{"id":14009,"date":"2024-03-26T15:21:41","date_gmt":"2024-03-26T08:21:41","guid":{"rendered":"https:\/\/fpt-is.com\/en\/?post_type=goc_nhin_so&#038;p=14009"},"modified":"2024-07-17T15:31:45","modified_gmt":"2024-07-17T08:31:45","slug":"cbam-compliance-a-guide-to-calculating-your-emissions","status":"publish","type":"goc_nhin_so","link":"https:\/\/fpt-is.com\/en\/insights\/cbam-compliance-a-guide-to-calculating-your-emissions\/","title":{"rendered":"CBAM Compliance: A Guide to Calculating Your Emissions"},"content":{"rendered":"<p><strong>In this guide, we&#8217;ll cover:<\/strong><\/p>\n<ul>\n<li>Essential CBAM knowledge and timelines<\/li>\n<li>Strategic data selection for emissions calculations<\/li>\n<li>Tips to optimize your CBAM compliance process<\/li>\n<\/ul>\n<h2>1. CBAM: Understanding Implications for Businesses<\/h2>\n<p>The Carbon Border Adjustment Mechanism (CBAM) is a significant new EU regulation addressing climate change and ensuring a level playing field for industries. CBAM places a carbon price on imports of selected high-emission goods (including cement, aluminum, iron and steel, fertilizers, hydrogen, and electricity). This aims to prevent &#8220;carbon leakage&#8221; and maintain the competitiveness of EU industries subject to carbon pricing under the Emissions Trading System (ETS). Businesses who export CBAM-covered goods should carefully evaluate potential financial implications of the regulation. Proactive compliance measures are essential.<\/p>\n<p><img decoding=\"async\" class=\"size-medium wp-image-14013 aligncenter\" src=\"https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Tong-quan-thong-tin-ve-CBAM-CBAM-EU-Factsheet-2024-700x235.png\" alt=\"T\u1ed5ng Quan Th\u00f4ng Tin V\u1ec1 Cbam (cbam (eu Factsheet, 2024)\" width=\"700\" height=\"235\" srcset=\"https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Tong-quan-thong-tin-ve-CBAM-CBAM-EU-Factsheet-2024-700x235.png 700w, https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Tong-quan-thong-tin-ve-CBAM-CBAM-EU-Factsheet-2024.png 1020w\" sizes=\"(max-width: 700px) 100vw, 700px\" \/><\/p>\n<p style=\"text-align: center\"><em>Carbon Border Adjustment Mechanism (CBAM (EU Factsheet, 2024)<\/em><\/p>\n<h3>1.1. What imported goods are cover?<\/h3>\n<ul>\n<li>Understanding which products are covered by CBAM is crucial for your business. Start by checking Annex I of the Regulation for the following categories:<\/li>\n<li>Iron, steel, and aluminum<\/li>\n<li>Certain fertilizers<\/li>\n<li>Cement<\/li>\n<li>Hydrogen<\/li>\n<li>Specific &#8220;downstream&#8221; products (e.g., bridge sections, rails, pipes, screws)<\/li>\n<\/ul>\n<p><img decoding=\"async\" class=\"size-medium wp-image-14014 aligncenter\" src=\"https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Mo-ta-cac-ben-lien-quan-CBAM-PTX-Hub-2023-700x342.png\" alt=\"M\u00f4 T\u1ea3 C\u00e1c B\u00ean Li\u00ean Quan Cbam (ptx Hub, 2023)\" width=\"700\" height=\"342\" srcset=\"https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Mo-ta-cac-ben-lien-quan-CBAM-PTX-Hub-2023-700x342.png 700w, https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Mo-ta-cac-ben-lien-quan-CBAM-PTX-Hub-2023.png 1019w\" sizes=\"(max-width: 700px) 100vw, 700px\" \/><\/p>\n<p style=\"text-align: center\"><em>Overview of actors in the CBAM (PTX Hub, 2023)<\/em><\/p>\n<h3>1.2. Key Timeline and Requirements<\/h3>\n<ul>\n<li><strong>October 1st, 2023:<\/strong> Reporting initiation. Begin meticulous quarterly tracking of imported CBAM goods, production details, and emissions data.