CQ】Ref.Ares(2025)6962930-28/082025EuropeanCommissionCALL FOR EVIDENCEFOR AN INITIATIVE (without an impact assessment)This document aims to inform the public and stakeholders about the Commission's work,so they can provide feedback andparticipate effectively in consultation acivities.We ask these groups to provide views on the Commission's understanding of the problem and possible solutions,and to giveus any relevant information they may have.CBAM implementation:rules on the methodology for calculating emissionsembedded in CBAM goods;rules on the adjustment of CBAM certificates to reflectthe EU ETS free allocation;rules on the deduction of the carbon price paid in athird countryLEAD DGRESPONSIBLEDirectorate-General for Taxation and Customs Union,Units C2 and C5UNIT(S)Three Commission Implementing Regulations laying down specific rules for theapplication of Regulation (EU)2023/956 of the European Parliament and of theCouncilINDICATIVE TIMINGQ42025Commission proposal to simplify and strengthen the CBAMCarbon border adjustment mechanism(CBAM):Council and Parliament strike adeal on its simplification ConsiliumThis document is for information purposes only.It does not prejudge the final decision of the Commission on whether thissubject to change.A.Political context,problem definition and subsidiarity checkPolitical contextAs part of the European Green Deal,in 2023 the EU introduced the carbon border adjustment mechanism(CBAM).The CBAM is a climate instrument to prevent carbon leakage.Carbon leakage occurs if.due to carbon costs.EUindustry transfers production to third countries with less stringent emission constraints,or imports from thesecountries replace equivalent products with a lower greenhouse gas emission intensity due to the difference inclimate policy.The CBAM currently covers cement,iron and steel,aluminium,fertilisers,electricity and hydrogen.It ensures that imports face the same carbon cost as EU production under the EU Emissions Trading System(EUETS).Regulation(EU)2023/956(the 'CBAM Regulation')provides for a series of implementing acts to be adopted whichclarify and harmonise key technical aspects of the CBAM,such as the calculation of embedded emissions(Article 7),adjustments of the CBAM obligation taking into account the carbon price effectively paid in the countryof origin of the product (Article 9)and reflecting the EU ETS free allocation between 2026 and 2034(Article 31).The current initiative is in line with the Commission's efforts to simplify the CBAM Regulation and make it morecost-efficient.The Commission also aims to provide clarity and legal certainty for businesses,support MemberStates in their implementation efforts,and improve the overall effectiveness of the CBAM.Problem the initiative aims to tackleTo prevent carbon leakage,it is crucial for CBAM provisions to be applied consistently and effectively across allMember States.To this end,the Commission will have to adopt several implementing acts that will operationalisethe CBAM provisions to ensure that the mechanism functions in its definitive regime,starting from 1 January 2026.This call for evidence seeks to clarify key technical aspects of the CBAM and gather relevant input fromstakeholders.It will effectively inform the three implementing acts to be adopted by the Commission before thedefinitive regime begins:1.Implementing act on methodologyThis call for evidence seeks to collect additional information for evidence-based decision-making on challengesrelated to the calculation methodology for the purposes of CBAM in the definitive regime,in particular:Calculating direct embedded emissionsThe Commission is revising the CBAM methodology applicable during the transitional period(2023-2025)to clarifyand simplify its application,reduce administrative burdens and facilitate the use of actual emissions.This revisionwill build on lessons leamnt during the transitional period and feedback from stakeholders,and feed into themethodology for the definitive regime (from 2026)that will be specified in the implementing act on methodology.This call for evidence aims to gather additional feedback.data and evidence to inform the Commission's revisionof the methodology for calculating direct emissions.Detemining embedded emissions for electricityThe CBAM Regulation mandates the use of COz emission factors as default values for electricity,based solely onfossil fuel-based generation sources.Actual emissions can be reported when certain cumulative conditions aremet.Stakeholders have expressed concerns on the current rules,and a separate call for evidence was launchedin relation to those issues.Within the existing legal limits set by the CBAM Regulation,the implementing act onmethodology will set out the details of the calculation of the emission factors for the definitive regime,the evidencethat must be provided to claim actual emissions and the conditions for using alternative default values.Detemining embedded indirect emissionsIndirect emissions are currently included in the scope of CBAM only for the cement and fertiliser sectors.The Commission is tasked with identifying the most appropriate default values for indirect emissions to ensureenvironmental integrity and prevent carbon leakage,while also operating within the criteria set out in the CBAMRegulation.In addition,the implementing act on methodology will set out the evidence that must be provided toclaim actual values,and the conditions for using altemative default values.Setting default valuesDefault values,for goods other than electricity,are intended as a fallback option when actual emissions data areunavailable.The implementing act on methodology aims to set out a fair,transparent and consistent approach todefault values,reinforcing the principle that actual emissions should remain the primary basis for CBAMdeclarations.2.Implementing act on free allocationUnder the EU ETS Directive.carbon leakage is addressed by allocating free allowances based on specificbenchmarks.This allocation will be progressively phased out between 2026 and 2034 for sectors covered byCBAM,in parallel with the gradual phase-in of CBAM.The implementing act on free allocation to be adopted willlay down the rules for calculating the adjustment for free allocation,which is applied as a discount to the CBAMobligation,to reflect the extent to which EU ETS allowances are allocated free of charge.The objective is to ensurethat goods produced in the EU and in third countries are treated equally.This call for evidence seeks to collectadditional high-quality evidence,information,data and feedback to inform the Commission's decisions on keyareas covered by the implementing act,in particular:Methodology for calculating embedded free allocationFree allocation under the EU ETS is based on applying specific product benchmarks,as well as fallback andprocess emission benchmarks,set for each relevant production process.The implementing act on free allocationwill mirror the EU ETS free allocation rules that are specified in the Commission Delegated Regulation (EU)2019/331Developing CBAM benchmarks derived from EU ETS benchmarksA key aspect of the methodology is developing CBAM benchmarks for each of the goods covered by the CBAMRegulation.These benchmarks will be derived from the relevant EU ETS benchmarks used to determine theallocation of free allowances within the EU carbon market.A key challenge is to match the EU ETS benchmarks,which apply to installations and specific production processes,to individual CBAM goods.The approach chosenin the implementing act on free allocation should be simple,to avoid a disproportionate administrative burden,andaccurate,to reflect the relevant amount of free allocation in imported goods.2