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Carbon Border Adjustment Mechanism: Another Piece in the EU's Green Legislative Mosaic

Carbon Border Adjustment Mechanism: Another Piece in the Eu's Green Legislative Mosaic

Czech Republic
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The EU is taking another legislative step in the fight against climate change. The Carbon Border Adjustment Mechanism (CBAM) is set to become a complement to emissions trading and later replace it entirely, according to a new regulation.

The aim of introducing the CBAM is to reduce greenhouse gas emissions in relation to imported products so that imported products are not favoured over EU products covered by the emissions trading scheme.

How will the CBAM work?

Customs authorities will issue greenhouse gas emission certificates that importers will purchase at a price set by the Commission as the average price of EU ETS allowances on the common auction platform. The price will be published regularly on the Commission's website. Importers will then submit a declaration to the customs authority by 31 May for the previous calendar year, also indicating the total quantity of goods imported, the total emissions in tonnes of CO2 per tonne of goods and the total number of certificates surrendered. The value of the certificates surrendered should correspond to the value of the emissions for the imported goods. If the value of the emissions is higher, the importer will purchase and surrender additional certificates. If, on the other hand, there is a surplus of certificates, a buyback can be requested. In the case of a buyback, the price of the certificate is equal to the price at which the importer purchased the certificate.

Companies should first check whether their products will be subject to the CBAM. If so, the amount of emissions per tonne of goods needs to be calculated. Given the fluctuating prices of certificates, it will be necessary to analyse when would be a good time to buy them.

The regulation should start to apply from 1 October 2023 for the time being, but only on a limited basis. It will apply in full from 1 January 2026.

By Jana Pospisilova, Associate, JSK Law Firm, PONTES

Czech Republic Knowledge Partner

PRK Partners, one of the leading Central European law firms, has been helping clients achieve their business objectives almost 30 years. Our team of lawyers, based in our Prague, Ostrava, and Bratislava offices, has a unique knowledge of Czech and Slovak law and of the business environment. Our lawyers studied at top law schools in the United States, United Kingdom, Switzerland and elsewhere. They also have experience working for leading international and domestic law firms in a number of jurisdictions. We speak your language, too. Our legal team is fluent in more than 15 languages, including all the key languages of the region.

PRK Partners has one of the most experienced legal teams on the market. We are consistently rated as one of the leading law firms in the region. We have received many significant honours and awards for our work. We represent the interests of international clients operating in the Czech Republic in an efficient way, combining local knowledge with an understanding of their global requirements in a business-friendly approach. We are one of the largest law firms in the Czech Republic and Slovakia. Our specialised teams of lawyers and tax advisors advise major global corporations as well as local companies. We provide comprehensive legal advice drawing on our profound knowledge of local law and markets.

Our legal advice delivers tangible results – as proven by our strong track record. We are the only Czech member firm of Lex Mundi, the world's leading network of independent law firms. As one of the leading law firms in the region, we have received many national and international awards, in some cases several years in a row. Honours include the Chambers Europe Award for Excellence, The Lawyer and Czech and Slovak Law Firm of the Year. Thanks to our close cooperation with leading international law firms and strong local players, we can serve clients in multiple jurisdictions around the globe. Our strong network means that we can meet your needs, wherever you do business.

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