EU Carbon Border Adjustment Mechanism (EU-CBAM) is coming and impacting our Industries

[thijs_elling]

Mining, Mill Products, Building Products, Chemicals, Oil, Gas & Energy, Utilities and ultimately all their up- and down-stream partners are impacted.

In 2023, the EU will begin implementing the Carbon Board Adjustment Mechanism (CBAM), more commonly known as the ‘carbon border tax’. This tax will ultimately require importers to pay a levy on all carbon emissions that are associated with the goods they bring into the market.

Initially, EU importers will be required to “just” document and report the embedded emissions of various materials but starting in 2026 will have to pay a levy on each metric ton of CO2e. Compliance for this tax system will only get more complex, thus efficiently managing the new CBAM requirements is crucial.

The CBAM will firstly motivate producers and governments worldwide to set up efforts to decarbonize so their products / industries can remain competitive when selling, and thus profitable when selling to Europe. CBAM also pushes European producers to take the next steps to decarbonizing. This policy will require importers to bear the burden of documenting emissions of imported products and purchase carbon import permits for each metric ton of CO2 they bring into the EU. It is expected that importers will face an additional cost of around €2 billion annually by 2030, which can be passed off to the end user.

As part of the SAPxBCG partnership we’re working on developing a joint GTM towards our customers. Goal is to combine SAP’s digital capabilities with BCG strategic services and position EU-CBAM compliance as a regulatory driver for broader sustainable business transformation.

Please read the whitepaper we published in July via this link. If you have any questions, please reach out to us via the below options.