<\/li>\n<li><strong>January 31st, 2024:<\/strong> First report submission covering Q4 2023 imports. Review and refine your report as needed until July 31st.<\/li>\n<li><strong>Transitional Period (2023-2025)<\/strong>: Streamlined reporting is permitted using default values if primary supplier data remains unavailable.<\/li>\n<li><strong>2026 Onwards: <\/strong>Financial phase commences. CBAM certificate acquisition becomes mandatory to offset imported emissions. Non-compliance risks hefty penalties.Calculating CBAM Emissions: A Strategic Guide<\/li>\n<\/ul>\n<h3>1.3. Carbon Price paid in a third country<\/h3>\n<p><strong>CBAM Certificates<\/strong><\/p>\n<p>Businesses must purchase CBAM certificates to offset embedded emissions in imported goods. Certificate costs reflect the price difference between the EU ETS and any carbon pricing system in the country of origin. Accurate emissions reporting is crucial to avoid purchasing excess certificates (which are non-refundable beyond a limited amount).<\/p>\n<p><img decoding=\"async\" class=\"size-medium wp-image-14015 aligncenter\" src=\"https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Gia-CO2e-trung-binh-tren-moi-tan-EEX-2023-700x341.png\" alt=\"Gi\u00e1 Co2e Trung B\u00ecnh Tr\u00ean M\u1ed7i T\u1ea5n (eex, 2023)\" width=\"700\" height=\"341\" srcset=\"https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Gia-CO2e-trung-binh-tren-moi-tan-EEX-2023-700x341.png 700w, https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Gia-CO2e-trung-binh-tren-moi-tan-EEX-2023.png 1019w\" sizes=\"(max-width: 700px) 100vw, 700px\" \/><\/p>\n<p style=\"text-align: center\"><em>Average CO2e Price per ton (EEX, 2023)<\/em><\/p>\n<p><strong>How CBAM Impacts Producers: EU vs. Third Countries<\/strong><\/p>\n<p>CBAM aims to level the playing field, ensuring imported goods face carbon costs similar to those produced within the EU. A reduction factor will be applied to free emissions allowances allocated under the EU ETS, phasing them out entirely by 2034.<\/p>\n<p><img decoding=\"async\" class=\"size-medium wp-image-14018 aligncenter\" src=\"https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Ty-le-nghia-vu-nop-Chung-chi-CBAM-2023-2034-700x348.png\" alt=\"T\u1ef7 L\u1ec7 Ngh\u0129a V\u1ee5 N\u1ed9p Ch\u1ee9ng Ch\u1ec9 Cbam (2023 2034)\" width=\"700\" height=\"348\" srcset=\"https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Ty-le-nghia-vu-nop-Chung-chi-CBAM-2023-2034-700x348.png 700w, https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Ty-le-nghia-vu-nop-Chung-chi-CBAM-2023-2034.png 1020w\" sizes=\"(max-width: 700px) 100vw, 700px\" \/><\/p>\n<p style=\"text-align: center\"><em>Share of CBAM surrendering obligation (2023-2034)<\/em><\/p>\n<p>Let&#8217;s consider the case of an ammonia producer. Regardless of location (EU or third country), the producer must report emissions based on their specific production methods and efficiency. Here&#8217;s the key difference:<\/p>\n<ul>\n<li><strong>EU Producer: <\/strong>Receives a decreasing number of free emissions allowances under the EU ETS. Over time, they&#8217;ll need to purchase more allowances to cover the gap between their emissions and free allocation.<\/li>\n<li><strong>Third Country Producer:<\/strong> Faces no free allocations.\u00a0 They must purchase CBAM certificates to offset the full emissions of their exported goods.