Position Paper - CBAM Downstream Extension: The Perspective of the Automotive Industry

ACEA position paper CBAMdownstreamextension:ACEAlight vehiclesposition onthelegislative proposal This paper concerns the position of ACEA light vehicle (LV) manufacturers only. LVs areconsidered to be passenger cars and light commercial vehicles (vans). The position of ACEA ACEAKEYRECOMMENDATIONS 1.Provide additional clarity and details on the calculations used to consider goods for 2.Keep the exclusion of passenger vehicles from the CBAM scope,at this stage. 3.Postpone the 2028 application of extension until 2030 or at leasttwoyears afterentry into force of the regulation, whichever is later, ensuring room to analyse and 4.Introduce an additionalone-tonnethresholdper supplier, per reporting period ‘de- 5.Take into account the current lack of accredited verifiers and include flexibilitieswhere needed. 6.See Annex 1 for tariff line specific requests related to automotive parts. INTRODUCTION TheCarbon Border Adjustment Mechanism(CBAM)will assistthe members of theEuropeanAutomobile Manufacturers’Association(ACEA) in reaching climate neutrality commitments Motor vehicle manufacturing is amongst the user sectors most impacted by theimplementation of CBAM. Our members import and process large volumes of steel andaluminum,and their role in the proper functioning of the mechanism is crucial, given the need Our manufacturers are also the importers of tens of thousands of other products of whichCBAM goods are a substantial element. Its potential impact on our sector will increasesignificantly as the scope of CBAM extends horizontally to other productsandverticallyamongst those products’ value chains. Therefore,following the proposal of the European GENERAL RECOMMENDATIONS 1.TIMINGOF THEIMPLEMENTATION OF DOWNSTREAM CBAM entered its implementation phase in2026,but the first surrender of CBAM certificateswill only take place in September 2027. Only then will companies be able to truly assess howmuch they are financially affected by the system. After such a step, an evaluation of the This should be avoided through delaying the entry into force of the downstream extensionproposal to at least 2030, ortwoyears after entry into force of the regulation, whichever 2.ADDITIONALREPORTING“DE-MINIMIS” In addition to the recommendation laid down in the first point, an adjusted de-minimis isneeded in order to mitigatetheadministrative impactthatdownstream extension will have on CBAM needs a reporting simplification tool forlargeimporters that maintainstheenvironmental integrity of the existing de-minimis but also provides some reporting relief forlarge importers.On behalf of light vehicle manufacturers, ACEA proposes introducing anadditionalone-tonne threshold per supplier, per reporting period. This would significantly 3.INDUSTRYCONSULTATION While it is vital that objective-based criteria are used in an assessment for inclusion or non-inclusion in CBAM, theEuropeanCommission should also assess the willingness of specificindustrial sectors to be included in CBAM or not. Manufacturers themselves are best placedtoevaluatecarbon leakage risk within their sector and to what extent their competitiveness is In this respect, ACEAregrets thelimited opportunityofindustryengagement in the extensiondebate,besides the public consultation. The inclusion of a sector in the downstreamextension warrants significant industry consultation beforehand.Automotive goods are now impact assessment clearly statesthat transport equipment only has a very limitedcontribution to decarbonisation under a CBAMcontext. 4.TRANSPARENCY OFDECISION-MAKING There remain many unanswered questions on the current legislative proposal and themethodology used to consider goods for inclusion in or exclusion from the downstreamextension. The combination of trade intensity, cost push factor threshold, and EU productionemissions floor, as basis for including goods is understood.However,a detailed overview of First and foremost, the extension should remain targeted, proportionate and aligned with Besides that, repeated waves of expansion within a comprehensive CBAM framework maydrive complexity to a critical level,while also undermining the stability of the operationalsystem. With regards to the downstream extension proposal, concerns arise that the same ACEA recommends that any scope adjustment takes into account supply chain realities,especially for complex and global products like automotive ones.Furthermore, data 5.LACK OF VERIFICATIONCAPACITY The lack of verification capacity, which is widely recognised by industry andMemberStates,has the potential to lead to significant disadvantages. Under the system of approving CBAMverifiers, a shortage of accredited verifiers is already expected in advance for the 2027implementation deadline. Further extending the scope to a wide variety of goods will also putadditional pressure on this shortage. Where actual emission cannot be verified, default DOWNSTREAM EXTENSION TOLIGHT ACEA regrets the limited indust