Carbon Border Adjustment Mechanism (CBAM)

On January 1, 2026, the full implementation of the Carbon Border Adjustment Mechanism (CBAM) commenced. Regulation 2023/956[1] has established the CBAM to address greenhouse gas emissions during the production of carbon-intensive goods imported into the customs territory of the Union in order to prevent the risk of carbon leakage.  Generally, the aim is to reduce global carbon emissions and support the goals of the Paris Agreement, also by creating incentives for emission reductions by operators in third countries.

The CBAM complements the System of greenhouse gas emission allowance within the Union (EU ETS), established under Directive 2003/87/EC[2], by applying an equivalent set of rules to imported products, resulting in a carbon price that is equivalent for imports and domestic products. In accordance with CBAM, importers are required to account for and pay taxes based on the greenhouse gas emissions embedded in imported goods. So far, the obligation applies only to a certain number of products with a high risk of carbon leakage, such as: iron/steel, cement, fertilizers, aluminum, hydrogen and electricity.

Starting from October 2023, CBAM was implemented in phases. During the transitional period, importers of goods (or their indirect customs representative) faced limited obligations:

  • to report greenhouse gas emissions embedded in their imports (direct and indirect emissions) quarterly, without making any financial payments or adjustments.
  • to register in the CBAM Transitional Registry, developed by the EU Commission to assist importers in making and submitting the CBAM report, and also allow communication between the Commission, the competent authorities, the national customs authorities and importers.
[1] Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishing a carbon border adjustment mechanism, OJ L 130, 16.5.2023.
[2] Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a system for greenhouse gas emission allowance trading within the Union and amending Council Directive 96/61/EC, OJ L 275, 25.10.2003.

Simplifications for the CBAM. Introduced as part of the “Omnibus I” legislative initiatives, the  Regulation (EU) 2025/2083[1] has provided for simplification measures, designed to enhance CBAM’s effectiveness in preventing carbon leakage while minimising the impact on small importers and exporters. A key element of the Regulation is a new exemption threshold of 50 tonnes for CBAM goods. Companies importing less than 50 tonnes of goods subject to CBAM annually will be exempt from CBAM obligations. This measure is expected to exempt approximately 182,000 importers, mostly SMEs and individuals, while still covering over 99% of emissions in scope. For those importers that remain in the CBAM scope, the adjustments will facilitate compliance with the reporting requirements and simplify the authorisation of declarants, the calculation of emissions, and compliance with the financial liability. The changes will reduce the regulatory and administrative burdens and compliance costs, particularly benefiting SMEs. In addition, as from 2027, the Commission may also, for third countries where carbon pricing rules are in place, determine and make available, in the CBAM registry, the default carbon prices for those third countries and publish the methodology for their calculation

[1] Regulation (EU) 2025/2083 of the European Parliament and of the Council of 8 October 2025 amending Regulation (EU) 2023/956 as regards simplifying and strengthening the carbon border adjustment mechanism OJ L, 2025/2083, 17.10.2025.

OBLIGATIONS AND RIGHTS OF AUTHORISED CBAM DECLARANTS

Goods shall be imported into the customs territory of the Union only by an authorised CBAM declarant. Therefore, any importer established in a Member State is required, before importing goods into the customs territory of the Union, to apply for the status of authorised CBAM declarant. Where an importer is not established in a Member State, this application is submitted by his indirect customs representative. The application for an authorisation is submitted via the CBAM registry.

By 31 May of each year, and for the first time in 2027 for the year 2026, each authorised CBAM declarant is required to use the CBAM registry to submit a CBAM declaration for the preceding calendar year, which contains the following information:

  • (a) the total quantity of each type of goods imported during the preceding calendar year, expressed in megawatt-hours for electricity and in tonnes for other goods;
  • (b) the total embedded emissions in the goods, expressed in tonnes of CO2e emissions per megawatt-hour of electricity or, for other goods, in tonnes of CO2e emissions per tonne of each type of goods, calculated and verified in accordance with Regulation;
  • (c) the total number of CBAM certificates to be surrendered, corresponding to the total embedded emissions after the reduction that is due on account of the carbon price paid in the country of origin and the adjustment necessary to reflect the extent to which EU ETS allowances are allocated free of charge;
  • (d) copies of verification reports, issued by accredited verifiers.

An authorised CBAM declarant may claim in the CBAM declaration a reduction in the number of CBAM certificates to be surrendered in order to take into account the carbon price paid in the country of origin for the declared embedded emissions. The reduction may be claimed only if the carbon price has been effectively paid in the country of origin. In such a case, any rebate or other form of compensation available in that country that would have resulted in a reduction of that carbon price shall be taken into account.

The Commission shall, upon request by an operator of an installation located in a third country, register the information on that operator and on its installation in the CBAM registry.

CBAM CERTIFICATES

A Member State sells CBAM certificates on a common central platform to authorised CBAM declarants established in that Member State. CBAM certificates shall be sold at the price calculated by the Commission as the average of the closing prices of EU ETS allowances on the auction platform, in accordance with the procedures laid down in Regulation (EU) No 1031/2010, for each calendar week.

By 31 May of each year, and for the first time in 2027 for the year 2026, the authorised CBAM declarant is required surrender via the CBAM registry a number of CBAM certificates that corresponds to the declared and verified embedded emissions for the calendar year preceding the surrender. Consequently, the Commission removes surrendered CBAM certificates from the CBAM registry. The authorised CBAM declarant has to ensure that the required number of CBAM certificates is available on its account in the CBAM registry.

Where an authorised CBAM declarant so requests, the Member State where that authorised CBAM declarant is established shall repurchase the excess CBAM certificates remaining on the account of the declarant in the CBAM registry after the certificates have been surrendered. The Commission shall repurchase the excess CBAM certificates through the common central platform on behalf of the Member State where the authorised CBAM declarant is established.

On 1 July of each year, the Commission shall cancel any CBAM certificates that were purchased during the year before the previous calendar year and that remained in the account of an authorised CBAM declarant in the CBAM registry. Those CBAM certificates shall be cancelled without any compensation.

RULES APPLICABLE TO THE IMPORTATION OF GOODS

The customs authorities shall not allow the importation of goods by any person other than an authorised CBAM declarant.

ENFORCEMENT

An authorised CBAM declarant who fails to surrender, by 31 May of each year, the number of CBAM certificates that corresponds to the emissions embedded in goods imported during the preceding calendar year shall be held liable for the payment of a penalty. The same applies to a person other than an authorized CBAM declarant who introduces goods into the customs territory of the Union without complying with the obligations under this Regulation.

The Commission shall take action, based on relevant and objective data, to address practices of circumvention of this Regulation.

 

Based on its powers in the implementation of this Regulation, the European Commission has so far developed the following guidelines:

  • CBAM Self-Assessment Tool for Importers to the EU. The tool provides importers to the EU with the possibility to get a quick overview on whether the imported goods are subject to CBAM during the transitional period, what the CBAM reporting requirements for that particular type of good are, and where to find further information (31 March, 2025).
  • Default values transitional period that can be used to determine embedded emissions in imported goods (except electricity) covered by the CBAM (22 December, 2023).
  • Default values transitional period (Excel format) (5 June, 2024).
  • Guidance document on CBAM implementation for importers of goods into the EU (30 May, 2024).
  • Guidance document on CBAM implementation for installation operators outside the EU (22 December, 2023).
Based on its powers in the implementation of this Regulation, the European Commission has so far adopted the following implementing and delegated acts: