Border Carbon Adjustment Mechanism
The Regulation (EU) 2023/956 on the Border Carbon Adjustment Mechanism (BCAM), which constitutes an important part of the European Green Deal, was published in the Official Journal of the European Union on 16 May 2023.
The emission of gases such as carbon dioxide, methane, and nitrogen into the atmosphere is referred to as greenhouse gas emissions. Particularly in recent years, human activities have led to increased carbon emissions, resulting in an increase in greenhouse gas emissions, which in turn has contributed to global warming and climate change. In this context, national and international measures have begun to be taken, one of which is the Border Carbon Adjustment Mechanism (BCAM).
The BCAM Regulation aims to prevent carbon leakage resulting from the shift of production in the EU to countries with less stringent climate policies. In this context, the Emission Trading System (ETS) has been introduced. Under the ETS, an additional fee is imposed on imported products for carbon emissions emitted during production. Thus, cleaner production is encouraged, aiming to balance competition within the EU and to encourage other countries to introduce regulations in this regard within their own legislation. Turkey’s announcement of establishing its own emission trading system after the BCAM proposal demonstrates the potential success of the EU’s policy.
Until 2030, products with the highest carbon leakage are planned to be gradually included in the scope of BCAM. The sectors identified include industries with the highest carbon intensity, such as petroleum refining, iron and steel production, mining industries, and paper production.
The transition period of the BCAM will start on 1 October 2023 and continue until 31 December 2025. The purpose of the transition period is to collect necessary data to shape the final phase of BCAM starting from 1 January 2026. During the transition period, the obligations of importers are limited to reporting and notification only.
The minimum requirements to be included in the reports are determined by the regulation and include producer information, total quantity of imported products (in tons), total embedded emissions of the imported product (in tons of CO2e), and the amount of electricity consumed. European Union resident importers who are reporting obligations under the BCAM must obtain BCAM Report information from the producers from whom they source the product. Therefore, producers need to prepare this information by the beginning of the reporting period.
In 2026, the second part of the BCAM will commence, and the payment obligation will come into effect. The BCAM Fee will be realized with the BCAM Certificate fee. Embedded emissions will be taken into account in the calculation of financial obligations based on the type of product. Financial obligations under the BCAM will be fulfilled by authorized BCAM obligors. One BCAM certificate will need to be provided for each ton of CO2 equivalent greenhouse gas emission. These certificates will be used as an official part of import transactions.