CBAM: The EU Carbon Border Tax, Explained for Importers and Exporters

The Carbon Border Adjustment Mechanism is the EU's carbon price on imports. Importers pay for the greenhouse gases embedded in covered goods, so that imported steel or cement carries a carbon cost comparable to EU-made equivalents.

Six sectors: iron and steel, cement, aluminium, fertilisers, hydrogen and electricity, identified by CN code. Downstream extensions (screws, tubes, wire products) are under discussion for around 2028 but are not law today.

The definitive regime started 1 January 2026. The 2023 to 2025 phase was reporting only; since January, financial liability accrues on every covered import.

The EU importer, or their indirect customs representative acting as declarant. Exporters have no direct EU obligation, but their data determines what their customers pay.

Regulation (EU) 2023/956 as amended by the Omnibus Regulation (EU) 2025/2083; default values in Implementing Regulation (EU) 2025/2621, corrected by IR (EU) 2026/1740; the calculation methodology in IR (EU) 2025/2547.

No. It is a certificate obligation priced off the EU ETS, not a customs duty. The cash mechanics differ: costs accrue at import but certificates are surrendered once a year.

If your combined annual imports of iron and steel, cement, aluminium and fertilisers do not exceed 50 tonnes of net mass, you are fully exempt: no authorisation, no declaration, no certificates. The Commission estimates this frees roughly 90% of importers.

Combined: cumulative net mass across all covered goods and all CN codes, per legal entity with its own EORI, per calendar year.

The test is "does not exceed", so at or below 50 tonnes keeps the exemption. The 51st tonne loses it for the whole year.

No, because they never benefit from the exemption at all. Any imported quantity of either is in scope regardless of volume.

The entire calendar year's imports fall into scope, retroactively to January, and you needed authorised declarant status before the crossing shipment. Importing above the line without it blocks customs clearance and opens penalty proceedings at three to five times the standard rate.

Emission intensity (verified actual or default) times tonnage, minus a free allocation adjustment mirroring what an equivalent EU plant would receive, times the ETS-linked certificate price. Only the intensity is under your control, and only through data.

For 2026 imports, the quarterly average of EU ETS auction prices; from 2027, a weekly average.

Nothing is bought during 2026. Certificate sales open 1 February 2027, and the first declaration with certificate surrender is due 30 September 2027 for everything imported in 2026. Costs accrue now, cash leaves later, which is why provisioning in 2026 matters.

Fallback emission intensities set per product and country, used whenever an importer cannot present verified actual data. They are country averages with a deliberate surcharge on top.

10% in 2026, 20% in 2027, 30% from 2028 for cement, iron and steel, and aluminium. Fertilisers carry a reduced 1%.

Only if it is effectively paid at the installation (Article 9). Free allocation does not qualify, which is why Turkey's 2026 pilot ETS, running on full free allocation, currently yields no deduction.

No. They are the fallback. Verified actual data from the producing installation always takes precedence when the importer can present it.

No. Defaults sit at the country average plus the mark-up. Producers dirtier than that line pay less on defaults; efficient producers, such as scrap-based EAF steel, pay the gap, which is where the money is.

Yes. The choice is made per good and per installation. Verified data for your biggest suppliers and defaults for the long tail is a common, legitimate structure.

The Commission published IR (EU) 2026/1740, correcting the December regulation by replacing Annexes I and IV in full, with retroactive effect from 1 January 2026. Any cost model built on the December figures needs re-checking.

Turkey received no national default for cement, so unverified Turkish Portland cement carries the other-countries value of 1.584 t CO2e per tonne as reported, roughly 80% above the reported actual performance of Turkish kilns.

Yes, without exception since 1 January 2026. Actual emissions may only enter a declaration if an accredited third-party verifier has signed them off; unverified supplier spreadsheets count for nothing.

The framework builds on the EU ETS verification system via national accreditation bodies. The unresolved point in practice is coverage and recognition of verifiers operating in third countries, the issue exporter associations keep raising.

Yes in practice. Verification attaches to the installation's data for the goods concerned, so one verified dataset can support every customer importing those goods.

Before the production of the goods you want covered. Monitoring cannot be reconstructed after the fact, so goods produced without it ride on default values permanently.

1 February 2027: certificate sales open. 30 September 2027: first annual declaration and certificate surrender, covering 2026 imports. Every 30 September thereafter for the prior year.

Failure to surrender certificates costs 100 euros per tonne of CO2e at the standard rate, indexed. Importing covered goods above the threshold without authorisation runs at three to five times that, reported around 300 to 500 euros per tonne, and paying a penalty does not cancel the certificate obligation.

Set up installation-level monitoring aligned with the CBAM methodology, book an accredited verifier early, and build one verification-ready data pack reusable across all EU customers. Verified data is becoming a condition of market access, not a courtesy.

Rank suppliers by the gap between their default and plausible actual intensity times tonnage, push the top of that list toward verification, provision 2026 costs before the 2027 cash call, and add CBAM data and cost clauses at every contract renewal.