What is CBAM?
The Carbon Border Adjustment Mechanism (CBAM) is a regulation adopted by the European Union under Regulation (EU) 2023/956. It applies a carbon price to certain goods imported into the EU, ensuring that carbon costs for imported goods are equivalent to those borne by EU producers under the EU Emissions Trading System (EU ETS).
CBAM prevents “carbon leakage” — the risk that EU companies move production to countries with weaker climate regulations. It requires importers to purchase CBAM certificatescorresponding to the carbon price that would have been paid if the goods were produced under the EU ETS.
An Authorized CBAM Declarant is the importer (or indirect customs representative) who is authorized by the competent authority of a Member State to import CBAM goods and submit annual CBAM declarations. Only authorized declarants may import CBAM goods into the EU from 1 January 2026.
6 Covered Sectors
CBAM covers goods identified by specific CN (Combined Nomenclature) codes in Annex I of the regulation.
Iron & Steel
Pig iron, ferro-alloys, flat-rolled products, bars, rods, tubes, and semi-finished products.
Aluminium
Unwrought aluminium, bars, rods, profiles, wire, plates, foil, and tubes.
Cement
Clinker, Portland cement, aluminous cement, and other hydraulic cements.
Fertilisers
Ammonia, nitric acid, sulphonitric acids, and mixed chemical fertilisers.
Hydrogen
Hydrogen gas in all forms.
Electricity
Electrical energy imports.
CBAM Timeline
Quarterly CBAM reports (no financial obligations)
Financial obligations, certificate purchases start
Covering imports from 1 Jan – 31 Dec 2026
EU ETS free allocations gradually reduce to zero
Key CBAM Obligations
Annual Declaration (Article 6)
Submit by 31 May each year covering the preceding calendar year. Includes total quantity of each type of good imported, total embedded emissions (direct + indirect), and the number of CBAM certificates to be surrendered.
Embedded Emissions (Article 7)
Calculate using actual data from the installation (Annex IV methodology), or use default values set by the Commission. Covers both direct emissions (from production) and indirect emissions (from electricity consumed).
Verification (Article 8 & Annex VI)
Embedded emissions must be verified by an accredited verifier before the declaration is submitted. The verification must include site visits to installations and assessment against Annex VI principles.
Certificates (Articles 20–24)
Purchase CBAM certificates at the weekly average EU ETS auction price. Each certificate represents 1 tonne of CO₂e. Certificates must be surrendered by 31 May. Carbon prices already paid in the country of origin may be deducted (Article 9).