Case Study

Achieving CBAM Compliance for an Aluminum Products Producer

SUMMARY/OVERVIEW

Delivering on Customer and Legal Requirements for an EU-Facing Supply Chain

In a global economy, compliance with international standards becomes a necessity.

One U.S.-based company that serves customers within the European Union (EU) learned it must comply with the EU’s Carbon Border Adjustment Mechanism (CBAM) and needed assistance from BDO to prepare. This new regulatory framework introduces emissions reporting and tax burdens for certain carbon-intensive goods being imported into the EU.

Key Takeaways

Calculated embedded emissions of products needed to comply with CBAM     

Established a framework for better visibility into emissions and carbon pricing

Maintained EU market access by navigating complex reporting requirements 

Aluminum can supply line
The Challenge

Navigating Imminent Reporting Requirements

The client, a producer of semi-fabricated specialty aluminum products, faced the daunting task of calculating embedded carbon emissions for CBAM-covered goods produced across nearly a dozen manufacturing facilities.

To achieve compliance, the client needed to quickly understand the new regulation, source the data needed from each facility, and disclose required information using CBAM’s reporting template. All of this had to be completed within a tight timeframe, as CBAM’s phased-in compliance requirements were beginning to go into effect.

Worker on manufacturing floor
The Approach

Calculating Embedded Emissions for Compliance

With help from BDO’s global and U.S.-based resources, our team guided the client through the maze of CBAM regulations. 

  1. We began by conducting a detailed analysis of CBAM requirements and identifying the company’s goods that fell under the regulation’s purview.

  2. The client needed to gather relevant data — including emissions, energy, quantity of materials, and precursors — that would be used to calculate embedded emissions for each product covered by CBAM. Multiple BDO teams worked to gather information, calculate embedded emissions data, and automate data analysis, the output of which was then used to populate the CBAM reporting template. 

  3. We also advised the client on preparing for subsequent CBAM submissions and created a data repository for fiscal year data. Throughout the project, our professionals collaborated closely with various departments and stakeholders to manage the complexities of CBAM compliance.

Worker on the manufacturing floor
The Results

Developing a Framework for Disclosure 

Using BDO’s extensive domestic and international resources, we provided end-to-end support that guided the client through every phase of CBAM compliance: understanding the regulation, gathering data, calculating embedded emissions, and consolidating emissions data at the facility level. 

With the help of our experienced professionals, the client:

  • Avoided penalties for noncompliance by meeting the CBAM reporting deadline for 2023 data, due in 2024

  • Has a trusted advisor to support their fiscal year 2024 CBAM compliance requirements, due in 2025 

  • Improved its readiness and reporting accuracy with the framework we established 

  • Prepared for its 2025 reporting obligations with our advice and assistance with emissions calculations  

Our comprehensive approach enabled the client to achieve compliance and have better visibility into future emissions and carbon pricing requirements. By building on our team’s in-depth experience and cross-firm resources, the company is now well positioned to meet its future CBAM reporting obligations. 

Information gathered for reporting can also provide insight into future production planning. Embedded emissions data will be used to calculate the carbon taxes on CBAM goods that EU importers must pay beginning in 2027, so non-EU suppliers that lower their products’ carbon footprints stand to gain a competitive advantage in the market.

We supported our client through the full spectrum of CBAM compliance, leveraging our extensive capabilities in international trade, sustainability, and data analysis. By establishing a framework for better visibility into the emissions and carbon pricing of their products, the client is now positioned to fulfill CBAM’s recurring reporting obligations and adapt as the regulation’s requirements continue to phase in.
Tyler Potter
Senior Manager, Customs & International Trade Services BDO USA

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