How will CO2 emissions be measured, are there exceptions to this measure and what is the EU ETS?
How are CO2 emissions measured under CBAM reporting?
Until July 31, 2024, there are 2 options for measuring CO2 emissions:
- (1) One of two possible "EU methods":
- The op calculation-based method where the quantity of CBAM commodity is measured and multiplied by an emission factor based on the CO2 values of the commodity in question.
- The op measurement-based method where the concentration of greenhouse gases in the exhaust is measured for each emission source.
- (2) The use of another calculation method is allowed if this other method is allowed in the country of measurement and if it leads to similar accuracy and coverage of information. A table of standard values may be used to determine the CO2 emissions of a given product.
From Aug. 1, 2024, only the above "EU methods" may be used.
Non-EU countries to which the CBAM does not apply:
What is the EU Emissions Trading Systems (EU ETS)?
Through the EU ETS, companies can buy or receive emission allowances based on their CO2 emissions. The EU Emissions Trading System operates on the "cap and trade" principle:
- Cap: Limit on number of allowances available.
- Trade: Companies can trade these allowances with each other
To prevent carbon leakage, free allowances are allocated, depending on each product. This share of free allowances will be gradually phased out from 2026. This system will ensure that the cost of production will become increasingly higher if production processes are not adjusted.
|
Year |
2026 |
2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 |
| % for free | 97.5% | 95% | 90% | 77.5% | 51.5% | 39% | 26.5% | 14% |
0% |
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