CBAM: transitional period starts on 1 October 2023. First importer reports due by the end of January 2024

From 1 October 2023 the first stage of the CO₂ Border Adjustment Mechanism (CBAM) applies. Importers of cement, electricity, fertilisers, iron and steel, aluminium and hydrogen must collect data on the emissions embedded in the goods they import and submit quarterly reports. The first of them, for the last quarter of 2023, is due by 31 January 2024. There will be no charges – CBAM certificates will start to apply from 2026. For agriculture it is important that nitrogen fertilisers are within the scope.

What is changing

Commission Implementing Regulation (EU) 2023/1773 sets out the reporting details: the format, the methods for calculating direct and indirect emissions, the ways of taking into account the carbon price paid in the country of origin, and transitional provisions. In the transitional period, which will last until the end of 2025, simplified methods of determining emissions are allowed, but over time the requirements will be tightened. Importers must obtain data from producers outside the EU, which for many companies is a challenge.

For the fertiliser market, the introduction of reporting increases transparency: it will be possible to compare the carbon footprint of fertilisers from different sources. In the long term, imports of fertilisers with a high carbon footprint will become more expensive.

Significance for the industry in Poland

Polish importers of fertilisers and other goods covered by CBAM must prepare data collection systems, including agreements with suppliers. Farmers should expect that fertiliser prices may in future also be shaped by the cost of emissions. For biogas plants that sell digestate this is a commercial argument, although its scale should not be overestimated: digestate has different properties from mineral fertilisers and requires logistics.

In the longer term it is worth noting that biogas and biomethane, as renewable gases, reduce the use of natural gas in production and heating, which indirectly reduces the costs associated with emissions in the ETS and CBAM.

What to pay attention to

Companies covered by the mechanism should check which commodity codes are subject to the regulation, build data collection procedures and name the persons responsible for reporting. Farmers and advisers can follow changes in fertiliser prices and programmes supporting organic fertilisation.

Why the transitional period matters

During this time importers learn to collect data, and the Commission tests the system and obtains information on actual emissions in supply chains. Data from the reports will be used to set default values and for any adjustment of the scope of the mechanism. For farmers and fertiliser producers this means that the final impact of CBAM on prices will be known only after several years, but the direction of change – more expensive imports with a high carbon footprint – is clear.

What next

By the end of 2025 the Commission will complete work on the methodologies and the registry system. For fertilisers, setting default emission values will be key, because they may affect the cost of imports if the supplier does not provide actual data.