### 9. where the commission considers that the findings justify temporary withdrawal for the reasons referred to in paragraph 1 of this article , it is empowered to adopt delegated acts , in accordance with article 36 , to amend annex i and annex ii in order to temporarily withdraw the tariff preferences provided under the special incentive arrangement for sustainable development and good governance referred to in article 1(2) , point (b). in adopting the delegated act the commission may , when appropriate , consider the socio-economic effect of the temporary withdrawal of tariff preferences in the beneficiary country. ### 9. where the commission considers that the findings justify temporary withdrawal for the reasons referred to in paragraph 1 of this article , it is empowered to adopt delegated acts , in accordance with article 36 , to amend annex i and annex ii in order to temporarily withdraw the tariff preferences provided under the special incentive arrangement for sustainable development and good governance referred to in article 1(2) , point (b). in adopting the delegated act the commission may , when appropriate , consider the human rights and socio-economic effect of the temporary withdrawal of tariff preferences in the beneficiary country.


### (5) it is therefore necessary to complement existing union instruments with a new tool to effectively deal with distortions in the internal market caused by foreign subsidies and ensure a level playing field. in particular , the new tool complements union state aid rules which deal with distortions in the internal market caused by member state subsidies. ### (5) it is therefore necessary to complement existing union instruments with a new tool to effectively deal with distortions in the internal market caused by foreign subsidies and ensure a level playing field. in particular , the new tool complements union state aid rules which deal with distortions in the internal market caused by member state subsidies. in parallel , the union should promote effective rules on subsidies at multilateral level.


### (6) rules and procedures to investigate foreign subsidies that actually or potentially distort the internal market should be laid down and , where relevant , those distortions should be redressed. foreign subsidies could distort the internal market if the undertaking benefitting from the foreign subsidy engages in an economic activity in the union. this regulation should therefore establish rules for all undertakings engaging in an economic activity in the union. given the significance of the economic activities pursued by smes , and their contribution to the fulfilment of the union’s key policy goals , special attention is given to the impact of this regulation on them. ### (6) rules and procedures to investigate foreign subsidies that actually or potentially distort the internal market should be laid down and , where relevant , those distortions should be redressed. foreign subsidies could distort the internal market if the undertaking benefitting from the foreign subsidy engages in an economic activity in the union. the proper application and enforcement of this regulation will contribute to the resilience of the internal market against distortions caused by external economic actors. this regulation should therefore establish rules for all undertakings engaging in an economic activity in the union. given the significance of the economic activities pursued by smes , and their contribution to the fulfilment of the union’s key policy goals , special attention is given to the impact of this regulation on them.


### (8) foreign subsidy in the context of this regulation should be understood as an intervention that meets three cumulative conditions. ### (8) foreign subsidy in the context of this regulation should be understood as an intervention that meets three cumulative conditions based on international rules laid down in the wto agreement on subsidies and countervailing measures and eu rules on state aid.


### (9) there should be a financial contribution provided , directly or indirectly , by the public authorities of a third country. the financial contribution may be granted through public or private entities. whether a public entity provides a financial contribution should be determined on a case-by-case basis with due regard to elements such as the characteristics of the relevant entity and the legal and economic environment prevailing in the country in which the entity operates including the government’s role in the economy. financial contributions may also be granted through a private entity if its actions can be attributed to the third country. ### (9) there should be a financial contribution provided , directly or indirectly , by a third country. the financial contribution may be granted through public or private entities. whether a public entity provides a financial contribution should be determined on a case-by-case basis with due regard to elements such as the characteristics of the relevant entity and the legal and economic environment prevailing in the third country in which the entity operates including the government’s role in the economy of that third country. financial contributions may also be granted through a private entity if its actions can be attributed to the third country. a financial contribution includes the privileged access to the domestic market that an undertaking has , for instance due to special or exclusive rights that were granted to an undertaking without receiving adequate remuneration in conformity with market rates. such a privileged access could lead to an unfair competitive advantage and create distortions in the internal market.


### (1) the commission has , in its communication on the european green deal31 , set out a new growth strategy that aims to transform the union into a fair and prosperous society , with a modern , resource-efficient and competitive economy , where there are no net emissions (emissions after deduction of removals) of greenhouse gases (‘ghg emissions’) in 2050 and where economic growth is decoupled from resource use. the european green deal also aims to protect , conserve and enhance the eu’s natural capital , and protect the health and well-being of citizens from environment-related risks and impacts. at the same time , that transformation must be just and inclusive , leaving no one behind. the commission also announced in its eu action plan: towards zero pollution for air , water and soil32 the promotion of relevant instruments and incentives to better implement the polluter pays principle as set out in article 191(2) of the treaty on the functioning of the european union (‘tfeu’) and thus complete the phasing out of ‘pollution for free’ with a view to maximising synergies between decarbonisation and the zero pollution ambition. ### (1) the commission has , in its communication on the european green deal31 , set out a new sustainable growth strategy that aims to transform the union into a fair and prosperous society , with a modern , resource-efficient , circular and competitive economy , where there are no net emissions (emissions after deduction of removals) of greenhouse gases (‘ghg emissions’) in 2050 and where economic growth is decoupled from resource use. the european green deal also aims to protect , conserve and enhance the eu’s natural capital , and protect the health and well-being of citizens from environment-related risks and impacts. at the same time , that transformation must be just and inclusive , creating sustainable growth and jobs and leaving no one behind. in addition , the european green deal aims to support the global efforts towards the achievement of the sustainable development goals of the united nations 2030 agenda for sustainable development (un sdgs) and the paris agreement. the commission also announced in its eu action plan: towards zero pollution for air , water and soil32 the promotion of relevant instruments and incentives to better implement the polluter pays principle as set out in article 191(2) of the treaty on the functioning of the european union (‘tfeu’) and thus complete the phasing out of ‘pollution for free’ with a view to maximising synergies between decarbonisation and the zero pollution ambition.


### (8) as long as a significant number of the union’s international partners have policy approaches that do not result in the same level of climate ambition , there is a risk of carbon leakage. carbon leakage occurs if , for reasons of costs related to climate policies , businesses in certain industry sectors or subsectors were to transfer production to other countries or imports from those countries would replace equivalent but less ghg emissions intensive products. that could lead to an increase in their total emissions globally , thus jeopardising the reduction of ghg emissions that is urgently needed if the world is to keep the global average temperature to well below 2 °c above pre-industrial levels. ### (8) as long as a significant number of the union’s international partners have policy approaches that do not result in the same level of climate ambition , there is a risk of carbon leakage. carbon leakage occurs if , for reasons of costs related to climate policies , businesses in certain industry sectors or subsectors were to transfer production to other countries or imports from those countries would replace equivalent but less ghg emissions intensive products. in addition to undermining the competitiveness of the european economy , that could lead to an increase in their total emissions globally , thus jeopardising the reduction of ghg emissions that is urgently needed if the world is to keep the global average temperature to well below 2 °c above pre-industrial levels.


### (9) the initiative for a carbon border adjustment mechanism (‘cbam’) is a part of the ‘fit for 55 package’. that mechanism is to serve as an essential element of the eu toolbox to meet the objective of a climate-neutral union by 2050 in line with the paris agreement by addressing risks of carbon leakage resulting from the increased union climate ambition. ### (9) the initiative for a carbon border adjustment mechanism (‘cbam’) is a part of the ‘fit for 55 package’. that mechanism is to serve as an essential element of the eu toolbox to meet the objective of a climate-neutral union by 2050 in line with the paris agreement by addressing risks of carbon leakage resulting from the increased union climate ambition , whilst preserving and promoting the development of european industries and ensuring an equal level playing field with regard to their competitiveness on eu and global markets;


### (9) the initiative for a carbon border adjustment mechanism (‘cbam’) is a part of the ‘fit for 55 package’. that mechanism is to serve as an essential element of the eu toolbox to meet the objective of a climate-neutral union by 2050 in line with the paris agreement by addressing risks of carbon leakage resulting from the increased union climate ambition. ### (9) the initiative for a carbon border adjustment mechanism (‘cbam’) is a part of the ‘fit for 55 package’. that mechanism is to serve as an essential element of the eu toolbox to meet the objective of a climate-neutral union by 2050 in line with the paris agreement by addressing risks of carbon leakage resulting from the increased union climate ambition. that initiative should be combined with incentives for innovation , aimed to facilitate the decarbonisation process and policies aimed at promoting investments in low-carbon industrial processes.


### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. however , free allocation under the eu ets weakens the price signal that the system provides for the installations receiving it compared to full auctioning and thus affects the incentives for investment into further abatement of emissions. ### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec.


### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. however , free allocation under the eu ets weakens the price signal that the system provides for the installations receiving it compared to full auctioning and thus affects the incentives for investment into further abatement of emissions. ### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. however , free allocation under the eu ets weakens the price signal that the system provides for the installations receiving it compared to full auctioning and thus affects the incentives for investment into further abatement of emissions. it remains necessary for the economic balance and competitiveness of the sectors concerned.


### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. however , free allocation under the eu ets weakens the price signal that the system provides for the installations receiving it compared to full auctioning and thus affects the incentives for investment into further abatement of emissions. ### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. however , free allocation under the eu ets weakens the price signal that the system provides for the installations receiving it compared to full auctioning and thus affects the incentives for investment into further abatement of emissions. introduction of the cbam must lead to phase out of these mechanisms to ensure that the price of domestically produced as well as imported products reflects more accurately their carbon content.


### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. however , free allocation under the eu ets weakens the price signal that the system provides for the installations receiving it compared to full auctioning and thus affects the incentives for investment into further abatement of emissions. ### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. however , free allocation under the eu ets should be gradually phased-out , in line with union’s commitment and targets for decarbonisation and in order to comply with the wto’s trade rules and avoid double compensation.


### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union. ### (11) the cbam seeks to gradually replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products and by ensuring that eu export products are not replaced by more carbon-intensive products , which would undermine the objective of reducing global emissions. the cbam should be progressively phased in while free allowances in sectors covered by the cbam are gradually phased out after an assessment by the commission has proven that the regulation is effective in protection from the risk of carbon leakage for both imports and exports. the gradual phase-out of free allowance is essential to ensure a just transition for energy-intensive sectors. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union.


### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union. ### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out until they are completely eliminated. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union and should remain wto-compliant. the transition period should provide regulatory certainty to resource- and energy-intensive industries and a predictable timeline for all stakeholders. the commission should also review the financial measures to compensate for indirect emission costs with a view to phasing them out as cbam indirect emissions are phased in. the commission should ensure this phase out design guarantees a level playing field for the eu industry and takes into account eu electricity market specificities.


### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union. ### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out , only after the efficiency of the cbam is proven , on the basis of data provided in the periodic evaluation of the commission. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union.


### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union. ### (11) the cbam seeks to gradually replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products and by ensuring that eu export products are not replaced by more carbon intensive products , which would undermine the objective of reducing global emissions. to ensure a gradual transition from the current system of free allowances to the cbam while preserving eu competitiveness , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are gradually phased out after an assessment by the commission has proven that the regulation is effective in protection from the risk of carbon leakage for both imports and exports. the gradual phase-out of free allowance is essential to ensure a just transition for energy-intensive sectors. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union.


### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union. ### (11) the cbam seeks to strengthen carbon leakage protection in view of higher eu climate ambition by progressively replacing these existing mechanisms and thereby addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing and costs for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam should be gradually phased out. the progressive phase-out of free allowances should only take place following an initial stage of data collection and analysis aimed at assessing the impact of the cbam on the affected industries' competitiveness and in preventing carbon leakage both for imports and exports. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union.


### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union. ### (11) the cbam seeks to provide an additional means of addressing the risk of carbon leakage , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out during a pilot phase that will allow for its effectiveness to be assessed. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union. similarly , the application of these provisions should not negatively impact the competitiveness of eu goods , particularly exports.


### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union. ### (11) the cbam seeks to gradually replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products and by ensuring that union export products are not replaced by more carbon intensive products , which would undermine the objective of reducing global emissions and would be counterproductive to the aim of supporting developing countries in reaching their climate goals. to ensure a gradual transition from the current system of free allowances to the cbam while preserving union competitiveness , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are gradually phased out after an assessment by the commission has proven that the regulation is effective in protection from the risk of carbon leakage for both imports and exports as well as in supporting developing countries in reaching their climate goals. the gradual phase-out of free allowance is essential to ensure a just transition for energy-intensive sectors. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union.


### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union. ### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out. cbam should be transparent , proportionate and easy to administer and should avoid any undue financial and administrative burden on enterprises , especially small and medium-sized enterprises (smes). the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union nor should lead to any market distortion.


### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union. ### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a transition from the current system of free allowances to the cbam , the cbam should be phased in while free allowances in sectors covered by the cbam are phased out simultaneously. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union. therefore , the compatibility with wto rules should be provided for by the phase out of free allowances in the eu market ensuring similar treatment of domestic and imported products based on the principle of non-discrimination.


### (12) while the objective of the cbam is to prevent the risk of carbon leakage , this regulation would also encourage the use of more ghg emissions-efficient technologies by producers from third countries , so that less emissions per unit of output are generated. ### (12) while the objective of the cbam is to prevent the risk of carbon leakage , this regulation would also encourage the use of more ghg emissions-efficient technologies by producers from third countries , so that less emissions per unit of output are generated. the commission should regularly assess and monitor whether the cbam encourages the use of more ghg emission-efficient technologies in third countries , in coordination with the affected industrial sectors and broader stakeholders , and provide additional measures where necessary.


### (12) while the objective of the cbam is to prevent the risk of carbon leakage , this regulation would also encourage the use of more ghg emissions-efficient technologies by producers from third countries , so that less emissions per unit of output are generated. ### (12) while the objective of the cbam is to prevent the risk of carbon leakage , this regulation would also encourage the use of more ghg emissions-efficient technologies by producers from third countries , so that less emissions per unit of output are generated , as well as encourage carbon pricing worldwide , thus enhancing a global level playing field.


### (12) while the objective of the cbam is to prevent the risk of carbon leakage , this regulation would also encourage the use of more ghg emissions-efficient technologies by producers from third countries , so that less emissions per unit of output are generated. ### (12) while the objective of the cbam is to prevent the risk of carbon leakage , this regulation would also encourage the use of more ghg emissions-efficient and regenerative technologies , e.g. in agriculture , by producers from third countries , so that less emissions per unit of output are generated.


### (13) as an instrument to prevent carbon leakage and reduce ghg emissions the cbam should ensure that imported products are subject to a regulatory system that applies carbon costs equivalent to the ones that otherwise would have been borne under the eu ets. the cbam is a climate measure which should prevent the risk of carbon leakage and support the union’s increased ambition on climate mitigation , while ensuring wto compatibility. ### (13) as an instrument to prevent carbon leakage and reduce ghg emissions the cbam should ensure that imported products are subject to a regulatory system that applies carbon costs equivalent to the ones that otherwise would have been borne under the eu ets , resulting in an equalisation of carbon costs between imported and domestic products. the cbam is a climate measure which should prevent the risk of carbon leakage and support the union’s increased ambition on climate mitigation , while ensuring wto compatibility.


