regulation

CBAM is based on the following principles:

• Climate responsibility – Carbon emissions should be calculated and paid for.
• Fairness – All manufacturers should be treated equally (regardless of where they come from).
• Transparency – Emissions should be clearly documented.
• Market-based – Companies that are cleaner pay less; the market is a stimulus.
• Adaptability – The transitional period allows companies to prepare.
• Global application – The regulation applies to all products, regardless of the source.

Structure of the CBAM Regulation

CBAM is organized around several key sections:

Section 1: Products in Scope

CBAM covers:

• Steel
• Aluminum
• Cement
• Fertilizers
• Electricity
• Process gas
• High-volume products with high emissions

Products are chosen because:

• They have high emissions
• They are at risk of “carbon leakage”
• There is a possibility of replacement with cleaner alternatives

Section 2: Types of Emissions

CBAM calculates:

• Direct emissions – Emissions directly created by the company (gas burning, etc.)
• Indirect emissions – Emissions from purchased electricity
• Raw material emissions – If the raw material already had emissions

Section 3: Transitional Period (2023-2025)

During the transitional period:

• Data collection
• Emissions reporting
• No payment for CBAM certificates
• Pilot system

Section 4: Full Application (from 2026)

From 2026:

• Payment of CBAM certificates
• Importers should buy CBAM certificates
• The certificate price depends on the product’s carbon emissions
• The ability to use credits from the EU ETS system

Section 5: Credits and Exemptions

A company can receive credits if:

• They have already paid carbon taxes in the country of origin
• They use cleaner technology
• A portion of emissions is “exempted” from CBAM (transitional period)

Section 6: Reporting and Verification

A company should:

• Regularly report on emissions
• Third parties should be engaged for verification
• Everything should be transparent and documented

Key Concepts of the CBAM Regulation

• CBAM (Carbon Border Adjustment Mechanism) – Carbon border adjustment mechanism.
• Carbon emissions – CO2 emissions from production.
• Direct emissions (Scope 1) – Emissions from operations themselves.
• Indirect emissions (Scope 2) – Emissions from purchased electricity.
• CBAM certificate – Proves the payment of the carbon tax.
• ETS (EU Emissions Trading System) – EU system for trading carbon allowances.
• Credits – Reductions on CBAM taxes.
• Exemptions – Privileges for specific companies.
• Carbon Footprint – Total product emissions.

Areas of Application of the CBAM Regulation

CBAM is applicable to:

• All types of manufactured products:
  • Steel
  • Aluminum
  • Cement
  • Fertilizers
  • Electricity
  • Process gas
  • Other categories to be added later
• All countries:
  • EU countries
  • Non-EU countries (if exporting to the EU)
  • All without exception
• All sizes:
  • Small companies
  • Large corporations

Benefits of Implementing the CBAM Regulation

Concrete benefits:

• Access to EU markets – The ability to continue selling in the EU.
• Reduction of CBAM costs – If emissions are low, taxes are low.
• Better reputation – Reputation as a clean company.
• Access to capital – Investors give money to green companies.
• Preparedness for the future – New regulations are likely.
• Customer trust – Customers want green products.
• Cost reduction – Cleaner production is often cheaper in the long run.
• Long-term stability – The possibility of long-term business.

The Process of Implementing the CBAM Regulation

• Step 1: Ensuring management commitment
  • Top management must be informed about CBAM requirements.
• Step 2: Assessment of the current state
  • Analysis of how many carbon emissions the production has.
• Step 3: Identification of emission sources
  • Where do emissions come from in the value chain?
• Step 4: Development of a reduction plan
  • How will emissions be reduced?
• Step 5: Data procurement
  • Collecting emission data (from suppliers, energy producers, etc.).
• Step 6: Reporting
  • Regular reporting on emissions to EU authorities.
• Step 7: Verification
  • Third parties should verify the data.
• Step 8: Preparation for payment
  • When full application begins, preparation for purchasing CBAM certificates.
• Step 9: Monitoring
  • Regular monitoring of emissions and costs.
• Step 10: Continuous improvements
  • Regular seeking of opportunities to reduce emissions.

