Malta introduces penalty framework for CBAM

The EU Carbon Border Adjustment Mechanism (CBAM) puts a carbon cost on specified goods imported into the EU: cement, iron and steel, aluminium, chemicals, fertilisers, hydrogen and electricity. Since 1 January 2026, certain importers of these goods must, in principle, be or act through an authorised CBAM declarant. They must declare the emissions embedded in their imports each year and surrender CBAM certificates to cover them. The first CBAM declaration and surrender, for imports made during 2026, is due by 30 September 2027. The main highlights are summarised below.  

On 25 September 2026, Malta introduced regulations in the form of Legal Notice 254 of 2026  ‘Carbon Border Adjustment Mechanism (Implementing) Regulations, 2026’ (the ‘Regulations’). These Regulations implement the requirements of the EU Carbon Border Adjustment Mechanism (Regulation (EU) 2023/956, the "CBAM Regulation") as regards the imposition and enforcement of administrative penalties.

Framework of penalties

The Regulations provide that any authorised CBAM declarant, importer or authorised representative within the scope of the CBAM Regulation who fails to comply with its provisions may be subject to the measures and administrative penalties set out in Article 16(3) and (4) of Directive 2003/87/EC (which established the EU Emissions Trading System for greenhouse gases), and in regulation 9(7) and (8) of the Maltese rules transposing that Directive (S.L. 643.02).

In summary, under the EU Emissions Trading System, an operator that does not surrender, by 30 September each year, a sufficient number of allowances to cover its emissions for the preceding year is generally liable to an excess emissions penalty of EUR 100 for each tonne of carbon dioxide equivalent (CO₂e) not covered, indexed to the European consumer index. In principle, payment of the penalty would not release the operator from the obligation to surrender the missing allowances.

Imposition of penalties

The Climate Action Authority would notify the authorised CBAM declarant, or the person in breach, in writing of the administrative penalty imposed, by means of a judicial letter. The person notified may appeal within 20 days from the date of service before the Administrative Review Tribunal.

Next steps

Businesses importing goods that are likely to fall within the scope of the CBAM Regulation are strongly advised to consider whether any exemption or threshold could apply, assess whether they need to apply for the status of authorised CBAM declarant, and engage with their suppliers early to obtain the emissions data that may be needed.  

How we can help

If you have questions regarding the obligations outlined above and wish to find out more about the impact of the CBAM on your business, please do not hesitate to contact us.