L228/94EN15.9.2023COMMISSION IMPLEMENTING REGULATION(EU)2023/1773of 17 August 2023laying down the rules for the application of Regulation(EU)2023/956 of the European Parliamentand of the Council as regards reporting obligations for the purposes of the carbon borderadjustment mechanism during the transitional period(Text with EEA relevance)THE EUROPEAN COMMISSION,Having regard to the Treaty on the Functioning of the European Union,Having regard to Regulation (EU)2023/956 of the European Parliament and of the Council of 10 May 2023 establishing acarbon border adjustment mechanism ()and in particular Article 35(7)thereof,Whereas:(1)Regulation (EU)2023/956 lays down reporting obligations for the purposes of carbon border adjustmentmechanism during the transitional period from 1 October 2023 until 31 December 2025.During the transitional period,importers or indirect customs representatives are to report on the quantity ofimported goods,direct and indirect emissions embedded in them,and any carbon price due for those emissions,including carbon prices due for emissions embedded in relevant precursor materials.(3)The first report should be submitted by 31 January 2024 in respect of goods imported during the fourth quarter of2023.The last report should be submitted by 31 January 2026 in respect of goods imported during the fourthquarter of 2025,(4The Commission is to adopt implementing rules for those reporting requirements.The reporting requirements should be limited to what is necessary to minimise the burden on importers in thetransitional period and facilitate the smooth roll-out of the CBAM declaration requirements after the transitionalperiod.(6)In line with Annex IV to Regulation (EU)2023/956,the detailed rules for calculating embedded emissions ofimported goods should be based on the methodology applicable under the Emission Trading Scheme forinstallations located in the EU,as notably specified in Commission Implementing Regulation (EU)2018/2066 ()The principles for determining the embedded emissions of the goods listed in Annex I to Regulation (EU)2023/956should aim at identifying the relevant production processes for goods categories,and to monitor the direct andindirect emissions of those production processes.Reporting during the transitional period should also take intoaccount existing norms and procedures ofrelevant Union legislation.As regards the production of hydrogen and itsderivatives,the reporting should take into account Directive (EU)2018/2001 of the European Parliament and of theCouncil ()The system boundaries of production processes,including emissions data at installation level,attributed emissions ofproduction processes and embedded emissions of goods should be used for determining data to be provided for thepurpose of fulfilling the reporting obligations.For those obligations,the importers and indirect customsrepresentatives should ensure the availability of information needed from the operators of installations.Thatinformation should be received in a timely manner for the importers and indirect customs representatives to fulfiltheir reporting obligations.That information should include standard emission factors to use for calculating directembedded emissions,notably fuel emission factors and process emission factors and reference efficiency factors forelectricity and heat production.90L130,16.5.2023,p.52.(Commission Implementing Regulation (EU)2018/2066 of 19 December 2018 on the monitoring and reporting of greenhouse gasemissions pursuant to Directive 2003/87/EC of the European Parliament and of the Council and amending Commission Regulation但U)No6012012(0L334,31.12.2018,p.1).(Directive(EU)2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use ofenergyfrom renewable sources (OJ L 328,21.12.2018,p.82).15.9.2023ENL228/95Since the beginning of the reporting period starts on 1 October 2023,importers and indirect customsrepresentatives have limited time available to ensure compliance with the reporting obligations.Synergies can beobtained with the monitoring and reporting systems already used by third country operators.A temporaryderogation to the calculation methods for reporting embedded emissions should therefore be allowed for a limitedperiod,until end of 2024.That flexibility should apply when the operator in a third country is subject to amandatory monitoring and reporting system associated to a carbon pricing scheme,or to other mandatorymonitoring and reporting schemes,or when the operator is monitoring the emissions of the installation,includingfor an emissions reduction project.For a limited period,until 31 July 2024,reporting declarants that would not be able to obtain all the informationfrom third country operators to determine the actual embedded emissions of the imported goods in accordancewith the methodology set in Annex Ill to this Regulation should be able to use and refer to an alterative methodfor determining the direct embedded emissions.(10)The reporting obligations should also afford some flexibility for the determination of the production steps ininstallations that do not account for a significant part of the embedded direct emissions of the imported goods.Such would be typically the case for the final production steps of steel or aluminium downstream products.In thatcase,a derogation from the required reporting obligations should be provided and estimated values may bereported for the production steps in installations whose contribution to direct emissions do not exceed 20%of thetotal embedded emissions of the imported goods.That threshold should ensure sufficient flexibility for smalloperators in third countries.(11)One of the objectives of the transitional period is to collect data for the purpose of further specifying,in theimplementing act pursuant to Article 7(7)of Regulation (EU)2023956,the methodology for calculating embeddedindirect emissions after that period.In that context,the reporting of indirect emissions during the transitional periodshould be open and designed to allow to select the most appropriate value among those listed in Section 4.3 inAnnex IV to Regulation(EU)2023956.Reporting of indirect emissions should however not include reportingbased on the average emission factor of the Union grid as that value is already known by the Commission.(12)Data collected during the transitional period should provide the basis for the reports that the Commission is topresent in accordance with Article 30(2)and (3)of Regulation (EU)2023956.Data collected during thetransitional period should also help define a unique monitoring,reporting and verification methodology after thetransitional period.The assessment of data collected should in particular be used for the Commission's work inview of adjusting the methodology applicable after the transitional period.(13)The indicative range of penalties that are to be imposed on a reporting declarant who has failed to respect thereporting obligations should be based on the default values made available and published by the Commission forthe transitional period for the embedded emissions that were not reported.The indicative maximum range shouldbe coherent with the penalty pursuant to Article 16(3)and (4)of Directive 200387/EC of the European Parliamentand of the Council ()while also taking into account that the obligation in the transitional period is limited to datareporting.The criteria to be used by competent authorities for determining the actual amount of the penalty shouldbe based on the gravity and duration of the failure to report.The Commission should monitor the CBAM reports inorder to provide for an indicative assessment of the information needed by the competent authorities and to ensurecoherency of the penalties to be applied.(14)In order to ensure the efficient implementation of reporting obligations,an electronic database,the CBAMTransitional Registry,should be established by the Commission to collect the information reported during thetransitional period.The CBAM Transitional Registry should be the basis for the establishment of the CBAM Registrypursuant to Article 14 of Regulation (EU)2023956.(Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gasemission allowance trading within the Union and amending Council Directive 96/61/EC (O]L 275,2 5.10.2003,p.32).