EU carbon border tax | Hydrogen and ammonia importers now have to report greenhouse gas emissions
Initial phase of the Carbon Border Adjustment Mechanism began on Sunday
Companies importing hydrogen and ammonia into the EU will now have to report their greenhouse gas emissions (both direct and indirect) to the European Commission on a quarterly basis, after the initial phase of the bloc’s Carbon Border Adjustment Mechanism (CBAM) came into effect on Sunday.
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The CBAM is the EU’s “landmark tool to put a fair price on the carbon emitted during the production of carbon intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries”.
“Carbon leakage occurs when companies based in the EU move carbon-intensive production abroad to countries where less stringent climate policies are in place than in the EU, or when EU products get replaced by more carbon-intensive imports,” the European Commission explains.
However, the actual carbon border tariffs will not have to be paid until 1 January 2026.
“The objective of this transition period is to serve as a pilot and learning period for all stakeholders (importers, producers and authorities) and to collect useful information on embedded emissions to refine the methodology for the definitive period,” the commission states.
“The gradual phasing in of CBAM over time will also allow for a careful, predictable and proportionate transition for EU and non-EU businesses, as well as for public authorities.”
Direct greenhouse gas emissions are those produced during manufacturing, while indirect emissions come from the electricity consumed in the installation of equipment or production of goods. Emissions from the transportation of goods to the EU, and the end-use/final disposal of the products, are not included.
EU hydrogen and fertiliser imports today
“Mixed fertilisers” include ammonium nitrate, calcium ammonium nitrate, ammonium sulphate, ammonium phosphates, urea ammonium nitrate solutions, as well as nitrogen-phosphorus, nitrogen-potassium and nitrogen-phosphorus-potassium fertilisers.
There are currently no imports of direct-reduced iron, or pig iron, made using hydrogen today as the process is still being commercialised.
Hydrogen imported in other forms, such as methanol, e-methane, e-fuels, or liquid organic hydrogen carriers, do not appear to be included in the CBAM, which could be a loophole that exporters and importers may seek to exploit.