The legal obligation to file CBAM declarations rests with the EU importer (more precisely, the "authorized CBAM declarant"), not with the Japanese manufacturer filing declarations directly with EU authorities. However, the responsibility to calculate and provide the embedded emissions data required for those declarations consistently falls on the Japanese manufacturer. If the EU importer lacks that data, the declaration cannot be submitted — default values (conservative estimates) are applied, driving up certificate purchase costs, or in the worst case, imports are halted. CBAM compliance is not "the EU side's problem"; it is a problem for Japan's manufacturing and export operations.
Roles and Responsibilities in the Declaration Process — Who Does What
The first step to understanding CBAM's structure is to grasp the precise division of roles among three parties.
Japanese Manufacturer (Third-Country Producer)
Calculates the embedded emissions per product and provides them to the EU importer in the methodology and format prescribed by the EU Implementing Regulation (Commission Implementing Regulation 2023/1773). Must retain the underlying calculation data (energy consumption, production volume, emission factors, etc.) for five years. Since calculation accuracy directly determines CBAM certificate costs, how the manufacturer handles this shapes the overall cost.
EU Authorities (European Commission / NCAs)
The European Commission manages the CBAM Registry, overseeing certificate issuance, pricing, and surrender. Each member state's NCA (Germany: Zoll, France: DGDDI, etc.) handles the review of authorized CBAM declarants and the verification of declarations. Certificate prices are linked to the weekly average EU ETS auction price and published weekly by the European Commission.
Overview of Declaration Phases — From the Transitional Period to Full Implementation
Since its October 2023 launch, CBAM has progressively tightened obligations across two phases.
| Item | Transitional Period (2023–2025) | Full Implementation (2026–) |
|---|---|---|
| Declaration form | Quarterly reporting | Annual declaration (May 31 deadline) |
| Financial obligation | None | Ongoing certificate purchase + annual full surrender |
| Default values | Permitted as substitute | Permitted but drives large cost increase |
| Import eligibility | All EU importers | Authorized CBAM declarants only |
| Registry | CBAM Transitional Registry | CBAM Registry (permanent) |
Quarterly Reporting Flow During the Transitional Period (2023–2025)
The reporting cycle during the transitional period repeated on a quarterly basis. A significant gap in post-2026 compliance costs has emerged between companies that built robust reporting systems during this phase and those that relied on default values or failed to report at all.
STEP 2 | Japanese Manufacturer Calculates and Provides Emissions Data
Direct emissions (Scope 1) and indirect emissions from electricity (Scope 2) are calculated per tonne of product. Where calculation is not possible, EU default values (set at the top 10% highest-emitting companies in each sector) are used. Since company-specific figures below the default value reduce certificate costs, building a robust calculation system is critical.
STEP 3 | EU Importer Reports to the Transitional Registry
Submission deadline is within one month of each quarter-end (Q1: April 30, Q2: July 31, Q3: October 31, Q4: January 31 of the following year). Reported items include the imported goods, quantities, country of origin, embedded emissions, calculation methodology, and any carbon price payments made in the country of origin.
STEP 4 | Corrections and Supplementary Responses
If the NCA identifies deficiencies, a corrected submission must be resubmitted. In some cases, figures reported using default values may be updated with company-specific calculations. Because the transitional period reporting data serves as a reference baseline for the full implementation phase, improving data accuracy now translates into long-term cost management benefits.
Post-2026: Annual Declaration Flow in the Full Implementation Phase
In the full implementation phase, EU importers are obligated to hold certificates throughout the year and must simultaneously submit the annual declaration and surrender all certificates by May 31 of the following year.
Phase 2 | Ongoing Certificate Purchases and Holdings Management (January–December)
Certificates may be purchased on an ongoing basis through the CBAM Registry. Prices are linked to the EU ETS weekly average. An important constraint: the number of certificates held at each quarter-end must equal or exceed 80% of the estimated total embedded emissions for the year (EU Regulation, Article 22). Managing estimated emissions volumes and the timing of certificate purchases becomes an ongoing operational challenge throughout the year, requiring coordination with the finance team.
