What you need to know about Carbon Border Adjustment Mechanism and Plastic Packaging Tax

12th January 2023

Well, here we are yet again. A new year and new challenges. Wishing everybody a successful and prosperous 2023.

During the first week of the year, I came across a couple of things which seem to have gone under the radar and have already, or will cause a degree of panic for exporters to the EU:

1/. CBAM – Carbon Border Adjustment Mechanism.

2/.  EU Plastic Packaging Tax regulations:


In December 2022, MEPS and the European Council provisionally agreed to introduce CBAM policies by 1st November 2023. The CBAM is a new carbon regulation designed to help the EU fight climate change. The existing ETS (EU Emissions Trading System) covers all trade within Europe so it will only affect products that are imported into the EU from third countries, eg. The UK!

So, for example, by the end of each quarter, for 2023 it will cover November and December, your EU customer will have to submit a CBAM report, declaring the total greenhouse gas emissions that are embedded in the products they have imported from you. The next CBAM report will be by the end of March 2024 and all the products imported into Europe during that period will have to be listed with the declared emissions.

The European Commission will have lists of default emission values if your customers cannot get primary values from you, the default values will most likely be higher!

Your EU customers will have to purchase one CBAM certificate for each tonne of reported direct emissions and the cost will be based on the cost of the latest weekly average ETS (EU Emissions Trading System) carbon price. However, the payment levy for import CBAM certificates will not be implemented until 2027

So, from the declaration implementation as of 1/11/23 until the levy implementation in 2027, the EU will be collecting data and building the default emission value tables.

How to Prepare

  • Start by gathering data on your carbon calculations for all the products you export
  • Understand how CBAM could affect your profitability and relationships with your EU customers
  • See what the EU’s default values could look like for your products
  • Try to reduce your carbon footprint. Your customers will be looking to buy from lower-carbon suppliers and secure long term procurement contracts.

This EU Legislation is going to cause more pain and costs to UK exporters to the EU. But it is going to happen in all countries eventually. The UK is developing its own policy and will increase costs on the products you import!

All Staff at the Sheffield International Trade Centre will undergo CBAM training, and we will offer consultancy, advice and effect on your EU customers for those clients who use the Sheffield International Trade Chamber Customs declaration service.

Plastic Packaging

An exporter had some issues last week with a delivery into Spain. The goods were held at Spanish customs whilst the plastic regulations introduced on 1/1/23 were sorted out.

Now the situation is very unclear. It seems the EU directive on Plastic Packaging Tax enables EU member states to decide their own rules! This is not at all helpful from a UK exporters perspective selling products in multiple EU markets. As there seems to be very little, easily found official information. I have had to do some digging.

Italy, apparently has proposed a plastic tax on the consumption of manufactured single-use items, which have or will have the function of containing, protecting, handling or delivering goods or food products.

The tax rate will be set at Euro 0.45 per Kg. The tax will be collected at various levels including production, sale, purchase, and importation depending on whether an intra EU purchase are imported into the EU and the Incoterm agreed between the buyer and seller.

The initial plans were published mid-year 2021 with the intention of full implementation by 1st January 2023 though my sources tell me it will be later in 2023.

Spain it would seem has implemented the tax on 1/1/23, They have a very similar policy to Italy but goods for certain medical products will be exempt.

Also, with a planned start date of 1/1/23, Portugal has the intention to introduce a plastic and aluminium packaging (for ready made meals) at a rate of EUR 0.30 per Kg.

Poland has published draft legislation regarding plastic packaging for consumer use, with a planned start date of January 2023. Other EU member states, such as Sweden, France and Belgium and  The Netherlands have announced plans to follow suit, with details to emerge.

Efforts to reduce single use plastic is or will be implemented worldwide. We know the US and Southeast Asia are developing policies to this end.

The UK implemented their Plastic Packaging Tax policy in April 2022 at a rate of £200 per tonne.  

Now either I have resembled an ostrich and buried my head in the sand, or these new policies, though implemented, have not been policed but zero issues have come to my attention.  The first was last week when we were asked to help a South Yorkshire company exporting goods to Spain.

That situation was quickly resolved, the incoterm was Delivered at Place (DAP) whereby the UK seller commits to deliver the goods to their customer. The customer must be responsible for clearing through customs and paying all duties and taxes. The resolution occurred when The UK seller provided a document certifying the weight of single use plastic used to protect the goods in Transit. I believe this will be required in the future but at the moment this is only conjecture! I believe only those selling on Delivered Duty Paid (DDP) terms will need to find out the true impact on their shipping costs as they, sellers on DDP are the importers of record and will have to pay all import taxes.

However, to maintain competitivity, suppliers to the EU should be looking at alternative packaging systems.

For more information please do not hesitate to contact.  nick.patrick@scci.org.uk 0114 308 1740

Written by Nick Patrick, Head of Sheffield International Trade Centre.

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