CBAM certificates

CBAM certificates' features

according to the European Commission Proposal of 14 July 2021 for a Regulation of the European Parliament and of the Council establishing a carbon border adjustment mechanism (COM(2021) 564 final, 2021/0214 (COD))

• Unique unit identification code - assigned upon creation evidencing unique unit identification number, the price and date of sale of the certificate (Article 20);

• Declarants' re-purchase right - the right of the authorised declarant to require the re-purchase of one third of total CBAM certificates purchased by the authorised declarant during the previous calendar year (for the price paid by the authorised declarant for that certificate at the time of purchase), the request to re-purchase must be submitted by 30 June of each year when CBAM certificates were surrendered (Article 23);

• CBAM certificates - contrary to the EU ETS allowances - cannot be traded between importers;
  
  

• Limited validity - by 30 June of each year, the competent authority of each Member State shall cancel any CBAM certificates that were purchased during the year before the previous calendar year and that remained in the accounts in the national registry of the declarants authorised in that Member State (Article 24);

• Surrender’s deadline 31 May of each year - by this date, the authorised declarant is required to surrender a number of CBAM certificates to the competent authority that corresponds to the embedded emissions declared and verified for the calendar year preceding the surrender (Article 22(1));

• 80% threshold at the end of each quarter - the authorised declarant is required to keep the number of CBAM certificates on its account in the national registry at the end of each quarter that corresponds to at least 80 per cent of the embedded emissions, in all goods it has imported since the beginning of the calendar year (Article 22(2));

• Price of CBAM certificates - calculated according to the specific rules (Article 21):

1. The European Commission shall calculate the price of CBAM certificates as the average price of the closing prices of EU ETS allowances on the common auction platform in accordance with the procedures laid down in Commission Regulation (EU) No 1031/201026 for each calendar week. For those calendar weeks in which there are no auctions scheduled on the common auction platform, the price of CBAM certificates shall be the average price of the closing prices of EU ETS allowances of the last week in which auctions on the common auction platform took place.

2. This average price shall be published by the Commission on its website on the first working day of the following calendar week and shall be applied from the following working day to the first working day of the following calendar week.

3. The Commission is empowered to adopt implementing acts to further define the methodology to calculate the average price of CBAM certificates and practical arrangements for the publication of the price.

4. Recital 21 of the draft Regulation reads: "In order to preserve its effectiveness as a carbon leakage measure, the CBAM needs to reflect closely the EU ETS price. While on the EU ETS market the price of allowances is determined through auctions, the price of CBAM certificates should reasonably reflect the price of such auctions through averages calculated on a weekly basis. Such weekly average prices reflect closely the price fluctuations of the EU ETS and allow a reasonable margin for importers to take advantage of the price changes of the EU ETS while at the same ensuring that the system remains manageable for the administrative authorities".

CBAM Certificates according to Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishing a carbon border adjustment mechanism:

• are non-fungible,
• have a two-year validity.

The price of CBAM certificates is based on the weekly average auctioning price for EUAs (for weeks in which no auction is scheduled, the last week's average will be used).