CBAM: the transitional phase has begun

How to prepare for Compliance

On September 8, 2023, the transitional phase of the CBAM (Carbon Border Adjustment Mechanism) officially began. This is a key pillar of the European Union’s climate strategy. Active until December 31, 2025, this mechanism aims to reduce carbon emissions linked to imports and encourage foreign companies to comply with EU environmental standards.

This article will help you understand:

• What CBAM is and why has been introduced
• Which obligations companies must comply with
• How to prepare now to avoid penalties

What is CBAM?

The Carbon Border Adjustment Mechanism is an EU regulatory measure designed to counter carbon leakage, the relocation of production to countries with looser environmental regulations. CBAM addresses this by applying carbon adjustment measures to imported goods.

Why has CBAM been introduces?

• Reduce global emissions: Companies exporting to the EU must monitor and report the embedded carbon emissions in their products.
• Encourage cleaner global supply chains: CBAM pushes non-EU businesses to adopt more sustainable standards.
• Ensure competitive fairness: European companies already face strict environmental regulations and must be protected from unfair competition.

CBAM: key deadlines and e obligations for EU companies preparing for CBAM

The transitional phase introduces a series of obligations for importing companies, which must gradually comply before the full implementation of the CBAM system in 2026.

Main obligations

Emission tracking:
68% of EU SMEs lack systems to trace carbon emissions across a product’s lifecycle. Recommended solutions include:

• Implementing carbon accounting software with ERP integration
• Requesting supplier reports aligned with ISO standards or GHG Protocol

Supplier compliance:
ensure international partners collect and report reliable emission data and meet EU environmental standards.

Employees must become proficient in:

• Understanding EU Regulation 2023/956
• Interfacing with customs and European Commission systems
• Compiling CBAM records
• Handling inspection audits

Detailed reporting:
submit quarterly declarations of direct and indirect emissions embedded in imported goods.

If your company imports goods subject to CBAM, taking action now is essential to avoid penalties and import restrictions.

The transitional period 2023–2025

What companies must do now

From October 1, 2023, importers of goods like steel, aluminum, cement, fertilizers, hydrogen, and electricity must:

•  Verify the customs codes of imported products and compare them with those subject to CBAM obligations
• Submit detailed reports every 3 months on the direct and indirect emissions embedded in imported products
• Declare any carbon costs already paid in the country of origin
• Respect the deadlines: reports must be submitted within the month following the end of each quarter
• Register with the CBAM TAXUD Portal

The European Commission’s digital registry allows you to:

• Enter and validate emissions data
• Communicate with national customs authorities
• Receive real-time regulatory updates

Involved sectors and timeline for 2026

While the transitional phase is penalty-free, full CBAM enforcement begins on January 1, 2026, with:

• Gradual application of CBAM tariffs on seven product categories
• Cross-checks between declared data and certificates of origin
• Fines up to 50% of the goods’ value for incomplete or incorrect declarations

Highly impacted sectors include:

• Metals: iron, steel, aluminum (32% of industrial emissions)
• Construction materials: cement (15% of extra-EU imports)
• Energy: hydrogen, electricity
• Chemical industry: fertilizers

Regulatory References: EU Regulation 2023/956 and Implementing Act 2023/1773.

Why comply immediately with the transitional phase?

The transitional period is designed to test the system and give companies time to prepare before carbon tariffs are applied.

Companies that begin collecting data now will enjoy a competitive advantage in 2026.

 Benefits of acting early:

• Anticipate future obligations and avoid fines
• Implement a robust system for collecting data from non-EU suppliers
• Demonstrate transparency and commitment to sustainability
• Position your company as a leader in the green transition

Prepare today to lead tomorrow’s market

Companies that begin compliance early can:

• Access funding through the EU Innovation Fund
• Reduce future green tariff exposure by 30–70%
• Avoid import restrictions on extra‑EU goods

Prometheus is your partner for CBAM compliance

Prometheus offers expert guidance to help businesses comply with CBAM and optimize carbon emissions management.

Our CBAM services include:

• Regulatory consulting: helping you understand and implement CBAM requirements
• Advanced reporting support: assisting with data collection and emissions analysis
• Employee training: delivering tailored courses to ensure a seamless transition

Start your sustainability journey now

Don’t wait until 2026, anticipate the regulatory shift and turn sustainability into a competitive advantage.

Contact us now for a tailored consultation