Carbon Border Adjustment Mechanism (CBAM) – What is it and what are its goals?
The Carbon Border Adjustment Mechanism, or CBAM for short, is a price adjustment mechanism at the borders that takes into account CO2 emissions. It applies to the prices of raw materials, semi-finished products, and products whose production has the strongest impact on increasing greenhouse gas emissions into the atmosphere. What is worth knowing about this topic? Read our article!
Carbon Tax (CBAM) – Key Information
CBAM is essentially a type of tax also known as the carbon tax or border carbon tax, which applies to a group of importers of goods who are required to purchase CBAM certificates in quantities corresponding to the embedded emissions, i.e., emissions released during the production of a specific product.
CBAM will come into force in this form on January 1, 2026, but since October of last year, entities importing specific goods are required to submit CBAM tax reports quarterly. Until January 2026, it is mandatory only to submit a report, and after this period, the system will be associated with incurring specific fees.
The carbon tax has been introduced as one of the instruments of the European Union's environmental protection strategy, which is closely linked to the reduction of greenhouse gas emissions. More specifically, this program is an integral part of the Fit for 55 package, aiming to reduce CO2 emissions in the EU by 55% by 2030 and work towards achieving climate neutrality by 2050.
CBAM – Which sectors of the economy are subject to this tax?
In the initial phase, the carbon tax applies to importers of products made of iron and steel, aluminum, cement, fertilizers, hydrogen, and electricity. These industries are already required to submit specific reports and report the applicable fee for greenhouse gas emissions in the country of origin. At the current stage of implementing the CO2 emissions tax, these entities are not yet incurring any fees.
This situation will change after January 1, 2026, when importers will have to purchase CBAM certificates and then redeem them, which will essentially serve as payment of the CBAM tax. These companies will also be required to submit annual CBAM declarations regarding goods with the highest risk of carbon leakage.
What is "carbon leakage"?
According to the European Commission, carbon leakage occurs when companies based in the EU relocate high-emission production abroad to places with lower environmental standards, or when EU products are replaced by other imported goods with higher carbon dioxide emissions. In both cases, the European Commission sees a significant weakening of the EU's climate protection efforts.
Carbon Emissions Tax in Poland – What are the perspectives and challenges?
As with all other obligations, the legislator has foreseen penalties and sanctions for entities that neglect the duties imposed by the carbon tax. These include financial penalties for failing to submit or submitting incorrect reports, and sanctions such as revoking the status of an authorized declarant, which in practice means the inability to transport or import goods covered by the mechanism.
The Polish language versions of all documents, including the implementing regulation and its annexes, have been published in the Official Journal of the European Union. The carbon tax will impact the conditions of business operations for many entities in Poland as well.
Although CBAM represents another obligation and challenge for companies, it is also worth considering the ongoing transformation not only in terms of costs and additional tasks but also as an opportunity for technological and business development. The short-term benefits could include cleaner air and healthier living conditions, while the long-term perspective aims at effectively combating climate change.
For Polish entrepreneurs, the carbon tax means, among other things, the need to closely review the tariff classification of imported products and to coordinate actions with foreign partners to provide timely and reliable information necessary to meet this new obligation. For all companies subject to CBAM duties, this also entails the need for training and, in some cases, cooperation with audit or specialized entities to properly calculate emissions in accordance with the CBAM mechanism.
Before the final implementation of the carbon tax in Poland, some entrepreneurs point out potential attempts to circumvent the mechanism, such as using inappropriate CN codes (used in the EU's common customs tariff and for trade statistics) that are incorrect for the imported goods in order to avoid CBAM regulations. Another open issue is the cost of implementation, which importers are expected to bear but which will likely be passed on to the end consumer, particularly in industries such as construction, chemicals, and others. These aspects are likely to be raised in discussions and debates in the coming months.
CBAM and Environmental Protection Policy – What is its impact on CO2 reduction?
Speaking about CBAM in the simplest terms, the mechanism aims to price the greenhouse gases produced during the manufacturing process of products imported into the EU and align this cost with the expenses incurred by companies producing within the EU due to carbon emissions.
This approach directly impacts environmental protection, and the carbon tax is intended to be an effective tool for reducing CO2 emissions. How it will work in practice will become evident in the coming years. However, the very obligation for companies to monitor this issue due to new reporting requirements is already increasing interest in solutions that reduce carbon emissions and a more careful assessment of how a company’s operations impact the environment, which ultimately affects the quality of life for everyone.
CBAM should be viewed as one of many tools that are intended to bring us closer to effective environmental actions that impact the quality of life on Earth.