CBAM: EU’s Carbon Border Adjustment Mechanism – Challenges and Uncertainty for Businesses
In an article originally published by Focus Magazine, the magazine explores the ongoing difficulties European industries face under the EU’s Carbon Border Adjustment Mechanism (CBAM). This policy, aimed at protecting the environment and European businesses, requires companies to report emissions data for products such as cement, steel, aluminium, and more.
However, as Focus Magazine reports, businesses face significant bureaucratic challenges and often lack access to the necessary data to comply.
The complete German version of this article is available on Focus Magazine here, and this blog post is essentially an English translation of the article.
Data Collection Challenges
Focus Magazine reports that the core idea of CBAM is to collect precise data on the emissions' intensity of products along supply chains. From 2026, a CO₂ levy will be introduced based on the price of CO₂ in the EU's Emissions Trading System (ETS). This will ensure that importers pay the same CO₂ price as European companies, aiming to protect against “carbon leakage,” where companies move operations outside the EU to avoid strict emissions rules.
However, as Focus Magazine outlines, obtaining accurate emissions data is a major hurdle for many businesses. During the initial transition phase (which runs until June 2024), companies were allowed to report standard values for emissions. Now, real emissions data is required, with only a small percentage of emissions (20%) allowed to be estimated using standard values for processed goods.
This change has hit industries like machinery and equipment manufacturing particularly hard. According to Sarah Brückner, head of environmental and sustainability at the VDMA (Verband Deutscher Maschinen- und Anlagenbau), “The real data is often simply unavailable, either because suppliers don’t collect the data or refuse to provide it.” The VDMA is the Mechanical Engineering Industry Association in Germany, representing over 3,300 companies in the mechanical engineering sector. It advocates for innovation, provides technical data, and ensures the interests of its members are reflected in policies like CBAM.
Lack of Support from the EU
As the Focus Magazine article notes, companies do not always have the market power to force their suppliers to gather emissions data, especially for smaller parts with limited suppliers. In many cases, multiple suppliers, each with different emissions data, make it even harder to ensure compliance. Importing companies remain responsible for verifying the accuracy of the data provided by their suppliers, adding another layer of complexity.
Even though some VDMA members have visited their suppliers to request the necessary data for CBAM, Brückner explains that they still cannot guarantee the data’s accuracy. As Focus Magazine reports, the European Commission has not offered significant support in resolving these challenges. Their guidance only emphasizes that if companies report standard values rather than real emissions data, the CBAM report will be deemed incomplete or incorrect.
Limited Capacity of National Authorities
The Focus Magazine article further highlights concerns in Germany, where the national CBAM authority, the Deutsche Emissionshandelsstelle (DEHSt), is responsible for evaluating reports. While there is some discretion in assessing incomplete data, the criteria are vague. Companies must demonstrate that “all reasonable efforts” were made to obtain the data, but what this means remains unclear. Furthermore, companies are concerned about the limited capacity of DEHSt to handle inquiries and offer guidance during this critical transition phase.
VDMA, as reported by Focus Magazine, has called for an extension of the transition period, allowing companies more time to report standard values. Brückner notes that in sectors like machinery and equipment manufacturing, switching suppliers can take up to 18 months, given the complexity of supply chains.
Proposals for a Higher Reporting Threshold
Focus Magazine also discusses proposals to raise the de minimis threshold, which currently sits at €150. This low threshold requires reporting even for small imports, creating additional administrative burdens for companies. Many high-cost components in machinery manufacturing generate minimal CO₂ emissions, making the reporting requirements disproportionate to their environmental impact. The VDMA has suggested raising the threshold to €5,000, which would alleviate pressure on small importers while ensuring larger companies continue to gather emissions data.
As the CBAM continues to evolve, companies remain uncertain about how to fully comply with the reporting requirements. The Focus Magazine article makes it clear that clearer guidance, stronger support from authorities, and more time for compliance are essential to making CBAM effective and manageable for businesses.
For the full German version of the article, visit Focus Magazine here.
CBAM Training for You
We offer three types of CBAM training designed to help businesses navigate the new EU Carbon Border Adjustment Mechanism. Our Essential CBAM Training provides a comprehensive introduction to get you started with the regulation. For those ready to file reports, we offer specialized training on How to Submit a CBAM Report to the EU Commission Successfully. Additionally, we provide guidance on How to Communicate with Non-EU Suppliers to obtain accurate CO₂ data. For flexibility, we also have an on-demand, four-hour live recording of our CBAM training that you can study at your own pace. Visit www.customsmanager.org/events and www.customsmanager.org/shop to find out more.
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