Carbon Border Adjustment Mechanism (CBAM)

What Is Carbon Border Adjustment Mechanism?

The Carbon Border Adjustment Mechanism (CBAM) ensures that imported goods in the EU bear the same climate costs as European products. In the future, importers will be required to report the CO₂ emissions generated during the production of their goods and purchase the relevant CBAM certificates.

Why Was the CBAM Introduced?

The aim is to limit global climate change, prevent carbon leakage and ensure fair competition between European and foreign manufacturers. At the same time, the CBAM creates incentives for companies to make their production more climate-friendly and supply chains more transparent.

What Regulations Will Apply From 1 January 2026?

CBAM will be fully implemented on 1 January 2026. Goods covered by CBAM can only be released for free circulation if the declarant is registered as an 'authorised CBAM declarant'. Typically, this will be the importer or an authorised representative based in the EU. The CBAM transitional register and quarterly reports will be replaced by the CBAM register and annual reports. Registration in the CBAM transitional register will not be sufficient in 2026.

A valid CBAM account number must be provided in the customs declaration. This account will later be used to manage and redeem the required CBAM certificates. Authorised declarants must report the quantity of imported goods and the direct and indirect greenhouse gas emissions contained therein once a year. The required number of CBAM certificates will be calculated based on this information. The price of these certificates is based on the weekly average price of EU ETS certificates traded in the European Emissions Trading System.

Which Goods Are Affected?

The CBAM primarily affects energy-intensive industries, such as steel, cement and chemicals, because they are responsible for a significant proportion of industrial CO₂ emissions. It specifically applies to cement, iron, steel, aluminium, fertilisers, electricity and hydrogen.

The EU plans to gradually extend the CBAM to other industries and product groups in the long term.

Importers are responsible for complying with the obligations when importing goods into the EU. Failure to meet these requirements may result in fines of between ten and fifty euros per tonne of unreported emissions.

How CBAM Works in Practice

• Collecting data: The importer requests CO₂ data from the manufacturer, documents it and reports it electronically via the CBAM register.

• Purchasing certificates: A corresponding certificate must be purchased for every tonne of CO₂ emissions from the imported goods.

• Processing payments: The costs are based on the current EU ETS price and are processed via the CBAM account.

• Reporting: The importer reports the quantities and emissions annually to confirm the required number of certificates.

How Companies Can Prepare Now

• Check which goods and quantities are affected by CBAM. Companies with an annual import volume of less than 50 tonnes are not subject to CBAM.

• Record the CO₂ values of your suppliers along the entire supply chain.

• Register early as an authorised CBAM declarant and set up a CBAM account.