### (13) as an instrument to prevent carbon leakage and reduce ghg emissions the cbam should ensure that imported products are subject to a regulatory system that applies carbon costs equivalent to the ones that otherwise would have been borne under the eu ets. the cbam is a climate measure which should prevent the risk of carbon leakage and support the union’s increased ambition on climate mitigation , while ensuring wto compatibility. ### (13) as an instrument to prevent carbon leakage and reduce ghg emissions the cbam should ensure that imported products are subject to a regulatory system that applies carbon costs equivalent to the ones that otherwise would have been borne under the eu ets. the cbam is a climate measure which should prevent the risk of carbon leakage , promote carbon pricing globally , enhance decarbonisation in a cost-effective and technology-neutral way and support the union’s increased ambition on climate mitigation , while ensuring wto compatibility.


### (17) the ghg emissions to be regulated by the cbam should correspond to those ghg emissions covered by annex i to the eu ets in directive 2003/87/ec , namely carbon dioxide (‘co2’) as well as , where relevant , nitrous oxide (‘n2o’) and perfluorocarbons (‘pfcs’). the cbam should initially apply to direct emissions of those ghg from the production of goods up to the time of import into the customs territory of the union , and after the end of a transition period and upon further assessment , as well to indirect emissions , mirroring the scope of the eu ets. ### (17) the ghg emissions to be regulated by the cbam should correspond to those ghg emissions covered by annex i to the eu ets in directive 2003/87/ec , namely carbon dioxide (‘co2’) as well as , where relevant , nitrous oxide (‘n2o’) and perfluorocarbons (‘pfcs’). the cbam should apply to direct emissions of those ghg from the production of goods up to the time of import into the customs territory of the union , as well to indirect emissions , mirroring the scope of the eu ets.


### (17) the ghg emissions to be regulated by the cbam should correspond to those ghg emissions covered by annex i to the eu ets in directive 2003/87/ec , namely carbon dioxide (‘co2’) as well as , where relevant , nitrous oxide (‘n2o’) and perfluorocarbons (‘pfcs’). the cbam should initially apply to direct emissions of those ghg from the production of goods up to the time of import into the customs territory of the union , and after the end of a transition period and upon further assessment , as well to indirect emissions , mirroring the scope of the eu ets. ### (17) the ghg emissions to be regulated by the cbam should correspond to those ghg emissions covered by annex i to the eu ets in directive 2003/87/ec , namely carbon dioxide (‘co2’) as well as , where relevant , nitrous oxide (‘n2o’) and perfluorocarbons (‘pfcs’). the cbam should initially apply to direct emissions of those ghg from the production of goods up to the time of import into the customs territory of the union , and after the end of a transition period and upon further assessment , as well to indirect emissions , mirroring the scope of the eu ets. the commission should take into account the exposure of the eu producers to increased electricity prices due to the functioning of the eu energy market , amongst the various factors.


### (28) whilst the ultimate objective of the cbam is a broad product coverage , it would be prudent to start with a selected number of sectors with relatively homogeneous products where there is a risk of carbon leakage. union sectors deemed at risk of carbon leakage are listed in commission delegated decision 2019/70842 . ### (28) whilst the ultimate objective of the cbam is a complete product coverage , it would be prudent to start with a selected number of sectors with relatively homogeneous products where there is a risk of carbon leakage. union sectors deemed at risk of carbon leakage are listed in commission delegated decision 2019/70842 .


### (28) whilst the ultimate objective of the cbam is a broad product coverage , it would be prudent to start with a selected number of sectors with relatively homogeneous products where there is a risk of carbon leakage. union sectors deemed at risk of carbon leakage are listed in commission delegated decision 2019/70842 . ### (28) whilst the ultimate objective of the cbam is a broad product coverage , it would be prudent to start with a selected number of sectors with relatively homogeneous products where there is a risk of carbon leakage. union sectors deemed at risk of carbon leakage are listed in commission delegated decision (eu) 2019/70842. any further extension of the sectors and products , covered by the cbam , should take place after an exhaustive scientific analysis and risk assessment , based on the latest available scientific evidence. the potential contribution of such extension , and possible negative effects as well as the effects on the stability of the internal market should also be taken into consideration.


### (29) the goods under this regulation should be selected after a careful analysis of their relevance in terms of cumulated ghg emissions and risk of carbon leakage in the corresponding eu ets sectors while limiting complexity and administrative burden. in particular , the actual selection should take into account basic materials and basic products covered by the eu ets with the objective of ensuring that imports of energy intensive products into the union are on equal footing with eu products in terms of eu ets carbon pricing , and to mitigate risks of carbon leakage. other relevant criteria to narrow the selection should be: firstly , relevance of sectors in terms of emissions , namely whether the sector is one of the largest aggregate emitters of ghg emissions; secondly , sector’s exposure to significant risk of carbon leakage , as defined pursuant to directive 2003/87/ec; thirdly , the need to balance broad coverage in terms of ghg emissions while limiting complexity and administrative effort. ### (29) the goods under this regulation should be selected after a careful analysis of their relevance in terms of cumulated ghg emissions and risk of carbon leakage in the corresponding eu ets sectors while limiting complexity and administrative burden. in particular , the actual selection should take into account basic materials and basic products covered by the eu ets with the objective of ensuring that imports of energy intensive products into the union are on equal footing with eu products in terms of eu ets carbon pricing , and to mitigate risks of carbon leakage. other relevant criteria to narrow the selection should be: firstly , relevance of sectors in terms of emissions , namely whether the sector is one of the largest aggregate emitters of ghg emissions; secondly , sector’s exposure to significant risk of carbon leakage , as defined pursuant to directive 2003/87/ec; thirdly , the need to balance broad coverage in terms of ghg emissions while limiting complexity and administrative effort. specific attention should also be paid to the risk of market distortions between the different sectors covered by the cbam , as well as between sectors covered by cbam and those not covered by the mechanism , in terms of product substitution due to the lower price competitiveness of products subject to the cbam regulation.


### (50) a transitional period should apply during the period 2023 until 2025. a cbam without financial adjustment should apply , with the objective to facilitate a smooth roll out of the mechanism hence reducing the risk of disruptive impacts on trade. declarants should have to report on a quarterly basis the actual embedded emissions in goods imported during the transitional period , detailing direct and indirect emissions as well as any carbon price paid abroad. ### (50) a transitional period should apply during the period 2023 until 2025. a cbam without financial adjustment should apply , with the objective to facilitate a smooth roll out of the mechanism hence reducing the risk of disruptive impacts on trade. declarants should have to report on a quarterly basis the actual embedded emissions in goods imported during the transitional period , detailing direct and indirect emissions as well as any carbon price paid abroad. to avoid excessive administrative burden for enterprises , in particular smes , the cbam authority should provide them with technical advice and assistance in order to facilitate their adaptation to the new obligations established by this regulation.


### (50) a transitional period should apply during the period 2023 until 2025. a cbam without financial adjustment should apply , with the objective to facilitate a smooth roll out of the mechanism hence reducing the risk of disruptive impacts on trade. declarants should have to report on a quarterly basis the actual embedded emissions in goods imported during the transitional period , detailing direct and indirect emissions as well as any carbon price paid abroad. ### (50) a transitional period should apply during the period 2023 until 2025 and shall be used for data collection and analysis of the impact of cbam on the industries concerned , with particular focus of the potential impact of the phase-out of free allocations . a cbam without financial adjustment should apply , with the objective to facilitate a smooth roll out of the mechanism hence reducing the risk of disruptive impacts on trade. declarants should have to report on a quarterly basis the actual embedded emissions in goods imported during the transitional period , detailing direct and indirect emissions as well as any carbon price paid abroad.