<\/li>\n<\/ul>\n<p><img decoding=\"async\" class=\"size-medium wp-image-14019 aligncenter\" src=\"https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Tong-quan-ve-ty-le-phat-thai-can-duoc-bu-dap-bang-chung-chi-CBAM-boi-cac-nha-nhap-khau-so-voi-cac-nha-san-xuat-trong-EU-theo-tung-nam-Oko-Institut-2023-700x381.png\" alt=\"T\u1ed5ng Quan V\u1ec1 T\u1ef7 L\u1ec7 Ph\u00e1t Th\u1ea3i C\u1ea7n \u0111\u01b0\u1ee3c B\u00f9 \u0111\u1eafp B\u1eb1ng Ch\u1ee9ng Ch\u1ec9 Cbam B\u1edfi C\u00e1c Nh\u00e0 Nh\u1eadp Kh\u1ea9u So V\u1edbi C\u00e1c Nh\u00e0 S\u1ea3n Xu\u1ea5t Trong Eu Theo T\u1eebng N\u0103m (\u00d6ko Institut, 2023)\" width=\"700\" height=\"381\" srcset=\"https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Tong-quan-ve-ty-le-phat-thai-can-duoc-bu-dap-bang-chung-chi-CBAM-boi-cac-nha-nhap-khau-so-voi-cac-nha-san-xuat-trong-EU-theo-tung-nam-Oko-Institut-2023-700x381.png 700w, https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Tong-quan-ve-ty-le-phat-thai-can-duoc-bu-dap-bang-chung-chi-CBAM-boi-cac-nha-nhap-khau-so-voi-cac-nha-san-xuat-trong-EU-theo-tung-nam-Oko-Institut-2023.png 1019w\" sizes=\"(max-width: 700px) 100vw, 700px\" \/><\/p>\n<p style=\"text-align: center\"><em>Overview of the share of emissions to be offset by CBAM certificates by importers compared to EU producers in different years ( \u00d6ko-Institut, 2023)<\/em><\/p>\n<p><strong>Verification<\/strong><\/p>\n<p>Starting in 2026, mandatory verification of CBAM declarations by accredited verifiers will be required. Verifiers ensure the accuracy of emissions calculations, with on-site visits as standard practice.<\/p>\n<h2>2. CBAM Reporting Step-by-Step Guideline<\/h2>\n<p>Calculating emissions for CBAM compliance requires a clear process. Here&#8217;s a breakdown:<\/p>\n<h3>2.1. Step 1: Identify Relevant Imports<\/h3>\n<p>Businesses should closely examine import documentation for goods covered by CBAM (iron &amp; steel, aluminum, fertilizers, cement, hydrogen, electricity). Collaborate with customs reporting teams to obtain:<\/p>\n<ul>\n<li>Goods list (with CN codes)<\/li>\n<li>Import quantities<\/li>\n<li>Country of origin for each good<\/li>\n<\/ul>\n<h3>2.2. Step 2:\u00a0 Choosing Emission Factors for Calculation and Strategy<\/h3>\n<p>Three emission factor sources are available:<\/p>\n<ul>\n<li><strong>Primary Data (Ideal)<\/strong>: Obtain actual emissions data directly from suppliers.<\/li>\n<li><strong>Default Factors (Compliance Focus):<\/strong> Provided by the European Commission for regulatory ease.<\/li>\n<li><strong>Regional Averages (Insightful)<\/strong>: Also from the EC, offering insights for emissions benchmarking and strategic decision-making.<\/li>\n<\/ul>\n<h3>2.3. Step 3: Deciding what Emission Factors to use:<\/h3>\n<p><strong>Before July 2024:<\/strong>\u00a0 Default factors ensure compliance. To calculate emissions:<\/p>\n<ul>\n<li>Locate the appropriate emission factor for your goods.<\/li>\n<li>Multiply the weight of the goods (in tonnes) by the emission factor.<\/li>\n<\/ul>\n<p><strong>Beyond July 2024:<\/strong> Primary data from producers becomes mandatory for accurate CBAM reporting.<\/p>\n<p><img decoding=\"async\" class=\"size-full wp-image-14020 aligncenter\" src=\"https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Cac-loai-He-so-Phat-thai-khac-nhau-Climatiq-2023.png\" alt=\"C\u00e1c Lo\u1ea1i H\u1ec7 S\u1ed1 Ph\u00e1t Th\u1ea3i Kh\u00e1c Nhau (climatiq, 2023)\" width=\"511\" height=\"472\" \/><\/p>\n<p style=\"text-align: center\"><em>Different types of Emission Factors (Climatiq, 2023)<\/em><\/p>\n<p><strong>Why Data Choice Matters<\/strong><\/p>\n<p>While primary supplier data is the long-term goal for precise emissions tracking, here&#8217;s how to leverage default factors and regional averages in the interim:<\/p>\n<p><strong>Primary supplier data: <\/strong>To achieve full CBAM compliance and ensure accurate reporting, closely follow European Commission guidelines. The EU mandates the use of primary supplier data \u2013 sourced directly from producers or exporters of CBAM goods \u2013 for the most precise emissions calculations. This data is essential for informed decision-making and minimizing financial liabilities come 2026.