The Certification Process of the CBAM Regulation

CBAM does not have a “certificate” in the classical sense, but rather a process of reporting and verification:

• Step 1: Registration
  • The company registers with the EU registry.
• Step 2: Data collection (Transitional period)
  • Collecting emission data:
    • Own emissions
    • Emissions from purchased electricity
    • Raw material emissions
    • Transport emissions
• Step 3: Reporting
  • Regular reporting (monthly or annually) on:
    • Product quantity
    • Emissions per product
    • Credits from other systems
• Step 4: Third-party verification
  • Third parties should:
    • Verify the data
    • Report on accuracy
    • Check the data collection systems
• Step 5: EU Approval
  • EU verification and approval of the data.
• Step 6: Payment (from 2026)
  • When full application begins:
    • Importers buy CBAM certificates
    • The certificate price depends on emissions
    • The ability to use credits

CBAM Regulation – Characteristics and Importance

The CBAM regulation does not have a formal “certificate” like ISO, but the reporting results are proof of compliance.

Characteristics:

• Obligation – Legal requirement, not an option.
• Transparency – All data should be publicly available.
• Dynamic – CBAM is updated as climate policy evolves.
• Global – Applies to all products, regardless of origin.
• Flexible – The ability to use credits from other systems.

The Importance of CBAM Regulation Compliance

For companies, CBAM compliance is critical:

• Legal obligation – The law is the law; compliance is an obligation.
• Access to EU markets – Without it, they cannot sell in the EU.
• Cost reduction – If emissions are low, taxes are low.
• Customer trust – Customers know the product is “clean”.
• Preparedness – Preparedness for new regulations.
• Global competition – The ability to be competitive globally.

The Cost of the CBAM Regulation

The cost of implementation depends on:

Factors:

• Industry (steel, aluminum, cement, etc.)
• State of current production
• Technology needs
• Company size

Costs may include:

• Consulting services (Mobes Group)
• Data collection systems
• Employee training
• Third-party verification
• CBAM certificates (from 2026)

CBAM certificate costs:

• Depend on emissions
• Market-determined
• Can be subsidized through credits

Return on investment:

• Access to EU markets
• Cost reduction if emissions are low
• Better reputation
• Preparedness for the future

Mobes Group offers transparent consulting services.

The EU Context of the CBAM Regulation

For companies in our markets, the CBAM regulation is an opportunity and a challenge:

• Opportunity – If emissions are low, they can be competitive.
• Challenge – If emissions are high, costs will be greater.
• Local context – Mobes Group understands our regional industry.
• English language – Consulting in English.
• Local verifiers – Assistance in finding local data verifiers.

Mobes Group, with local expertise, can help.

CBAM Regulation in the EU – Legal Framework and Support

Within our markets:

Legal framework:

• EU Environmental Action Programme – Basic legal foundation
• Energy Efficiency Directive – Requirements for energy efficiency
• Internal market requirements – As our teams align with the internal market, EU regulations become relevant.

CBAM is a fundamental requirement for our teams to operate smoothly, as it is mandatory if you want to sell across the EU.

Institutions:

• European Environment Agency
• Directorate-General for Energy
• National Environmental Agencies

Trends:

• Growing awareness of climate change
• EU requirements are becoming more relevant
• The industry is preparing for CBAM

Maintaining CBAM Compliance

Maintaining requirements:

• Continuous data collection – All emissions should be continuously collected.
• Regular reporting – Monthly or annual reporting.
• Third-party verification – Regular verification of data.
• System updating – If production changes, systems should be updated.
• Employee training – Continuous training of employees.
• Emissions monitoring – Regular monitoring of emissions.
• Improvements – Continuous seeking of opportunities to reduce emissions.
• Regular reporting – Careful collection and reporting of data.

