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The Carbon Border Adjustment Mechanism (CBAM) puts a carbon price on imports of certain carbon-intensive goods into the EU. Who is affected, what the phases are and how importers fulfil their obligations – explained concisely.
A carbon price on imports of carbon-intensive goods into the EU – prevents carbon leakage and mirrors the EU ETS.
Iron and steel, aluminium, cement, fertilisers, electricity and hydrogen, as well as certain downstream products.
Transitional period (reporting only) since October 2023; definitive regime with CBAM certificates from 2026.
Importers must determine and disclose the greenhouse gas emissions embedded in imported goods.
The Carbon Border Adjustment Mechanism (CBAM) is an EU instrument that puts a carbon price on imports of certain carbon-intensive goods. Its aim is to prevent carbon leakage: where EU producers pay for their CO2 emissions through the EU Emissions Trading System (ETS), imports from countries with lower or no carbon prices should not gain an unfair competitive advantage. CBAM levels the playing field and incentivises climate action globally.
CBAM applies to a defined list of carbon-intensive sectors. The scope may be extended when the definitive regime is fully established.
CBAM is introduced in two phases, giving importers and third countries time to adapt.
The central concept of CBAM is the determination of greenhouse gas emissions embedded in imported goods. Importers have two options: using actual emission data from the foreign producer or EU default values. Actual data requires verification by an accredited body; default values are based on EU averages and are typically higher, creating an incentive for precise data collection.
Requirements for importers differ depending on the phase of the CBAM regime.
The EU Omnibus package introduces simplifications to CBAM in order to reduce the administrative burden for smaller importers. A de-minimis threshold is intended to exempt small importers from the obligations of the definitive regime. The underlying mechanism – a carbon price on embedded emissions of imported goods – remains unchanged; larger importers should not postpone their preparation.
CBAM affects EU importers of covered goods – companies that bring iron and steel, aluminium, cement, fertilisers, electricity or hydrogen from third countries into the EU. What matters is the nature of the imported goods, not the size of the company.
Embedded emissions are the greenhouse gas emissions produced during the manufacture of an imported good. For CBAM, direct emissions from the production process are captured; for some sectors (e.g. electricity) indirect emissions are also included. Importers may use actual producer data or EU default values.
During the transitional period (October 2023 to end of 2025) only reporting obligations apply – importers must file quarterly CBAM reports but do not yet pay a carbon price. From 2026 the definitive regime becomes active: importers must purchase and surrender CBAM certificates whose price is linked to the EU ETS price.
From 1 January 2026 the definitive CBAM regime enters into force. Importers will need 'authorised CBAM declarant' status, must purchase CBAM certificates (at the current ETS price) and surrender certificates annually equal to their verified embedded emissions. At the same time, free ETS allocations for the sectors covered by CBAM will be phased out progressively.
The Omnibus package provides for a de-minimis threshold below which importers are exempt from the obligations of the definitive CBAM regime. Small importers with only small quantities of covered goods will thus be relieved of the burden. The exact level of the threshold is still being determined in the legislative process – larger importers should nonetheless prepare early.
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