### (50) a transitional period should apply during the period 2023 until 2025. a cbam without financial adjustment should apply , with the objective to facilitate a smooth roll out of the mechanism hence reducing the risk of disruptive impacts on trade. declarants should have to report on a quarterly basis the actual embedded emissions in goods imported during the transitional period , detailing direct and indirect emissions as well as any carbon price paid abroad. ### (50) a pilot phase should apply at least until 2025. a cbam without financial adjustment should apply , with the objective to facilitate a smooth roll out of the mechanism hence reducing the risk of disruptive impacts on trade. declarants should have to report on a quarterly basis the actual embedded emissions in goods imported during the transitional period , detailing direct and indirect emissions as well as any carbon price paid abroad.


### (51) to facilitate and ensure a proper functioning of the cbam , the commission should provide support to the competent authorities responsible for the application of this regulation in carrying out their obligations. ### (51) to facilitate and ensure a proper functioning of the cbam , the commission should provide support to the cbam authority in carrying out its obligations.


### (52) the commission should evaluate the application of this regulation before the end of the transitional period and report to the european parliament and the council. the report of the commission should in particular focus on possibilities to enhance climate actions towards the objective of a climate neutral union by 2050. the commission should , as part of that evaluation , initiate collection of information necessary to possibly extend the scope to indirect emissions , as well as to other goods and services at risk of carbon leakage , and to develop methods of calculating embedded emissions based on the environmental footprint methods47 . ### (52) the commission should evaluate the application of this regulation before the end of the transitional period , or after a demand from the european parliament , the council or the cbam authority , and report to the european parliament and the council. the report of the commission should in particular focus on possibilities to enhance climate actions towards the objective of a climate neutral union by 2050. the commission should , as part of that evaluation , initiate collection of information necessary to extend the scope to other goods and services resulting from activities listed in directive 2003/87/ec , as well as to goods further down the value chain , in particular downstream products using goods covered by this regulation , and to develop methods of calculating embedded emissions based on the environmental footprint methods47 .


### (52) the commission should evaluate the application of this regulation before the end of the transitional period and report to the european parliament and the council. the report of the commission should in particular focus on possibilities to enhance climate actions towards the objective of a climate neutral union by 2050. the commission should , as part of that evaluation , initiate collection of information necessary to possibly extend the scope to indirect emissions , as well as to other goods and services at risk of carbon leakage , and to develop methods of calculating embedded emissions based on the environmental footprint methods47 . ### (52) the commission should evaluate the application of this regulation before the start of the removal of free allowances in ets and report to the european parliament and the council. the report of the commission should in particular focus on possibilities to enhance climate actions towards the objective of a climate neutral union by 2050. the commission should , as part of that evaluation , initiate collection of information necessary to possibly extend the scope to indirect emissions , as well as to other goods and services at risk of carbon leakage , and to develop methods of calculating embedded emissions based on the environmental footprint methods47 . with regard to indirect emissions , the evaluation should take into account the exposure of eu producers to carbon costs passed on in electricity prices due to the functioning of the eu energy market.


### (52) the commission should evaluate the application of this regulation before the end of the transitional period and report to the european parliament and the council. the report of the commission should in particular focus on possibilities to enhance climate actions towards the objective of a climate neutral union by 2050. the commission should , as part of that evaluation , initiate collection of information necessary to possibly extend the scope to indirect emissions , as well as to other goods and services at risk of carbon leakage , and to develop methods of calculating embedded emissions based on the environmental footprint methods47 . ### (52) the commission should evaluate the application of this regulation before the end of the transitional period and report to the european parliament and the council. the report of the commission should in particular focus on assessing the risk of eu exports on global markets being replaced by more carbon intensive goods or by goods that are not subject to equivalent carbon costs. the commission report shall be accompanied by a legislative proposal to develop wto-compatible solutions such as export adjustments mechanisms to avoid carbon leakage on european exports , while preserving emission reduction targets. the report should also include possibilities to enhance climate actions towards the objective of a climate neutral union by 2050. the commission should , as part of that evaluation , initiate collection of information and evidence-based impact assessments necessary to possibly extend the scope to indirect emissions , as well as to other goods and services at risk of carbon leakage , and to develop methods of calculating embedded emissions based on the environmental footprint methods47 .


### (52) the commission should evaluate the application of this regulation before the end of the transitional period and report to the european parliament and the council. the report of the commission should in particular focus on possibilities to enhance climate actions towards the objective of a climate neutral union by 2050. the commission should , as part of that evaluation , initiate collection of information necessary to possibly extend the scope to indirect emissions , as well as to other goods and services at risk of carbon leakage , and to develop methods of calculating embedded emissions based on the environmental footprint methods47. ### (52) the commission should evaluate the application of this regulation before the end of the pilot phase and report to the european parliament and the council. the report of the commission should in particular focus on possibilities to enhance climate actions towards the objective of a climate neutral union by 2050. the commission should , as part of that evaluation , initiate collection of information necessary to possibly extend the scope to indirect emissions , as well as to other goods and services at risk of carbon leakage , and to develop methods of calculating embedded emissions based on the environmental footprint methods47.


### (52) the commission should evaluate the application of this regulation before the end of the transitional period and report to the european parliament and the council. the report of the commission should in particular focus on possibilities to enhance climate actions towards the objective of a climate neutral union by 2050. the commission should , as part of that evaluation , initiate collection of information necessary to possibly extend the scope to indirect emissions , as well as to other goods and services at risk of carbon leakage , and to develop methods of calculating embedded emissions based on the environmental footprint methods47 . ### (52) the commission should evaluate the application of this regulation before the end of the transitional period and report to the european parliament and the council. the report of the commission should , in particular , focus on possibilities to enhance climate actions towards the objective of a climate neutral union by 2050 , the actual impact on climate and environmental protection and the impact on the competitiveness and viability of the union’s economy. the report should also examine the effects on sustainable innovation and changes in trade flows and supply chains with regards to fertilisers , and the effects on the prices of fertilisers and agricultural production. the commission should also assess the cumulative impact on the union agricultural sector , what are the effects of this regulation on union enterprises , including a quantitative assessment of impacts , specifically on small and medium sized enterprises (smes) , and actual compliance cost. the effects of the potential extension of the scope of this regulation to agricultural goods and its possible implications should also be evaluated.


### (55) as the cbam aims to encourage cleaner production processes , the eu stands ready to work with low and middle-income countries towards the de-carbonisation of their manufacturing industries. moreover , the union should support less developed countries with the necessary technical assistance in order to facilitate their adaptation to the new obligations established by this regulation. ### (55) as the cbam aims to encourage cleaner production processes , the eu stands ready to work with low and middle-income countries towards the de-carbonisation of their manufacturing industries. moreover , the union should support less developed countries with the necessary technical assistance in order to facilitate their adaptation to the new obligations established by this regulation. in so far as applicable and eligible , such assistance and support should be financed under the relevant expenditure programmes in the union budget , in particular the neighbourhood , development and international cooperation instrument - global europe (ndici) or the instrument for pre-accession assistance (ipa iii).


### (55) as the cbam aims to encourage cleaner production processes , the eu stands ready to work with low and middle-income countries towards the de-carbonisation of their manufacturing industries. moreover , the union should support less developed countries with the necessary technical assistance in order to facilitate their adaptation to the new obligations established by this regulation. ### (55) as the cbam aims to encourage cleaner production processes , the eu stands ready to provide technical and financial assistance to support de-carbonisation of manufacturing industries in low income countries and lower middle-income countries. the cbam revenue will also be used for provision of financial support to least developed countries , as well as to countries not belonging to this category , but defined by the world bank as a lower middle-income country and facing particularly important costs related to the cbam , including compliance costs and costs for investments to bring down relevant emissions towards levels similar to those of competing producers in the union or in other third countries. in this light , the cbam should not harm or hinder the socioeconomic progress of least developed coutries.


