EU CBAM has introduced a number of new terminologies that organisations are familiarising themselves with as we speak. One of these is the concept of an "installation".
The legislation defines an installation as a stationary technical unit where a production process is carried out - effectively a manufacturer of a product.
Critically for CBAM, a production process means the parts of an installation in which chemical or physical processes are carried out to produce CBAM goods.
CBAM goods are those defined under an aggregated goods category as outlined by the EU CBAM regulation (i.e. producing goods of a CN code captured under the EU CBAM regulation such as aluminium or steel products).
Installations are generally based in "third-countries" which are those not based in the EU, Lichtenstein, Norway, Iceland or Switzerland (where there is an ETS link). However, it is worth noting that manufacturers of CBAM precursor goods that export product outside the EU where the final good is a CBAM good and is imported into the EU must report the embedded emissions of their goods to their customers. In this way, EU-based manufacturers of CBAM goods precursors are installations as well.
All installations have an associated operator. In the CBAM declaration, a declarant will be required to define both the name of the installation and the name and contact details of the operator of that installation.
The legislation defines an operator as "any person who operates or controls an installation in a third (i.e. non-EU) country."
In simple, if you are processing and subsequently selling goods captured under a CBAM CN Code that end up being released for free circulation into the EU then you are the operator of an installation under EU CBAM and you need to measure your contribution to the embedded emissions of these products.
Installations can appear throughout a product's value chain. For example, an installation could be early in the value chain - e.g. you are a steel mill - or that you are further down the value chain - e.g. you buy steel coil and process this into steel brackets. The act of processing (e.g. the consumption of electricity by static machines at your factory) results in you having an obligation under EU CBAM to attribute the emissions generated by this process to the end product manufactured by your goods.
Where you have been requested by your customer to provide "CBAM data", or similar, this is because they have to report you as the operator of the installation that produced the CBAM goods that they are importing into the EU.
Note, if you do not produce CBAM goods, and you simply distribute them (e.g. you operate a distribution or service centre business model that sources CBAM goods and your customers subsequently import these goods into the EU) then you will still be required to pass on CBAM data to those customers that are buying CBAM goods from you. You will therefore need to be able to provide customers on a per installation basis the CBAM data associated with a that installation for each product they have produced.
CarbonChain has prepared the following guidance in order to support operators of installations with obtaining data and preparing it in the correct format to report under the EU CBAM accounting methodology. If you have any questions or clarifications, please don't hesitate to reach out to the CarbonChain team.