Carbon Border Adjustment Mechanism (CBAM) in the Automotive Industry ??

Introduction ??

The European Union's Carbon Border Adjustment Mechanism (CBAM), in force since October 1, 2023, marks a pivotal shift in the global trade landscape, especially for industries like automotive. This article delves into the essence of CBAM, its implications for the automotive sector, and how businesses can navigate this new regulatory environment.

Understanding CBAM ??

Adopted on May 17, 2023, CBAM is a groundbreaking EU regulation aimed at mitigating carbon leakage and aligning import practices with the EU's climate objectives. It introduces a carbon levy on imports of certain goods, including iron, steel, cement, aluminum, electricity, and hydrogen, which are fundamental to the automotive industry.

CBAM's Impact on the Automotive Industry ??

The automotive sector, with its extensive global supply chains, faces a significant impact. Key aspects include:

1. Increased Costs: The levy on raw materials can lead to higher production costs, affecting the overall pricing of vehicles.
2. Supply Chain Restructuring: Companies might need to reassess their supply chain to optimize costs and comply with CBAM.
3. Innovation and Sustainability: There's a push towards more sustainable practices and innovative solutions in manufacturing to reduce the carbon footprint.

Transitional Period ??

During the transitional period, which started October 1, 2023, importers must report quarterly on CBAM goods and their embedded greenhouse gas emissions. This involves:

• Assessing the impact on products and sourcing.
• Collecting data on production sites and emissions.
• Establishing reporting processes within the EU.
• Submitting initial reports by January 31, 2024.

Deloitte's Role in Facilitating Compliance ??

Deloitte's specialists offer comprehensive support:

• Impact Assessments: Understanding how CBAM affects product portfolios.
• Emissions Data Review: Checking availability and assessing the financial impact of purchasing CBAM certificates.
• Supply Chain Review: Analyzing sourcing patterns for possible exemptions or reductions.
• Organizational Preparedness: Advising on roles and responsibilities.

The Deloitte CBAM Compliance Manager ??

Deloitte is developing a digital solution to automate CBAM reporting, enabling:

• Systematic requests for production site and emissions data from suppliers.
• Automatic allocation of emissions based on supplier information.
• Decision-making based on default emissions data when necessary.

CBAM Compliance Manager | Deloitte Netherlands

Conclusion ??

The CBAM represents a significant challenge but also an opportunity for the automotive industry to advance towards more sustainable practices. By understanding the mechanism, its implications, and utilizing available tools like Deloitte's CBAM Compliance Manager, businesses can effectively navigate this new regulatory landscape.

Why Deloitte

Deloitte’s Global Trade Advisory specialists are part of a global network of professionals who provide specialized assistance in global trade and customs matters. Our professionals collaborate closely with our Deloitte ESG and sustainability experts

Contact for Assistance ??

For further information on CBAM and how it impacts your business, feel free to reach out to me.