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https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en

https://www.europarl.europa.eu/doceo/document/TA-9-2023-0100_EN.pdf

Summary of EU CBAM regulations

•Legal control status: Officially effective on May 10 this year
•Listed according to tariff code: steel, aluminum, cement, fertilizer, hydrogen, electricity─Added metal precursors (sinter) and metal fasteners (screws and bolts)
•Emission control scope: direct emissions (including refrigeration and heating) and indirect emissions (only electricity consumption)
•Transitional period schedule: Entering the transitional period from October 1, 2023 (the CBAM applicant system will be established from January 1, 2024) until December 31, 2025
•Official implementation: from January 1, 2026 (or may be adjusted based on the evaluation results of the transition period)
• CBAM sub-stage targets: transportation industry, organic chemistry, plastics; it is expected to cooperate with EUETS to conduct a reform review around 2030, and discuss indirect emissions into pricing

#ESGReporting
#Governance/Controls
#Academia

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Wei-Chung Lin CMA
Administrative
New Taipei
Taiwan
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EU's CBAM will impact companies worldwide.  If your organization sells into the EU (or to a company that does), this will impact you, whether your company is publicly traded or privately held.  

Various reporting and disclosure frameworks have addressed the need to have an internal carbon price.  This helps companies identify where the carbon emissions arise, and anticipate transition risks:  carbon tax, cost of offsets, etc.  World Bank recommends using at least $40 per ton.  Per CDP survey in 2021, over 1,200 companies say they use ICP, with even more indicating they plan to.  

With the growth in requirements to report GHG emissions (including Scope 3 - in ISSB S2 and California's SB 253), it is imperative that internal accountants enter the picture - in a big way.  Consider work on feasibility, gaps, and next steps to evaluate impact of a ICP on the organization.  Excellent input for a risk assessment, and to feed strategy for all those disclosure requirements.