CBAM entered its definitive regime in 2026. Learn the compliance requirements, certificate costs, reporting rules, and upcoming changes.

The Carbon Border Adjustment Mechanism (CBAM) is an EU policy designed to address carbon leakage resulting from the import of certain high-carbon products, where carbon-intensive production shifts to countries with lower electricity costs and less stringent decarbonisation and reporting requirements. CBAM applies to imports of cement, aluminium, iron and steel, fertilisers, electricity, and hydrogen.

A transitional phase ran from October 2023 to December 2025 during which importers of CBAM-covered goods were required to report the carbon emissions embedded in their imports.

CBAM moved to the definitive regime on 1 January 2026, requiring importers to purchase and surrender CBAM certificates corresponding to their reported embedded emissions.

CBAM Compliance Requirements for Importers

All organisations that expect to import goods covered by CBAM above the minimum thresholds must apply for authorised CBAM declarant status by 31 March 2026. To continue importing beyond the minimum requirements, companies must hold either a valid CBAM account number or an application reference number, including for imports made before the application deadline.

For cement, aluminium, iron and steel, and fertilisers, a weight-based threshold of 50 tonnes per calendar year applies. Organisations importing less than this amount are not required to comply. There are no minimum thresholds for hydrogen or electricity, meaning all imports of these commodities are included under CBAM.

Annual CBAM Declaration Requirements

Authorised CBAM declarants are required to submit an annual CBAM declaration including calculated emissions. Emissions must either use actual data or default values provided by the European commission. To avoid underestimation and incentivise the use of actual data, default values are inflated by 30%.

Purchasing CBAM Certificates

Once an organisation has declared the embedded emissions in its imports, CBAM certificates must be purchased and surrendered to cover each tCO2e of embedded emissions reported. The first surrender deadline is 30 September 2027, covering emissions from the 2026 reporting year.

CBAM certificates are priced in line with the EU Emissions Trading System (EU-ETS), starting at a quarterly average price for 2026 and moving to a weekly price from 2027. If an import has previously been subject to carbon pricing in a third country, the price already paid will be deducted from the price to pay under CBAM. To simplify this process, the EU will make default third-country carbon prices available, along with approved calculation methodologies.

Future Proposed CBAM Changes

In December 2025, the European Commission released proposed CBAM changes based on feedback and findings from the transitional phase. These proposals aim to strengthen the mechanism and support EU industry.

Extension to downstream products: from 1 January 2028, the scope of CBAM will be extended to include an additional 180 steel and aluminium-intensive products, primarily machinery and appliances. This is intended to prevent carbon leakage from shifting downstream in the supply chain through production relocation or the replacement of EU-manufactured goods with imported alternatives.

Additional anti-circumvention measures: The EU has proposed measures to address circumvention risks identified in the transitional period. Pre-consumer aluminium and steel scrap are included in CBAM calculations; reporting requirements have been enhanced to improve traceability; and the European Commission has been provided with the authority to request additional evidence or apply country default values where actual values are deemed unreliable.

Temporary decarbonisation fund: a temporary fund has been put in place to support EU producers of CBAM-covered goods and address lost competitiveness. This will be used to reimburse a portion of EU-ETS carbon costs for goods which continue to experience risks of carbon leakage.