Phase 3 | Annual CBAM Declaration Submission (May 31 of the Following Year)
An annual declaration is submitted to the CBAM Registry for all CBAM-covered goods imported between January 1 and December 31 of the previous year. Required disclosures include goods category, quantity, country of origin, manufacturing facility, total embedded emissions, calculation methodology, and any carbon price deduction claims. Certificates equivalent to the total calculated embedded emissions must be surrendered at the time of submission.
Phase 4 | Record Keeping and Response to Authorities
Data used in declarations, calculation bases, the manufacturing facility's energy data, documents provided to the EU importer, and transaction contracts must be retained for five years from the declaration year. A system capable of responding to NCA reviews and verifications is required. In cases of deficiency or non-declaration, a penalty of €100/tCO2e (equivalent to the EU ETS non-compliance penalty) applies.
Embedded Emissions Calculation Methodology — Three Approaches
The EU Implementing Regulation (2023/1773) recognizes three calculation methods. Selection depends on the balance between accuracy and operational burden.
Method 1 | Actual Emissions Monitoring (Most Recommended)
Direct measurement of fuel and electricity consumption at the facility, multiplied by emission factors, in accordance with the calculation formulas prescribed in the EU Implementing Regulation. This approach offers the highest accuracy and, where company-specific emissions are below the default value, directly reduces certificate costs. Data used in mandatory reporting under Japan's Act on Rational Use of Energy (energy consumption and intensity) may be reusable, so advance verification of whether new measurement investment can be minimized is recommended.
Method 2 | Mass Balance Method
Emissions are estimated from the material balance of inputs (raw materials, fuels) and outputs (products, by-products) in the manufacturing process. Suitable for process industries (chemicals, fertilizers, etc.) where processes are complex and direct measurement is difficult. Transparency of calculation is relatively easy to ensure, but the methodology for setting allocation factors may be subject to EU authority review.
Method 3 | Use of Default Values (Last Resort)
Uses values set by the European Commission by product and country of origin. This is a fallback where company-specific calculation data cannot be prepared, but default values are set at the top 10% highest-emitting companies in each sector and are almost always substantially higher than actual company emissions. Companies should treat default values as a temporary measure, with a planned migration to Method 1.
Calculation Units and the Allocation Challenge
Calculated figures are expressed in tCO2e per tonne of product (per MWh for certain goods). Where multiple products are manufactured at the same facility, a process is required to allocate energy consumption and production volume by equipment to each product. This allocation calculation — determining what proportion of each piece of equipment's energy should be assigned to which product — is technically the most demanding part of the calculation process. The allocation method must be selected in accordance with the hierarchy prescribed in EU regulations (actual measurement → contractual values → estimated values).
Data Set Japanese Manufacturers Must Provide to EU Importers
The following organizes the data that EU importers need to obtain from Japanese manufacturers to prepare annual CBAM declarations. In practice, a formal "CBAM Data Request Form" will arrive from the EU importer.
| Item | Content / Notes |
|---|---|
| Manufacturing Facility Information | Plant name, address, geographic coordinates (latitude and longitude). A facility ID registered in the EU CBAM Registry may be assigned. |
| CN Code of the Covered Product | EU customs tariff classification (8-digit). The CN code may differ depending on the degree of processing, so confirmation is required for each export product. |
| Direct Emissions (Scope 1) | Direct emissions per tonne of product (tCO2e). Provided together with the underlying data on fuel type, consumption, and IPCC emission factor basis. |
| Indirect Emissions (Scope 2) | CO2 emissions from electricity per tonne of product. Uses either Japan's grid average emission factor (published by the Ministry of the Environment) or the emission factor for actual purchased power. |
| Description of Calculation Methodology | A document (in English) describing the calculation method in compliance with the EU Implementing Regulation. Must be sufficiently detailed to withstand an audit of the calculation basis. |
| Third-Country Carbon Price Information | Amount of carbon tax paid in Japan, legal basis, and proof of payment (only when applying for a deduction). |
Third-Country Carbon Price Deduction Claims — Can Carbon Tax Payments in Japan Be Applied?