### 3. the mechanism will progressively become an alternative to the mechanisms established under directive 2003/87/ec to prevent the risk of carbon leakage , notably the allocation of allowances free of charge in accordance with article 10a of that directive. ### 3. the mechanism will progressively become an alternative , once the efficiency of the cbam in addressing greenhouse gas emissions and preventing the risk of the carbon leakage both for import and export is proven and without prejudice to maintaining the mechanisms established under directive 2003/87/ec , notably the allocation of allowances free of charge in accordance with article 10a of that directive.


### 3. the mechanism will progressively become an alternative to the mechanisms established under directive 2003/87/ec to prevent the risk of carbon leakage , notably the allocation of allowances free of charge in accordance with article 10a of that directive. ### 3. the mechanism will progressively become an alternative to the mechanisms established under directive 2003/87/ec to prevent the risk of carbon leakage , notably the allocation of allowances free of charge in accordance with article 10a of that directive. the mechanism shall first prove to be effective to prevent the risk of carbon leakage both for imports into or exports from the customs territory of the union , without prejudice to maintaining eu ets allowances free of charge at benchmark level until a test period with actual surrendering obligation by declarants running until 2030.


### 3. the mechanism will progressively become an alternative to the mechanisms established under directive 2003/87/ec to prevent the risk of carbon leakage , notably the allocation of allowances free of charge in accordance with article 10a of that directive. ### 3. the mechanism will progressively become an alternative to the mechanisms established under directive 2003/87/ec to prevent the risk of carbon leakage , notably the allocation of allowances free of charge and the financial measures to compensate for indirect emission costs in accordance with article 10a and 10b of that directive.


### 3. the mechanism will progressively become an alternative to the mechanisms established under directive 2003/87/ec to prevent the risk of carbon leakage , notably the allocation of allowances free of charge in accordance with article 10a of that directive. ### 3. the mechanism shall , after a thorough analysis and simulation of its impact on carbon intensive industries and on their entire supply chains , progressively become an alternative to the mechanisms established under directive 2003/87/ec to prevent the risk of carbon leakage , notably the allocation of allowances free of charge in accordance with article 10a of that directive. the gradual replacement shall be accompanied by a close monitoring of the effects on the competitiveness of the affected european industries , on the resulting carbon leakage and on emission reduction.


### 11. the commission is empowered to adopt delegated acts in accordance with article 28 to amend the lists in annex ii , sections a or b , depending on whether the conditions in paragraphs 5 , 7 or 9 are satisfied. ### deleted


### 11. the commission is empowered to adopt delegated acts in accordance with article 28 to amend the lists in annex ii , sections a or b , depending on whether the conditions in paragraphs 5 , 7 or 9 are satisfied. ### 11. if a third country is committed to decarbonisation processes that should result in the adoption of emission trading system similar to the eu ets , the importation of goods originating in that country shall be exempt from the application of the cbam , provided all of the following conditions are satisfied:


### 11. the commission is empowered to adopt delegated acts in accordance with article 28 to amend the lists in annex ii , sections a or b , depending on whether the conditions in paragraphs 5 , 7 or 9 are satisfied. ### 11. the commission is empowered to adopt delegated acts in accordance with article 28 to amend the lists in annex ii , sections a or b , depending on whether the conditions in paragraphs 5 , 7 or 9 are satisfied.


### 1. any declarant shall , prior to importing goods as referred to in article 2 , apply to the competent authority at the place where it is established , for an authorisation to import those goods into the customs territory of the union. ### 1. any declarant shall , prior to importing goods as referred to in article 2 , apply to the cbam authority , for an authorisation to import those goods into the customs territory of the union.


### 6. the commission is empowered to adopt implementing acts concerning detailed rules regarding the elements of the calculation methods set out in annex iii , including determining system boundaries of production processes , emission factors , installation-specific values of actual emissions and default values and their respective application to individual goods as well as laying down methods to ensure the reliability of data on the basis of which the default values shall be determined , including the level of detail and the verification of the data. where necessary , those acts shall provide that the default values can be adapted to particular areas , regions or countries to take into account specific objective factors such as geography , natural resources , market conditions , prevailing energy sources , or industrial processes. the implementing acts shall build upon existing legislation for the verification of emissions and activity data for installations covered by directive 2003/87/ec , in particular implementing regulation (eu) no 2018/2067. ### 6. the commission is empowered to adopt implementing acts concerning detailed methodologies and calculations of indirect emissions and rules regarding the elements of the calculation methods set out in annex iii , including determining system boundaries of production processes , emission factors , installation-specific values of actual emissions and default values and their respective application to individual goods as well as laying down methods to ensure the reliability of data on the basis of which the default values shall be determined , including the level of detail and the verification of the data. where necessary , those acts shall provide that the default values can be adapted to particular areas , regions or countries to take into account specific objective factors such as geography , natural resources , market conditions , prevailing energy sources , or industrial processes. the implementing acts shall build upon existing legislation for the verification of emissions and activity data for installations covered by directive 2003/87/ec , in particular implementing regulation (eu) no 2018/2067.


### iii competent authorities ### iii cbam authority


### 11 competent authorities ### 11 cbam authority


### 2. member states shall require that competent authorities exchange any information that is essential or relevant to the exercise of their functions and duties. ### deleted


### 1. the competent authority may review the cbam declaration within the period ending with the fourth year after the year in which the declaration should have been submitted. the review may consist in verifying the information provided in the cbam declaration on the basis of the information communicated by the customs authorities in accordance with article 25(2) and any other relevant evidence , and on the basis of any audit deemed necessary , including at the premises of the authorised declarant. ### 1. the cbam authority may review the cbam declaration within the period ending with the fourth year after the year in which the declaration should have been submitted. the review may consist in verifying the information provided in the cbam declaration on the basis of the information communicated by the customs authorities in accordance with article 25(2) and any other relevant evidence , and on the basis of any audit deemed necessary , including at the premises of the authorised declarant.


### 1. the commission shall collect the information necessary with a view to extending the scope of this regulation to indirect emissions and goods other than those listed in annex i , and develop methods of calculating embedded emissions based on environmental footprint methods. ### 1. the commission shall collect the information necessary with a view to extending the scope of this regulation to goods other than those listed in annex i , such as downstream products using goods covered by this regulation , and develop methods of calculating embedded emissions based on environmental footprint methods.


### 1. the commission shall collect the information necessary with a view to extending the scope of this regulation to indirect emissions and goods other than those listed in annex i , and develop methods of calculating embedded emissions based on environmental footprint methods. ### 1. the commission shall collect the information necessary with a view to extending the scope of this regulation to indirect emissions , transportation services such as air transport , manufacturing of transport equipment such as ship hulls and floating structures , and other goods than those listed in annex i , and develop methods of calculating embedded emissions based on environmental footprint methods.


### 1. the commission shall collect the information necessary with a view to extending the scope of this regulation to indirect emissions and goods other than those listed in annex i , and develop methods of calculating embedded emissions based on environmental footprint methods. ### 1. the commission shall collect , in consultation with the relevant stakeholders , the information necessary information necessary with a view to extending the scope of this regulation to indirect emissions and goods other than those listed in annex i , and develop methods of calculating embedded emissions based on environmental footprint methods.


### 1. the commission shall collect the information necessary with a view to extending the scope of this regulation to indirect emissions and goods other than those listed in annex i , and develop methods of calculating embedded emissions based on environmental footprint methods. ### 1. the commission shall collect the information necessary with a view to extending the scope of this regulation to indirect emissions and goods other than those listed in annex i , and develop methods of calculating embedded emissions based on environmental footprint methods , if the objectives of the cbam are met by the end of the pilot phase.


