On January 29, 2024, the Directorate-General for Taxation and Customs Union of the European Union issued a temporary news regarding the transitional period filing of the Carbon Border Adjustment Mechanism (CBAM), announcing that the first filing deadline originally scheduled for January 31 was extended. This decision was made due to technical issues that prevented some enterprises from submitting relevant reports on time. This extension is good news for exporters to the EU.

Background and Decision of the Extension
The European Commission noticed that due to system technical issues, some enterprises faced difficulties in completing the submission of CBAM - related reports within the specified time. To address this issue, the Commission specifically introduced solutions for report filers, including providing a new function for deferred submission.

Specific Measures for Deferred Submission
(a) Introduction of the New Function:Starting from February 1, 2024, declarants can "request a delayed submission" in the system, which will grant them an additional 30 days to submit the CBAM report for the current quarter.
(b) Penalty Exemption:According to the guidance of the National Competent Authority (NCA), filers who encounter difficulties in submitting the first CBAM report will not be subject to any penalties.
(c) Report Modification:According to the Implementing Regulation of the Transition Period (Regulation 2023/1773), after the report is submitted this time, filers still have the right to modify it before July 31, 2024.

Analysis of the Benefits for Exporters to the EU
The deferred submission of the first CBAM report provides EU importers with more time to collect supplier data and information. This also means that exporters to the EU have more time to collect information, conduct actual carbon emission calculations, and provide more sufficient preparation time for subsequent compliance and response work.

Carry out the Calculation of Embedded Carbon Emissions in Products

Exporters should take advantage of the opportunity of deferred submission to carry out the calculation of embedded carbon emissions in products. This includes requiring their own suppliers to provide the embedded emission data per unit of raw materials, so as to ensure the acquisition of the actual carbon emission information of export products.

Compliance Response and Reduction of Carbon Costs

(a) Compliance Preparation:Exporters need to make full use of the extended time to ensure their full compliance with CBAM requirements. This includes understanding the regulatory requirements, calculation methods, and reporting processes of CBAM.
(b) Energy Conservation and Emission Reduction Measures:Exporters should assess and implement energy conservation and emission reduction measures to reduce the embedded carbon emissions of products, thereby reducing the potential cost increase caused by CBAM.
(c) Cooperation with the Supply Chain:Strengthen cooperation with suppliers to ensure that every link in the supply chain can effectively respond to CBAM requirements and work together to reduce overall carbon emissions.

The extension of the EU CBAM report transition period provides enterprises with a valuable time window to better prepare for and adapt to the new carbon emission reporting requirements.