Where a carbon price has been paid in the country of origin during the manufacture of CBAM-covered goods, that amount may be deducted from the CBAM certificate purchase volume (EU Regulation, Article 9).
Requirement 1 | The Charge Must Be Imposed by Law
Voluntary emissions trading and voluntary carbon offsets are excluded. Japan's Climate Change Levy (the surcharge on the Oil and Coal Tax) has a statutory basis and therefore meets this requirement. Purchases of J-Credits are not a legal obligation and therefore do not qualify for deduction.
Requirement 2 | The Charge Must Have Actually Been Paid
Any amount effectively not borne due to exemptions, refunds, or subsidies cannot be deducted. In Japan, some operators receive preferential treatment under the Act on Rational Use of Energy; verification of the actual net amount borne is required.
Requirement 3 | The Charge Must Correspond to the Embedded Emissions
It must be demonstrated that the carbon price paid directly corresponds to the embedded emissions of the declared product. Maintaining traceability between emissions and carbon price payments in accounting records is a practical prerequisite.
Assessment of Japan's Current Position: Japan's Climate Change Levy stands at ¥289/tCO2 (approximately €1.7/tCO2), representing roughly 2–3% of EU ETS carbon prices (which are in the €65–85 range). The deduction amount is small, but there is value in building a track record of claims as an institutional right and in establishing the calculation workflow in preparation for future carbon price increases (including the full launch of GX-ETS).
Penalties and Record-Keeping Obligations
Penalty for Failure to Surrender Certificates
Where the required certificates have not been fully surrendered by the annual declaration deadline (May 31), a penalty of €100/tCO2e applies to the unsurrendered portion (EU Regulation, Article 26) — the same level as the EU ETS non-compliance penalty. In addition, the unsurrendered portion is carried over and added to the following year's certificate obligation. Individual NCAs may also impose their own additional sanctions.
Deficient or False Declarations
Incomplete declarations or false emissions data are subject to NCA correction orders and fines under national law. Understated emissions will result in a demand to purchase additional certificates. Deliberately false declarations may be subject to more severe sanctions.
Record-Keeping Obligation (Five Years)
Data used in declarations, calculation bases, the manufacturing facility's energy data, documents provided to the EU importer, and transaction contracts must be retained for five years from the declaration year. Managing records electronically and maintaining the ability to produce them for NCA inquiries within one week is recommended.
Operational Checklist — Items to Verify Now
Build an Emissions Calculation System
① A system exists to calculate direct emissions (Scope 1) by product and manufacturing facility. ② The grid emission factor for electricity (the adjusted emission factor published by the Ministry of the Environment) is known. ③ Verified whether data from mandatory reporting under Japan's Act on Rational Use of Energy can be reused for CBAM calculations. ④ A document management system capable of retaining calculation basis data for five years is in place. ⑤ Company-specific calculated values have been compared against EU default values and the cost differential has been estimated.
Establish Coordination with EU Importers and Internal Teams
① The format, deadlines, and division of responsibilities for data requests from EU importers are specified in the annual trading contract. ② An internal system (assigned personnel, approval workflow) is in place to provide CBAM compliance data in English. ③ Japan carbon tax payment records are maintained in accounting books and evidence required for deduction claims is retained. ④ CBAM guidelines from industry associations (Japan Iron and Steel Federation, Japan Aluminium Association, etc.) have been consulted.
CBAM is a regime in which EU importers file declarations, but the majority of practical compliance costs and operational burden are concentrated on the Japanese manufacturer's side. Whether a company can calculate its own embedded emissions directly determines certificate purchase costs, and the readiness of its data provision system determines the continuity of its relationship with EU importers. As full implementation proceeds from 2026, CBAM compliance capability is becoming one of the competitive conditions for exports to Europe.