### 1. the commission shall collect the information necessary with a view to extending the scope of this regulation to indirect emissions and goods other than those listed in annex i , and develop methods of calculating embedded emissions based on environmental footprint methods. ### 1. the commission shall collect , in consultation with the relevant stakeholders , the information necessary with a view to extending the scope of this regulation to indirect emissions and goods other than those listed in annex i , and develop methods of calculating embedded emissions based on environmental footprint methods.


### 2. before the end of the transitional period , the commission shall present a report to the european parliament and the council on the application of this regulation. the report shall contain , in particular , the assessment of the possibilities to further extend the scope of embedded emissions to indirect emissions and to other goods at risk of carbon leakage than those already covered by this regulation , as well as an assessment of the governance system. it shall also contain the assessment of the possibility to further extend the scope to embedded emissions of transportation services as well as to goods further down the value chain and services that may be subject to the risk of carbon leakage in the future. ### 2. before the end of the transitional period , the commission shall present a report , based on the information collected under paragraph 1 , to the european parliament and the council on the application of this regulation. the report shall contain , in particular , possibilities to further extend the scope to other goods at risk of carbon leakage than those already covered by this regulation , as well as an assessment of the governance system. if the assessment shows that other sectors need to be included in the scope of this regulation to goods further down the value chain and transportation services that may be subject to the risk of carbon leakage in the future , the report by the commission shall be accompanied by a legislative proposal to extend the scope to these sectors.


### 2. before the end of the transitional period , the commission shall present a report to the european parliament and the council on the application of this regulation. the report shall contain , in particular , the assessment of the possibilities to further extend the scope of embedded emissions to indirect emissions and to other goods at risk of carbon leakage than those already covered by this regulation , as well as an assessment of the governance system. it shall also contain the assessment of the possibility to further extend the scope to embedded emissions of transportation services as well as to goods further down the value chain and services that may be subject to the risk of carbon leakage in the future. ### 2. before the end of the transitional period , or at any moment at the request of the european parliament , the council or the cbam authority , the commission shall present a report to the european parliament and the council on the application of this regulation. the report shall contain , in particular , the assessment of the possibilities to further extend the scope of application of this regulation to goods resulting from activities listed in directive 2003/87/ec other than those already covered by this regulation , as well as an assessment of the state of implementation of the regulation , including how it is fulfilling its objectives , and its governance system. it shall also contain the assessment of the possibility to further extend the scope to embedded emissions of transportation services and other services that may be subject to the risk of carbon leakage in the future as well as to goods further down the value chain , in particular downstream products using goods covered by this regulation.


### 2. before the end of the transitional period , the commission shall present a report to the european parliament and the council on the application of this regulation. the report shall contain , in particular , the assessment of the possibilities to further extend the scope of embedded emissions to indirect emissions and to other goods at risk of carbon leakage than those already covered by this regulation , as well as an assessment of the governance system. it shall also contain the assessment of the possibility to further extend the scope to embedded emissions of transportation services as well as to goods further down the value chain and services that may be subject to the risk of carbon leakage in the future. ### 2. before the start of the removal of free allowances under ets , the commission shall present a report to the european parliament and the council on the application of this regulation and assess if the conditions are in place for the effective implementation of a cbam before phasing our free allocations. the report shall contain , in addition , in-depth assessment , developed in close cooperation with the industrial sectors , of the rules to be applied in the testing period established pursuing to article 30bis and the assessment of the possibilities to further extend the scope of embedded emissions to indirect emissions and to other goods at risk of carbon leakage than those already covered by this regulation , as well as an assessment of the governance system. it shall also contain the assessment of the possibility to further extend the scope to embedded emissions of transportation services as well as to goods further down the value chain and services that maybe subject to the risk of carbon leakage in the future.


### 2. before the end of the transitional period , the commission shall present a report to the european parliament and the council on the application of this regulation. the report shall contain , in particular , the assessment of the possibilities to further extend the scope of embedded emissions to indirect emissions and to other goods at risk of carbon leakage than those already covered by this regulation , as well as an assessment of the governance system. it shall also contain the assessment of the possibility to further extend the scope to embedded emissions of transportation services as well as to goods further down the value chain and services that may be subject to the risk of carbon leakage in the future. ### 2. before the end of the transitional period , the commission shall present a report to the european parliament and the council on the application of this regulation. the report shall highlight , in particular:


### 2. before the end of the transitional period , the commission shall present a report to the european parliament and the council on the application of this regulation. the report shall contain , in particular , the assessment of the possibilities to further extend the scope of embedded emissions to indirect emissions and to other goods at risk of carbon leakage than those already covered by this regulation , as well as an assessment of the governance system. it shall also contain the assessment of the possibility to further extend the scope to embedded emissions of transportation services as well as to goods further down the value chain and services that may be subject to the risk of carbon leakage in the future. ### 2. before the end of the transitional period , the commission shall present a report , based on the information collected under paragraph 1 , to the european parliament and the council on the application of this regulation. the report shall contain , in particular , the assessment of the possibilities to further extend the scope of embedded emissions to indirect emissions and to other goods at risk of carbon leakage than those already covered by this regulation , as well as an assessment of the governance system. if the assessment shows that other sectors need to be included in the scope of this regulation to goods further down the value chain and transportation services that may be subject to the risk of carbon leakage in the future , the report by the commission shall be accompanied by a legislative proposal to extend the scope to these sectors.


### 2. before the end of the transitional period , the commission shall present a report to the european parliament and the council on the application of this regulation. the report shall contain , in particular , the assessment of the possibilities to further extend the scope of embedded emissions to indirect emissions and to other goods at risk of carbon leakage than those already covered by this regulation , as well as an assessment of the governance system. it shall also contain the assessment of the possibility to further extend the scope to embedded emissions of transportation services as well as to goods further down the value chain and services that may be subject to the risk of carbon leakage in the future. ### 2. before the end of the pilot phase , the commission shall present a report to the european parliament and the council on the application of this regulation. the report shall contain , in particular , the assessment of the possibilities to further extend the scope of embedded emissions to indirect emissions and to other goods at risk of carbon leakage than those already covered by this regulation , the assessment of the potential negative impact on the export of european goods , as well as an assessment of the governance system. it shall also contain the assessment of the possibility to further extend the scope to embedded emissions of transportation services as well as to goods further down the value chain and services that may be subject to the risk of carbon leakage in the future.


### 2. before the end of the transitional period , the commission shall present a report to the european parliament and the council on the application of this regulation. the report shall contain , in particular , the assessment of the possibilities to further extend the scope of embedded emissions to indirect emissions and to other goods at risk of carbon leakage than those already covered by this regulation , as well as an assessment of the governance system. it shall also contain the assessment of the possibility to further extend the scope to embedded emissions of transportation services as well as to goods further down the value chain and services that may be subject to the risk of carbon leakage in the future. ### 2. before the end of the transitional period , the commission shall present a report to the european parliament and the council on the application of this regulation. the report shall contain , in particular , the assessment of the possibilities to further extend the scope of embedded emissions to indirect emissions and to other goods at risk of carbon leakage than those already covered by this regulation , as well as an assessment of the governance system. it shall also contain the assessment of the possibility to further extend the scope to embedded emissions of transportation services as well as to goods further down the value chain and services that may be subject to the risk of carbon leakage in the future. finally , it shall also contain an analysis of the financial , environmental and social impact of the cbam in least developed countries.