<\/p>\n<p><img decoding=\"async\" class=\"size-medium wp-image-14021 aligncenter\" src=\"https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Vi-du-ve-hang-hoa-don-gian-va-hang-hoa-phuc-tap-khi-thu-thap-du-lieu-so-cap-UBA-2023-700x583.png\" alt=\"V\u00ed D\u1ee5 V\u1ec1 H\u00e0ng H\u00f3a \u0111\u01a1n Gi\u1ea3n V\u00e0 H\u00e0ng H\u00f3a Ph\u1ee9c T\u1ea1p Khi Thu Th\u1eadp D\u1eef Li\u1ec7u S\u01a1 C\u1ea5p (uba, 2023)\" width=\"700\" height=\"583\" srcset=\"https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Vi-du-ve-hang-hoa-don-gian-va-hang-hoa-phuc-tap-khi-thu-thap-du-lieu-so-cap-UBA-2023-700x583.png 700w, https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Vi-du-ve-hang-hoa-don-gian-va-hang-hoa-phuc-tap-khi-thu-thap-du-lieu-so-cap-UBA-2023.png 749w\" sizes=\"(max-width: 700px) 100vw, 700px\" \/><\/p>\n<p style=\"text-align: center\"><em>Example of Simple and Complex Goods when collecting primary data (UBA, 2023)<\/em><\/p>\n<p>When primary data is collected, exporters need to understand the difference between Scope 1, Scope 2 and Scope 3 and which stages of product will fall under CBAM for accurate calculation.<\/p>\n<p><img decoding=\"async\" class=\"size-medium wp-image-14022 aligncenter\" src=\"https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Pham-vi-1-Pham-vi-2-va-Pham-vi-3-700x372.png\" alt=\"Ph\u1ea1m Vi 1, Ph\u1ea1m Vi 2 V\u00e0 Ph\u1ea1m Vi 3\" width=\"700\" height=\"372\" srcset=\"https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Pham-vi-1-Pham-vi-2-va-Pham-vi-3-700x372.png 700w, https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Pham-vi-1-Pham-vi-2-va-Pham-vi-3.png 1019w\" sizes=\"(max-width: 700px) 100vw, 700px\" \/><\/p>\n<p><strong>Default Factors: <\/strong>In the initial CBAM reporting phase (until July 2024), businesses can utilize default emission factors provided by the European Commission (EC) when primary supplier data is unavailable. These factors offer a streamlined approach to estimate emissions for CBAM-covered goods.<\/p>\n<p><strong>Regional Averages:<\/strong> Obtaining primary supplier data is crucial for precise calculations.\u00a0 When unavailable, regional emission factors provide a more nuanced alternative to default factors, factoring in the impact of varying energy sources and manufacturing practices<\/p>\n<p><img decoding=\"async\" class=\"size-full wp-image-14023 aligncenter\" src=\"https:\/\/cdn.fpt-is.com\/en\/sites\/3\/Vi-du-ve-He-so-Phat-thai-Xi-mang-theo-Khu-vuc-Climatiq-2023.png\" alt=\"V\u00ed D\u1ee5 V\u1ec1 H\u1ec7 S\u1ed1 Ph\u00e1t Th\u1ea3i Xi M\u0103ng Theo Khu V\u1ef1c (climatiq, 2023)\" width=\"612\" height=\"489\" \/><\/p>\n<p style=\"text-align: center\"><em>Example of Cement Emission Factor (kgCO2e\/kg) by Region (Climatiq, 2023)<\/em><\/p>\n<p>Default emission factors can obscure significant regional variations in carbon intensity.\u00a0 For example, South African aluminum production has a 76% higher emissions intensity compared to the EC&#8217;s default factor. Similarly, Chinese fertilizers have a 38% higher regional factor. Relying solely on default factors underestimates your true carbon footprint and potential CBAM costs. Regional factors provide a more accurate picture, empowering you to make informed decisions for both compliance and strategic emissions reduction.