Integration with Other Management Systems

CBAM naturally integrates with:

• ISO 14001 (Environmental Management) – CBAM is a part of environmental management.
• ISO 50001 (Energy Management) – Energy is crucial for emissions.
• ISO 9001 (Quality) – Quality is a part of sustainable production.
• ESG (Sustainability) – CBAM is a part of the ESG strategy

Integration simplifies management.

Mobes Group offers integrated support.

Mobes Group – Your Partner for the CBAM Regulation

Mobes Group provides comprehensive support:

Mobes Group offers:

• CBAM training – Educating the team on regulation requirements
• Carbon footprint assessment – Analysis of current emissions
• Identifying emission sources – Where emissions come from
• Development of a reduction plan – How emissions will be reduced
• Data collection systems – How to collect emissions
• Employee training – Educating employees about CBAM
• Reporting – Assistance in preparing reports for the EU
• Finding verifiers – Finding a third party for verification
• Verification support – Facilitating the process
• Continuous support – Regular analysis and improvement of emissions

Why Choose Mobes Group?

• Local expertise – Understanding our regional industry and environment.
• International experience – Knowledge of CBAM and global practices.
• English language – Consulting in your native language.
• Experience with various industries – Working with steel, aluminum, cement, energy.
• Holistic approach – Focus on actual emission reduction.
• Contacts with verifiers – Connections with accredited data verifiers.
• Tailored services – Packages according to industry, size, goals.
• Practical knowledge – A team that understands industrial challenges.

Common Challenges and How to Overcome Them

Challenge 1: The complexity of data collection

Where to get emission data from the entire value chain?

Solution:

• Systematic approach
• Communication with suppliers
• Mobes Group can help with the structure

Challenge 2: The costs of CBAM certificates

If emissions are high, costs will be high.

Solution:

• Finding opportunities to reduce emissions
• Using credits
• Mobes Group can help with the plan

Challenge 3: The need for new technology

Cleaner production may require new equipment.

Solution:

• Phased implementation
• Finding cost-effective solutions
• Mobes Group can help with the plan

Challenge 4: Suppliers who cannot collect data

Not all suppliers have a data collection system.

Solution:

• Educating suppliers
• Support in finding data
• Mobes Group can facilitate communication

Challenge 5: Competitive secrecy

Companies may be reluctant to share data.

Solution:

• Confidential third-party verification
• The EU requires transparency but also privacy protection
• Mobes Group can ensure confidentiality

The Future and the CBAM Regulation

CBAM will likely evolve:

• Product expansion – More products will be included.
• Stricter standards – Emissions should be lower.
• Global application – Other countries may apply similar systems.
• Digitalization – Digital systems for tracking emissions.
• Blockchain – The possibility of using blockchain for transparency.
• Focus on Scope 3 – Increasing attention on indirect emissions in the value chain.

For our offices, as EU requirements become clearer, CBAM will become increasingly important.

The CBAM Regulation

The CBAM regulation is not just EU policy – it is the future of production. Companies that start collecting emission data now and work on reduction will be in a better position when full application begins in 2026.

For companies in our market exporting within the EU, CBAM is an opportunity to show that they are responsible and clean, an opportunity to be globally competitive.

Start your journey towards CBAM compliance!

Contact Mobes Group and transform your production to be clean, safe, and globally competitive.

Your path to business excellence begins here. Contact Mobes Group today and discover how the CBAM regulation can improve your business.

Mobes Group d.o.o. Consulting services for the implementation and certification of ISO standards

Novi Sad Office: Karađorđeva 38, 21000 Novi Sad Tel: +381 21 2700 693, +381 63 8950 474

Belgrade Office: Petra Škundrića 27, 11000 Beograd Tel: +381 11 4022 745, +381 62 8224 227

Email: office@mobes.rs