### ix coordination with free allocation of allowances under the eu ets ### ix coordination with carbon leakage provisions under the eu ets


### 1. the cbam certificates to be surrendered in accordance with article 22 shall be adjusted to reflect the extent to which eu ets allowances are allocated free of charge in accordance with article 10a of directive 2003/87/ec to installations producing , within the union , the goods listed in annex i. ### 1. the cbam certificates to be surrendered in accordance with article 22 at the end of the pilot phase shall be adjusted to reflect the extent to which eu ets allowances are allocated free of charge in accordance with article 10a of directive 2003/87/ec to installations producing , within the union , the goods listed in annex i.


### articles 32 to 34 shall apply until 31 december 2025. ### articles 32 to 34 shall apply at least until 31 december 2025.


### articles 5 and 17 shall apply from 1 september 2025. ### articles 5 and 17 shall apply from 1 september 2025 at the earliest.


### accounts in the national registries ### accounts in the cbam registry


### 1. the competent authority shall assign to each authorised declarant a unique cbam account number. ### 1. the cbam authority shall assign to each authorised declarant a unique cbam account number.


### 3. the competent authority shall set up the account as soon as the authorisation referred to in article 17(1) is granted and notify the authorised declarant thereof. ### 3. the cbam authority shall set up the account as soon as the authorisation referred to in article 17(1) is granted and notify the authorised declarant thereof.


### 4. if the authorised declarant has ceased its economic activity or its authorisation was revoked , the competent authority shall close the account of that declarant. ### 4. if the authorised declarant has ceased its economic activity or its authorisation was revoked , the cbam authority shall close the account of that declarant.


### 1. the competent authority shall authorise a declarant who submits an application for authorisation in accordance with article 5(1) , if the following conditions are fulfilled: ### 1. the cbam authority shall authorise a declarant who submits an application for authorisation in accordance with article 5(1) , if the following conditions are fulfilled:


### 2. where the competent authority finds that the conditions listed in paragraph 1 are not fulfilled , or where the applicant has failed to provide the information listed in article 5(3) , the authorisation of the declarant shall be refused. ### 2. where the cbam authority finds that the conditions listed in paragraph 1 are not fulfilled , or where the applicant has failed to provide the information listed in article 5(3) , the authorisation of the declarant shall be refused.


### 3. if the competent authority refuses to authorise a declarant , the declarant requesting the authorisation may , prior to an appeal , object to the relevant authority under national law , who shall either instruct the national administrator to open the account or uphold the refusal in a reasoned decision , subject to requirements of national law that pursue a legitimate objective compatible with this regulation and are proportionate. ### 3. if the cbam authority refuses to authorise a declarant , the declarant requesting the authorisation may , prior to an appeal , object to the relevant authority , who shall either instruct to open the account or uphold the refusal in a reasoned decision.


### 4. a decision of the competent authority authorising a declarant shall contain the following information ### 4. a decision of the cbam authority authorising a declarant shall contain the following information


### 6. the competent authority shall require the provision of a guarantee in order to authorise a declarant in accordance with paragraph 1 , if the declarant was not established throughout the two financial years that precede the year when the application in accordance with article 5(1) was submitted. ### 6. the cbam authority shall require the provision of a guarantee in order to authorise a declarant in accordance with paragraph 1 , if the declarant was not established throughout the two financial years that precede the year when the application in accordance with article 5(1) was submitted.


### the competent authority shall fix the amount of such guarantee at the maximum amount , as estimated by the competent authority , of the value of the cbam certificates that the authorised declarant have to surrender , in accordance with article 22. ### the cbam authority shall fix the amount of such guarantee at the maximum amount , as estimated by the cbam authority , of the value of the cbam certificates that the authorised declarant have to surrender , in accordance with article 22.


### 7. the guarantee shall be provided as a bank guarantee , payable at first demand , by a financial institution operating in the union or by another form of guarantee which provides equivalent assurance. where the competent authority establishes that the guarantee provided does not ensure , or is no longer certain or sufficient to ensure the amount of cbam obligations , it shall require the authorised declarant either to provide an additional guarantee or to replace the initial guarantee with a new guarantee , according to its choice. ### 7. the guarantee shall be provided as a bank guarantee , payable at first demand , by a financial institution operating in the union or by another form of guarantee which provides equivalent assurance. where the cbam authority establishes that the guarantee provided does not ensure , or is no longer certain or sufficient to ensure the amount of cbam obligations , it shall require the authorised declarant either to provide an additional guarantee or to replace the initial guarantee with a new guarantee , according to its choice.


### 8. the competent authority shall release the guarantee immediately after 31 may of the second year in which the authorised declarant has surrendered cbam certificates in accordance with article 22. ### 8. the cbam authority shall release the guarantee immediately after 31 may of the second year in which the authorised declarant has surrendered cbam certificates in accordance with article 22.


### 9. the competent authority shall revoke the authorisation for a declarant who no longer meets the conditions laid down in paragraph 1 , or who fails to cooperate with that authority. ### 9. the cbam authority shall revoke the authorisation for a declarant who no longer meets the conditions laid down in paragraph 1 , or who fails to cooperate with that authority.


### 2. where a cbam declaration in accordance with article 6 has not been submitted , the competent authority of the member state of establishment of the authorised declarant shall assess the cbam obligations of that declarant on the basis of the information at its disposal and calculate the total number of cbam certificates due at the latest by the 31 december of the fourth year following that when the cbam declaration should have been submitted. ### 2. where a cbam declaration in accordance with article 6 has not been submitted , the cbam authority shall assess the cbam obligations of that declarant on the basis of the information at its disposal and calculate the total number of cbam certificates due at the latest by the 31 december of the fourth year following that when the cbam declaration should have been submitted.


### 3. where the competent authority has established that the declared number of cbam certificates to be surrendered is incorrect , or that no cbam declaration has been submitted pursuant to paragraph 2 , it shall adjust the number of cbam certificates due by the authorised declarant. the competent authority shall notify the authorised declarant of the adjustment and request that the authorised declarant shall surrender the additional cbam certificates within one month. ### 3. where the cbam authority has established that the declared number of cbam certificates to be surrendered is incorrect , or that no cbam declaration has been submitted pursuant to paragraph 2 , it shall adjust the number of cbam certificates due by the authorised declarant. the cbam authority shall notify the authorised declarant of the adjustment and request that the authorised declarant shall surrender the additional cbam certificates within one month.


### 5. where cbam certificates have been surrendered in excess of the number due , the competent authority shall , without delay , reimburse the authorised declarant the value of cbam certificates surrendered in excess , calculated at the average price paid for cbam certificates by the authorised declarant during the year of import. ### 5. where cbam certificates have been surrendered in excess of the number due , the cbam authority shall , without delay , reimburse the authorised declarant the value of cbam certificates surrendered in excess , calculated at the average price paid for cbam certificates by the authorised declarant during the year of import.


### 1. the competent authority of each member state shall sell cbam certificates to declarants authorised in that member state at the price calculated in accordance with article 21. ### 1. the cbam authority shall sell cbam certificates to authorised declarants at the price calculated in accordance with article 21.


### 2. the competent authority shall ensure that each cbam certificate is assigned a unique unit identification code upon its creation and shall register the unique unit identification number , the price and date of sale of the certificate in the national registry in the account of the authorised declarant purchasing it. ### 2. the cbam authority shall ensure that each cbam certificate is assigned a unique unit identification code upon its creation and shall register the unique unit identification number , the price and date of sale of the certificate in the cbam registry in the account of the authorised declarant purchasing it.


