What is CBAM and who does it apply to?
A basic overview of the CBAM mechanism — Carbon Border Adjustment Mechanism.
What is CBAM and who does it apply to?
CBAM (Carbon Border Adjustment Mechanism) is the EU's carbon border adjustment mechanism. Its purpose is to prevent so-called carbon leakage — the relocation of production to countries with lower climate standards — and to ensure fair competition for European manufacturers who pay for emissions under the EU ETS system.
Who does CBAM apply to?
The mechanism applies to importers of selected commodities from non-EU countries. Specifically, it covers the following categories:
- Cement — clinker, Portland cement, hydraulic cements
- Iron and steel — pig iron, steel semi-finished products, tubes
- Aluminium — unwrought aluminium, aluminium oxide
- Fertilisers — nitrogen fertilisers (ammonia, urea, nitrates)
- Hydrogen — hydrogen for industrial use
- Electricity — electricity imported from non-member states
If you import these products into the EU, you will be required to comply with CBAM obligations from 2026.
When does CBAM start?
From 1 January 2026, financial obligations apply. The transitional period (2023–2025) served for data collection and preparation — from 2026, importers must actually pay for the carbon footprint of imported goods.
How does the payment work?
Importers must purchase CBAM certificates in quantities corresponding to the embedded emissions of imported goods. The certificate price is derived from the EU ETS allowance price (the average weekly price on European exchanges). In effect, importers pay per tonne of CO₂e at a price comparable to what European manufacturers pay under the ETS.
The calculation includes direct emissions (production) and, from 2027, indirect emissions (electricity). For goods without verified data, default values from the regulation's annexes are used.
CBAM is a key instrument of European climate policy. If you import affected commodities, we recommend preparing your reporting and obligation calculations well in advance.