The Carbon Border Adjustment Mechanism (CBAM) is established by Regulation (EU) 2023/956 as a carbon pricing instrument aimed at preventing carbon leakage by equalising the cost of embedded emissions in certain imported goods with that of EU-produced goods subject to the EU Emissions Trading System (EU ETS). This regulation applies to non-EU exporters, including South African exporters of specific goods such as steel (HS 72-73), aluminium (HS 76), cement (HS 25), fertilisers (HS 28, 31), electricity (HS 27), and hydrogen (HS 28). The mechanism mandates reporting and, from 1 January 2026, the surrender of CBAM certificates by EU importers to cover embedded emissions in these goods.
CBAM Compliance Checklist for South African Exporters
South African exporters of steel, aluminium, cement, fertilisers, electricity, and hydrogen destined for the European Union must comply with the Carbon Border Adjustment Mechanism (CBAM) under Regulation (EU) 2023/956. This compliance checklist guides you through the precise steps to avoid penalties of up to €150 per tonne of undeclared CO2 and meet all reporting and certification deadlines, including the critical 31 May 2026 certificate surrender deadline.
Step 1: Confirm Product Scope Under CBAM
Identify if your exported products fall within the CBAM scope by verifying their Combined Nomenclature (CN) codes against Annex I of Regulation (EU) 2023/956. The primary product categories affected include:
- Steel: CN codes 72 and 73
- Aluminium: CN code 76
- Cement: CN code 25
- Fertilisers: CN codes 28 and 31
- Electricity: CN code 27
- Hydrogen: CN code 28 (specific subheadings)
Only goods within these CN codes are subject to CBAM obligations when imported into the EU.
Step 2: Identify Your EU Importer and Establish Data Sharing
Under CBAM, the EU importer is the declarant responsible for reporting and certificate surrender, not the South African exporter. It is essential to:
- Identify the EU importer for each shipment.
- Establish a formal data-sharing agreement to exchange embedded emissions data and other relevant compliance information.
- Coordinate on reporting timelines and verification processes.
This cooperation ensures accurate and timely compliance with CBAM requirements.
Step 3: Calculate Embedded Carbon Emissions
Calculate the embedded greenhouse gas emissions of your products using either:
- Default values published by the European Commission, differentiated by product and country of origin.
- Actual emissions data based on your production processes, which can provide more precise and potentially lower emission values.
Using actual emissions requires accredited verification (see Step 4). Default values are available on the European Commission’s CBAM portal and updated regularly.
Step 4: Engage an Accredited Verifier for Actual Emissions
If you opt to report actual embedded emissions, your data must be verified by an accredited verifier under Regulation (EU) 2023/1773. This involves:
- Selecting a verifier accredited by an EU Member State competent authority.
- Completing the verification process before submission of CBAM reports.
- Ensuring verifiers comply with the standards and deadlines set by the regulation.
Accredited verification improves accuracy and can reduce CBAM costs if your actual emissions are below default values.
Step 5: Fulfil Transitional Reporting Obligations (Q4 2023 – Q4 2025)
During the transitional phase, from the fourth quarter of 2023 until the end of 2025, EU importers must submit quarterly CBAM reports detailing embedded emissions and import volumes. Key points include:
- No CBAM certificate surrender is required during this phase.
- Reports must be submitted within one month after each quarter ends.
- Ensure timely and accurate data provision to your EU importer to facilitate their reporting.
Step 6: Prepare for Certificate Surrender Starting 1 January 2026
From 1 January 2026, EU importers must surrender CBAM certificates annually to cover the embedded emissions of imported goods. The key deadlines are:
| Deadline | Obligation | Responsible Party |
|---|---|---|
| 31 May (annually, starting 2026) | Surrender CBAM certificates corresponding to embedded emissions of previous calendar year imports | EU importer |
| Quarterly (Q1-Q4) | Submit CBAM reports detailing imports and emissions | EU importer |
South African exporters must support EU importers with accurate emissions data and documentation to ensure timely certificate surrender and avoid penalties.
