The EU’s Carbon Border Adjustment Mechanism (CBAM) is the EU’s tool to put a fair price on the carbon emitted during the production of carbon intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries. In Bosnia and Herzegovina, the application of the Carbon Border Adjustment Mechanism (CBAM) is governed by international agreements, specifically the Paris Agreement and the Sofia Declaration on the Green Agenda. As businesses navigate these frameworks, the demand for specialized legal services in the energy sector becomes increasingly significant.

Transition Period (2023-2025):

During this phase, businesses are required to submit quarterly reports. Failure to comply may result in hefty fines.

After the Permanent System Is Implemented in 2026:

Once the permanent CBAM system is in place, importers to the EU will have to annually report the quantity of goods imported into the EU in the previous year, along with the embedded greenhouse gases. They will also need to obtain a “CBAM” declaration specifying the quantity of goods, the embedded emissions, and certificates for paying the carbon import tax. The price of the certificates will be calculated based on the weekly average price of EU ETS emission units, expressed in €/ton of CO2 emitted.

What Must Businesses Do to Protect Their Production?

• During the transition period: Submit quarterly reports to adapt to CBAM and avoid penalties. The information required for the CBAM report is outlined in the EU Regulation Tables.
• In the final period: Align their production with CBAM standards, which will likely extend to other goods that BiH businesses export to the EU. This includes securing renewable energy sources (RES) and ensuring proper reporting.

 The Importance of Timely Preparation to Reduce Business Risks

In order to prepare adequately and align operations with EU and BiH regulations, it is essential to undertake comprehensive preparations, with systematic consultation from a qualified legal team. CBAM rules are strict, and non-compliance can result in severe penalties, drastically reduced competitiveness, and potentially the inability to remain on the market. For example, the selling price of aluminum is €2,300/ton, but an exporter would have to pay CBAM certificates worth €1,000/ton, making aluminum producers/processors uncompetitive.

However, with proper and timely preparation, you can safeguard your rights and prepare for CBAM by seeking assistance from our law firm, “Ibrahimović & CO.” We are the sole and permanent advisors to the “Association for H2 and RES” in Bosnia and Herzegovina, with 15 years of experience in RES projects and the green transition.

For more information on CBAM regulations. please visit: Carbon Border Adjustment Mechanism – European Commission

For more information on IA Law Firm’s expertise and range of services in the field of energy law, please visit: Energetika, rudarstvo i infrastruktura | IA Lawfirm