CBAM — Carbon Border Adjustment Mechanism
Carbon pricing at the EU border. Definitive phase from January 2026 with mandatory certificate purchases for embedded emissions in imported goods.
Overview
The Carbon Border Adjustment Mechanism (CBAM) — Regulation (EU) 2023/956 — puts a carbon price on imports of certain goods to prevent carbon leakage and ensure a level playing field for EU producers under the Emissions Trading System.
Legal basis
- Proposed: 14 July 2021
- Adopted: 10 May 2023
- Transitional phase: 1 October 2023 - 31 December 2025
- Definitive phase: 1 January 2026
Covered products
- Cement
- Iron and steel
- Aluminium
- Fertilisers
- Electricity
- Hydrogen
Transitional phase (Oct 2023 - Dec 2025)
- Quarterly reports on imported quantity and embedded emissions
- No certificate purchase required
- Actual or default emissions values permitted
Definitive phase (from January 2026)
- Annual CBAM Declaration required (deadline: 31 May each year)
- Authorised CBAM Declarant status required
- CBAM certificates purchased and surrendered annually
- First certificate surrender: 30 September 2027 (for 2026 emissions)
- Verified emissions data from producers required
- Third-party verification mandatory
2025 simplification
Regulation (EU) 2025/2083 introduced a 50-tonne annual exemption: importers with fewer than 50 tonnes/year total of all CBAM goods are exempt.
Penalties
CBAM penalties are among the most mechanically precise of any EU sustainability regulation:
- €100 per excess tonne of CO2 equivalent not covered by surrendered certificates (Art. 26) — no maximum cap on total penalty exposure
- Transitional phase (through December 2025): national fines of €10–€50 per tonne of unreported or incorrectly reported emissions; higher rates applied for repeated non-compliance
- Failure to register as an Authorised CBAM Declarant: member states set proportionate penalties; importing without declarant status may result in customs refusal
- Criminal penalties possible under national law in several member states for deliberate evasion
The absence of a cap means large importers face unconstrained financial exposure for material underreporting.
Who is affected
All importers of CBAM-covered goods above the 50-tonne annual threshold:
- Importers of cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen into the EU customs territory
- Authorised CBAM Declarant status required — companies must register with the competent authority in their member state of establishment; existing importers had until 31 March 2026
- Customs agents and indirect representatives may submit declarations on behalf of importers but the economic operator retains liability
- Importers below 50 tonnes/year total across all CBAM goods are exempt under the Simplification Regulation (EU) 2025/2083
First certificate surrender obligation falls on 30 September 2027 (covering 2026 imports).
Key articles
| Article | Subject | |---------|---------| | Art. 4 | Authorised CBAM Declarant — registration requirement and conditions | | Art. 6 | CBAM declaration — annual submission by 31 May covering prior calendar year | | Art. 7 | Calculation of embedded emissions | | Art. 26 | Penalties — €100 per excess tonne of CO2 equivalent; no cap | | Art. 35 | Transitional period reporting obligations |
Relevance to DPP
CBAM is adjacent to DPP in the carbon data ecosystem:
- Both require product-level carbon footprint data
- Companies calculating carbon footprints for batteries (Battery Regulation) may reuse methodology for CBAM
- Harmonisation of carbon footprint methodologies across regulations is ongoing
Key dates
| Date | Milestone | |------|-----------| | 1 October 2023 | Transitional phase begins (reporting only) | | 1 January 2026 | Definitive phase — certificate obligations apply | | 31 March 2026 | Authorised CBAM Declarant application deadline | | 30 September 2027 | First certificate surrender (for 2026 emissions) |