The EU is leading with CBAM (Carbon Border Adjustment Mechanism) a new instrument is being introduced that is receiving worldwide attention. It ensures that imported, emission-intensive goods the same CO₂ cost pressure have products that in the EC getting produced.
Why does CBAM exist?
Many industries face costs due to the EU Emissions Trading System (EU ETS). Producers outside the EU often do not. CBAM prevents this.
- Carbon Leakage (Relocation of emissions abroad) and
- creates fair competition conditions between EU and non-EU production.
What exactly is CBAM?
CBAM is a border adjustment scheme that applies to certain imported goods. CO₂ price at the EU border charges. This price is based on EU ETS levelThe higher the embedded emissions of the product, the more certificates will have to be surrendered later.
How does CBAM work? – The two-phase model explained
1) Transition phase (until 31.12.2025)
- Companies must Report quarterly emissions data for their imports (in the CBAM Transitional Registry).
- No payments, no certificate issuance.
- Purpose: To collect data, test processes, and prepare supply chains.
2) Definitive phase (from January 1st, 2026)
- Import only through Authorized CBAM Declarants (ACD).
- ACD must Buy CBAM certificates, whose price EU ETS average price requirements.
- Each year, the actual emissions are reported and the corresponding amount of certificates is surrendered.
- Already CO₂ prices paid abroad will credited.
Which products are affected?
CBAM starts with the most emission-intensive sectors:
- Iron & Steel
- Aluminium
- Cement
- Fertilizer
- Electricity
- Hydrogen
(Each precisely via CN codes defined.)
Thresholds & Simplifications
- Now (transition phase): de minimis 150 € per shipment.
- From 2026 (after the reform is adopted): 50-tonne annual mass threshold per importer – significant relief for smaller volumes, without diluting the climate effects.
What should companies do now?
- Identifying CN codes, goods flows & supply chains.
- Obtain emissions data from suppliers (directly and indirectly).
- Prepare for ACD registration.
- Clearly define internal processes and responsibilities (customs, sustainability, purchasing, finance).
- Budget planning & price adjustment clauses for future CBAM certificate costs to adjust.
And finally ...
CBAM is one of the EU's most effective climate instruments: it links climate protection, trade policy, and a level playing field – and will have a major impact on global supply chains. Now is the right time to make your own processes fit for 2026.
Learn more about Sustainability ESG here.
