Correct Understanding and Action on the Transitional Period of EU Carbon Border adjustment Mechanism (CBAM)

Abstract

Carbon border adjustment mechanism (CBAM) of the European Union has started from October 2023 and the transitional period of it would be from October 2023 to December 2025. CBAM is the first carbon border tax in the world and domestic companies are having difficulties in responding to CBAM among inaccurate information. Thus, this paper is written to deliver accurate information about CBAM based on the EU regulations or documents published by the EU. It is written that CBAM overview, how to respond to the transitional period, and the main concepts and data preparation of CBAM. Domestic companies are classified according to import system in the EU as Type 1, Type 2, and Type 3. The action for each type is presented, and preparation of CBAM report or emissions data communication template is described. Through this paper, it is expected that domestic companies would respond appropriately to CBAM during the transition period and contribute to the export of CBAM goods to the EU.