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Navigating CBAM Reporting: Default values

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While the primary approach mandates declarants to report CBAM information based on actual embedded emissions, certain flexibilities and default values play a vital role, particularly when complete information is unavailable.

Here's a breakdown of how default values come into play during the CBAM transitional phase:

I. First Three Quarterly Reports (Q4 2023, Q1&2 2024):

  • Declarants may report embedded emissions based on default values provided by the European Commission, without any quantitative limit.

II. From Q3 2024 to End of 2025:

  • Declarants can still report emissions based on default values, but only for complex goods, with a limit of 20% of the total embedded emissions. Declarants should only utilize default values when actual emissions data is unavailable.

Noteworthy points about the default values:

  • The default values will undergo regular revisions based on data from the first reporting period and feedback from both EU industry and non-EU producers.

  • During the transition period the default values represent 'world' average values weighted by production volumes.

  • The default values are based on estimations provided by the Joint Research Centre's study, which covers key sectors such as iron and steel, cement, fertilizers, aluminium, and hydrogen.

These default values are applicable independently of the country of origin and only until the transitional period's conclusion on December 31, 2025. Beyond 2025, a new set of default values will be established, determined by the average emission intensity of each exporting country, increased by a proportionately designed mark-up. Expect an implementing act for adoption in 2025 to define these post-transitional default values.

For the electricity sector, default values operate in a different manner: in contrast with other sectors, the EU Commission uses the default values (so-called electricity emissions factors) as a general rule to count electricity production emissions for specific countries. The current emissions factors are based on the International Energy Agency’s publications, whereas the factors used for the full-fledged CBAM implementation would be counted by the EU Commission with the use of its own methodology. It is up to the electricity producers to rebate the EU-set emissions factors if they believe that their emissions are actually lower that the default values, but the procedure for such rebate is complex and requires strong evidence in the producer’s favor.