<\/p>\n<h3>2.4. Step 4: Aligning Goods with Emissions Factors<\/h3>\n<p>After selecting default or regional averages, the next step is matching your imported goods with their corresponding emissions factors.\u00a0 For optimal efficiency and accuracy, leverage the Combined Nomenclature (CN) coding system.<\/p>\n<p><strong>Why CN Codes Matter:<\/strong><\/p>\n<ul>\n<li><strong>Streamlined Workflow:<\/strong> CN codes are embedded in your existing customs documentation, simplifying calculations and minimizing errors.<\/li>\n<li><strong>Automation Potential:<\/strong> CN-based mapping allows for automated processes, further enhancing efficiency.<\/li>\n<li><strong>Compliance Assurance<\/strong>: Using this EU-standard coding system aligns with regulatory best practices.<\/li>\n<\/ul>\n<p>Navigating CBAM reporting can be complex. For a seamless and stress-free experience,\u00a0 VertZero&#8217;s Carbon Accounting Software offers an intuitive solution. Our platform automates calculations, simplifies compliance, and provides the insights you need to make strategic emissions reduction decisions. Let VertZero empower you to\u00a0 tackle CBAM with confidence!<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Exclusive article by FPT IS Technology Expert<\/strong><\/p>\n<p><strong>Pham Tuan<\/strong><\/p>\n<p>VertZero Product Manager<\/p>\n<p>FPT Information System Company.<\/p>\n","protected":false},"author":3,"featured_media":14016,"parent":0,"template":"","nang_luc":[790,827],"danh_muc_goc_nhin_so":[789,788],"dich_vu":[854],"linh_vuc":[836],"platform":[],"san_pham":[],"the_goc_nhin_so":[],"class_list":["post-14009","goc_nhin_so","type-goc_nhin_so","status-publish","has-post-thumbnail","hentry","nang_luc-experts-sharing","nang_luc-green-transformation","danh_muc_goc_nhin_so-expert-sharing","danh_muc_goc_nhin_so-green-transformation","dich_vu-carbon-accounting","linh_vuc-esg"],"acf":[],"_links":{"self":[{"href":"https:\/\/fpt-is.com\/en\/wp-json\/wp\/v2\/goc_nhin_so\/14009","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fpt-is.com\/en\/wp-json\/wp\/v2\/goc_nhin_so"}],"about":[{"href":"https:\/\/fpt-is.com\/en\/wp-json\/wp\/v2\/types\/goc_nhin_so"}],"author":[{"embeddable":true,"href":"https:\/\/fpt-is.com\/en\/wp-json\/wp\/v2\/users\/3"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/fpt-is.com\/en\/wp-json\/wp\/v2\/media\/14016"}],"wp:attachment":[{"href":"https:\/\/fpt-is.com\/en\/wp-json\/wp\/v2\/media?parent=14009"}],"wp:term":[{"taxonomy":"nang_luc","embeddable":true,"href":"https:\/\/fpt-is.com\/en\/wp-json\/wp\/v2\/nang_luc?post=14009"},{"taxonomy":"danh_muc_goc_nhin_so","embeddable":true,"href":"https:\/\/fpt-is.com\/en\/wp-json\/wp\/v2\/danh_muc_goc_nhin_so?post=14009"},{"taxonomy":"dich_vu","embeddable":true,"href":"https:\/\/fpt-is.com\/en\/wp-json\/wp\/v2\/dich_vu?post=14009"},{"taxonomy":"linh_vuc","embeddable":true,"href":"https:\/\/fpt-is.com\/en\/wp-json\/wp\/v2\/linh_vuc?post=14009"},{"taxonomy":"platform","embeddable":true,"href":"https:\/\/fpt-is.com\/en\/wp-json\/wp\/v2\/platform?post=14009"},{"taxonomy":"san_pham","embeddable":true,"href":"https:\/\/fpt-is.com\/en\/wp-json\/wp\/v2\/san_pham?post=14009"},{"taxonomy":"the_goc_nhin_so","embeddable":true,"href":"https:\/\/fpt-is.com\/en\/wp-json\/wp\/v2\/the_goc_nhin_so?post=14009"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}