The Carbon Border Adjustment Mechanism (CBAM) was agreed in 2023 and the trading of CBAM certificates is about to start on January 1st 2026. Omnibus I package simplified the participation requirements in 2025 by limiting the scope of the CBAM to larger imports.
Bioenergia ry – the Bioenergy Association of Finland – objected the introduction of the CBAM mechanism in October 2020, as we believed the risks related to the CBAM far exceeded the expected benefits. It has since been increasingly understood that the EU is in a position where improvement of its global competitiveness is a must and should be part of all new legislative initiatives. More experience has also been gained on the practical challenges of implementation of the CBAM.
We continue to have serious concerns on the forthcoming impacts of CBAM on EU’s competitiveness. The CBAM is a tariff-like policy and has corresponding negative impacts on the EU economy. It also carries the risk of retaliatory measures from non-EU countries. While the CBAM may improve competitiveness in goods covered by the CBAM in the EU area, it risks merely shifting carbon leakage downstream and presents a significant business and administrative risk for companies exporting downstream products from the EU. Bioenergy technologies, where the EU has a strong global market share, are these kinds of products.
EU policies clearly require new or reformed solutions to support all exports – particularly the high value-added downstream products – in the context of an ambitious European climate policy. In our view, the current inward processing regime is not practical and affordable, and it is not always fully available due to legal limitations. Extending the scope of the CBAM to downstream products will also not solve this problem. The inward processing regime could be simplified, and a new possibility might be a mechanism for indirect cost compensation for selected export-oriented and steel- and aluminium-intensive sectors.
We have serious concerns regarding the applicability of CBAM requirements and their administrative burden. According to the experience gained, getting emission data from the supply chain has proven extremely difficult as this data is simply not available and the calculation methodology is complex. Non-EU suppliers do not want to allocate resources to calculating and providing this information. Therefore, CBAM methodologies should be simplified, focused on scope 1 and 2 emissions, and made less dependent on non-EU suppliers’ behaviour. The use of default values must be an option, and their use should not be penalized. A global emissions database for known CBAM producers should be developed.
Bioenergia ry