### 1. by 31 may of each year , the authorised declarant shall surrender a number of cbam certificates to the competent authority that corresponds to the embedded emissions declared in accordance with article 6(2)(c) and verified in accordance with article 8 for the calendar year preceding the surrender ### 1. by 31 may of each year , the authorised declarant shall surrender a number of cbam certificates to the cbam authority that corresponds to the embedded emissions declared in accordance with article 6(2)(c) and verified in accordance with article 8 for the calendar year preceding the surrender


### 2. for the purposes of paragraph 1 , the authorised declarant shall ensure that the required number of cbam certificates is available on its account in the national registry. in addition , the authorised declarant shall ensure that the number of cbam certificates on its account in the national registry at the end of each quarter corresponds to at least 80 per cent of the embedded emissions , determined by reference to default values in accordance with the methods set out in annex iii , in all goods it has imported since the beginning of the calendar year. ### 2. for the purposes of paragraph 1 , the authorised declarant shall ensure that the required number of cbam certificates is available on its account in the cbam registry. in addition , the authorised declarant shall ensure that the number of cbam certificates on its account in the cbam registry at the end of each quarter corresponds to at least 80 per cent of the embedded emissions , determined by reference to default values in accordance with the methods set out in annex iii , in all goods it has imported since the beginning of the calendar year.


### 3. where the competent authority finds that the number of cbam certificates in the account of an authorised declarant is not in compliance with the obligations pursuant to paragraph 2 , second sentence , that authority shall notify the adjustment and request that the authorised declarant surrenders the additional cbam certificates within one month. ### 3. where the cbam authority finds that the number of cbam certificates in the account of an authorised declarant is not in compliance with the obligations pursuant to paragraph 2 , second sentence , that authority shall notify the adjustment and request that the authorised declarant surrenders the additional cbam certificates within one month.


### 1. the competent authority of each member state shall , on request by a declarant authorised in that member state , re-purchase the excess of cbam certificates remaining on the account of the declarant in the national registry after the certificates have been surrendered in accordance with article 22. the request to re-purchase shall be submitted by 30 june of each year when cbam certificates were surrendered. ### 1. the cbam authority of each member state shall , on request by an authorised declarant , re-purchase the excess of cbam certificates remaining on the account of the declarant in the cbam registry after the certificates have been surrendered in accordance with article 22. the request to re-purchase shall be submitted by 30 june of each year when cbam certificates were surrendered.


### by 30 june of each year , the competent authority of each member state shall cancel any cbam certificates that were purchased during the year before the previous calendar year and that remained in the accounts in the national registry of the declarants authorised in that member state. ### by 30 june of each year , the cbam authority shall cancel any cbam certificates that were purchased during the year before the previous calendar year and that remained in the accounts in the cbam registry of the authorised declarants.


### 1. the customs authorities shall not allow the importation of goods unless the declarant is authorised by a competent authority at the latest at the release for free circulation of the goods. ### 1. the customs authorities shall not allow the importation of goods unless the declarant is authorised by a cbam authority at the latest at the release for free circulation of the goods.


### 2. the customs authorities shall periodically communicate information on the goods declared for importation , which shall include the eori number and the cbam account number of the declarant , the 8-digit cn code of the goods , the quantity , the country of origin , the date of declaration and the customs procedure , to the competent authority of the member state where the declarant has been authorised. ### 2. the customs authorities shall periodically communicate information on the goods declared for importation , which shall include the eori number and the cbam account number of the declarant , the 8-digit cn code of the goods , the quantity , the country of origin , the date of declaration and the customs procedure , to the cbam authority.


### 4. the customs authorities may communicate in accordance with article 12(1) of regulation (eu) no 952/2013 , confidential information acquired by the customs authorities in the course of performing their duty or provided on a confidential basis , to the competent authority of the member state where the declarant has been authorised. the competent authorities of the member states shall treat and exchange this information in accordance with council regulation (ec) no 515/97. ### 4. the customs authorities may communicate in accordance with article 12(1) of regulation (eu) no 952/2013 , confidential information acquired by the customs authorities in the course of performing their duty or provided on a confidential basis , to the cbam authority. the cbam authority shall treat and exchange this information in accordance with council regulation (ec) no 515/97.


### vi enforcement ### vi enforcement and appeals


### 3. payment of the penalty shall in no case release the authorised declarant from the obligation to surrender the outstanding number of cbam certificates in a given year to the competent authority of the member state where the declarant has been authorised. ### 3. payment of the penalty shall in no case release the authorised declarant from the obligation to surrender the outstanding number of cbam certificates in a given year to the cbam authority.


### 4. if the competent authority determines that an authorised declarant has failed to comply with the obligation to surrender cbam certificates as specified in paragraph 1 , or that a person has introduced goods into the customs territory of the union as specified in paragraph 2 , the competent authority shall impose the penalty and notify the authorised declarant or , in the situation under paragraph 2 , the person: ### 4. if the cbam authority determines that an authorised declarant has failed to comply with the obligation to surrender cbam certificates as specified in paragraph 1 , or that a person has introduced goods into the customs territory of the union as specified in paragraph 2 , the cbam authority shall impose the penalty and notify the authorised declarant or , in the situation under paragraph 2 , the person:


### that the competent authority has concluded that the authorised declarant or the person fails to comply with the obligation of surrendering cbam certificates for a given year; ### that the cbam authority has concluded that the authorised declarant or the person fails to comply with the obligation of surrendering cbam certificates for a given year;


### of the action the competent authority considers the authorised declarant or the person should take to comply with its obligation under point (a) depending on the facts and circumstances of the case; and ### of the action the cbam authority considers the authorised declarant or the person should take to comply with its obligation under point (a) depending on the facts and circumstances of the case; and


### of the right of the authorised declarant or of the person to appeal under national rules. ### of the right of the authorised declarant or of the person to appeal.


### 5. member states may apply administrative or criminal sanctions for failure to comply with the cbam legislation in accordance with their national rules in addition to penalties referred to in paragraph 2. such sanctions shall be effective , proportionate and dissuasive. ### 5. the cbam authority may decide to suspend the account of the declarant in case of repeated offences. the cbam authority may apply administrative or criminal sanctions for failure to comply with the cbam legislation in addition to penalties referred to in paragraph 2. such sanctions shall be effective , proportionate and dissuasive.


### 2. practices of circumvention include situations where a change in the pattern of trade in relation to goods included in the scope of this regulation has insufficient due cause or economic justification other than avoiding obligations as laid down in this regulation and consist in replacing those goods with slightly modified products , which are not included in the list of goods in annex i but belong to a sector included in the scope of this regulation. ### 2. practices of circumvention include situations where a change in the pattern of trade in relation to goods included in the scope of this regulation , whether slightly modified or not , stems from a practice , process or work has insufficient due cause or economic justification other than avoiding obligations as laid down in this regulation and consist in replacing those goods with slightly modified products , which are not included in the list of goods in annex i but belong to a sector included in the scope of this regulation , or undermining their effects , including on overall ghg emissions and on prices of the like products.


### 2. practices of circumvention include situations where a change in the pattern of trade in relation to goods included in the scope of this regulation has insufficient due cause or economic justification other than avoiding obligations as laid down in this regulation and consist in replacing those goods with slightly modified products , which are not included in the list of goods in annex i but belong to a sector included in the scope of this regulation. ### 2. practices of circumvention include situations where a change in the pattern of trade in relation to goods included in the scope of this regulation has insufficient due cause or economic justification other than avoiding obligations as laid down in this regulation and may consist in:


### 2. practices of circumvention include situations where a change in the pattern of trade in relation to goods included in the scope of this regulation has insufficient due cause or economic justification other than avoiding obligations as laid down in this regulation and consist in replacing those goods with slightly modified products , which are not included in the list of goods in annex i but belong to a sector included in the scope of this regulation. ### 2. practices of circumvention include in particular situations where a change in the pattern of trade in relation to goods included in the scope of this regulation has insufficient due cause or economic justification other than avoiding obligations as laid down in this regulation and consist in replacing those goods with slightly modified products , which are not included in the list of goods in annex i but belong to a sector included in the scope of this regulation.