Step 7: Maintain Records for Four Years
Both exporters and importers must retain all relevant documentation, including emissions calculations, verification reports, and transactional data, for a minimum of four years following the import date. This is critical for potential audits by EU authorities.
South Africa’s Carbon Price and CBAM Adjustment
South Africa implements a carbon tax under the Carbon Tax Act 15 of 2019. CBAM allows for a reduction of the CBAM obligation by the amount of carbon price paid in South Africa on the exported goods’ embedded emissions. This mechanism prevents double carbon pricing but requires:
- Proof of carbon tax payment on the exported goods.
- Documentation submitted to the EU importer for CBAM reporting.
Accurate accounting of South African carbon tax payments can reduce your CBAM costs significantly.
Truth Anchor: According to Article 15 of Regulation (EU) 2023/956, failure to declare embedded emissions or submit accurate CBAM reports can result in penalties ranging from €50 to €150 per tonne of CO2 equivalent undeclared. The first mandatory certificate surrender deadline is 31 May 2026.
CBAM Compliance Checklist for South African Exporters
| Compliance Step | Action Required | Deadline | Responsible Party |
|---|---|---|---|
| 1. Product Scope Verification | Confirm CN codes against Annex I of Regulation (EU) 2023/956 | Before export | Exporter |
| 2. EU Importer Identification | Establish data-sharing agreement with EU importer | Before first shipment | Exporter & EU Importer |
| 3. Emissions Calculation | Calculate embedded emissions using default or actual values | Before shipment | Exporter |
| 4. Verification (if actual emissions) | Engage accredited verifier per Regulation (EU) 2023/1773 | Before reporting | Exporter |
| 5. Transitional Reporting | Provide emissions data for quarterly CBAM reports | Quarterly, Q4 2023 – Q4 2025 | Exporter & EU Importer |
| 6. Certificate Surrender Preparation | Support EU importer for annual certificate surrender | Annually from 31 May 2026 | Exporter & EU Importer |
| 7. Record Retention | Maintain all compliance documentation for 4 years | Ongoing | Exporter & EU Importer |
Frequently Asked Questions
1. Does CBAM apply to all South African exports to the EU?
CBAM applies only to specific goods listed in Annex I of Regulation (EU) 2023/956, including steel, aluminium, cement, fertilisers, electricity, and hydrogen. Other products are currently exempt.
2. Who is responsible for submitting CBAM reports and certificates?
The EU importer is responsible for submitting CBAM reports quarterly during the transitional phase and surrendering certificates annually starting 31 May 2026. South African exporters must provide accurate emissions data to support this process.
3. Can South African carbon tax payments reduce CBAM obligations?
Yes. Under CBAM, the carbon price paid in South Africa under the Carbon Tax Act 15 of 2019 can be deducted from the CBAM obligation, preventing double carbon pricing.
4. What are the penalties for non-compliance with CBAM?
Penalties range from €50 to €150 per tonne of CO2 equivalent undeclared, as specified in Article 15 of Regulation (EU) 2023/956. Non-compliance can also result in shipment delays and reputational damage.
5. How do I calculate embedded emissions if I don’t have actual data?
You can use the default embedded emissions values published by the European Commission, which are product- and country-specific. These values are updated regularly and available on the official CBAM portal.
6. What records must I keep for CBAM compliance?
All documentation related to product CN codes, embedded emissions calculations, verification reports, and shipment data must be retained for at least four years to comply with audit requirements.
Ready to Ensure Your CBAM Compliance?
Use our dedicated CBAM Compliance Tool for South African Exporters to calculate embedded emissions, prepare reports, and track deadlines. This tool guides you step-by-step through the entire compliance process, ensuring you meet the 31 May 2026 certificate surrender deadline and avoid costly penalties.
Clicking the link will open the compliance tool where you can enter your product details and receive a tailored compliance roadmap immediately.