EU carbon border adjustment mechanism (CBAM): a guide for importers

If you import cement, steel, aluminium, fertilisers, electricity or hydrogen into the EU, CBAM turns the emissions embedded in those goods into a reporting obligation and a cost. Most of that data sits with the organisations you buy from, not in your own systems.

Last reviewed 12 August 2026. The dates, thresholds and penalties below are taken from Regulation (EU) 2023/956 as amended by Regulation (EU) 2025/2083. CBAM is still being amended, so check the consolidated text and your national competent authority before you act on anything here.

The carbon border adjustment mechanism, CBAM, puts a carbon price on certain goods imported into the EU. It works alongside the EU emissions trading system, so that imported goods carry a carbon cost comparable to goods produced inside the EU.

For an importer, the practical work is data. You need the emissions embedded in what you bring in, taken from the production processes of your suppliers, in a form your finance team and your auditor can both follow.

What is the EU carbon border adjustment mechanism?

CBAM is a policy tool established by Regulation (EU) 2023/956 to address carbon leakage and support the EU climate goals set out in the European Green Deal. It applies a carbon price to imports of specified goods into the EU.

Carbon leakage is what happens when production moves to countries with less stringent emissions constraints. EU emissions fall, global emissions do not.

By pricing the carbon in imported goods, CBAM narrows the gap between the cost of carbon inside the EU, where the emissions trading system applies, and the cost of carbon outside it. A producer who can show lower embedded emissions per tonne of product faces a smaller adjustment at the border.

Which goods and companies does CBAM cover?

Who has to comply, inside and outside the EU?

The obligation sits with the EU importer. An importer declares the embedded emissions in the goods it brings into the EU and accounts for them through CBAM certificates under the definitive regime.

Producers outside the EU carry no direct obligation under the regulation, but they feel it through their customers, because an importer needs production data from the producer to declare anything other than a default value.

Which sectors and goods are in scope?

Annex I of Regulation (EU) 2023/956 lists the goods in scope by CN code, the eight-digit Combined Nomenclature classification your customs declarations already use. The sectors are trade exposed and emissions intensive, which is where carbon leakage risk concentrates:

• Cement
• Iron and steel
• Aluminium
• Fertilisers
• Electricity
• Hydrogen

Check the CN codes rather than the sector name. Two products from the same supplier can sit on different sides of the line, and the list in Annex I is what your declaration works from.

Which emissions have to be reported?

CBAM covers the emissions embedded in imported goods, meaning the emissions from the production processes, expressed per tonne of product. Whether indirect emissions count depends on the goods. Article 7(1) of Regulation (EU) 2023/956 says only direct emissions are taken into account for the goods listed in Annex II, which are iron and steel, aluminium and hydrogen, and Regulation (EU) 2025/2083 added electricity to that list. For cement and fertilisers, which sit outside Annex II, embedded emissions also include the indirect emissions from the electricity consumed in production.

That split changes what you ask a producer for. A cement or fertiliser supplier has to account for its purchased electricity as well as its process emissions. A steel or aluminium supplier does not.

Importers calculate embedded emissions from primary production data where they can get it. Where actual data is not available, the default values published by the Commission apply. Defaults are set conservatively, which is what makes real supplier data worth collecting. The Commission keeps the default values, the implementing regulations and its guidance for importers on its CBAM pages, with the legal texts gathered under CBAM legislation and guidance.

Where does the CBAM timeline stand in August 2026?

The transitional reporting period ran from 1 October 2023 to the end of 2025. During that phase importers reported embedded emissions without paying for them. That phase has ended.

The definitive regime applies from 1 January 2026, so 2026 is the first year of imports to fall under it. Importers report annually on the previous calendar year and account for embedded emissions through CBAM certificates. Three dates follow from that, all of them in the regulation as amended:

• 1 February 2027. Member States start selling CBAM certificates to authorised CBAM declarants, under Article 20(1). No certificates are sold during 2026.
• 30 September 2027. The first annual CBAM declaration falls due, covering 2026 imports, under Article 6(1). The deadline is 30 September of each year after that.
• 50 tonnes. An importer whose imports do not cumulatively exceed 50 tonnes of net mass in a calendar year is exempt, under Article 2a and Annex VII. The threshold counts iron and steel, aluminium, fertilisers and cement together, and it does not apply to imports of electricity or hydrogen.

Penalties sit in Article 26. An authorised CBAM declarant who fails to surrender the certificates it owes pays a penalty identical to the EU emissions trading system excess emissions penalty in Article 16(3) of Directive 2003/87/EC, as indexed, applicable in the year of importation. Where a person who is not an authorised CBAM declarant brings in-scope goods into the EU, the penalty is three to five times that amount.

The scope is still moving. On 12 June 2026 the Council agreed its negotiating position on extending CBAM to a selection of downstream products made with iron, steel and aluminium, and on bringing pre-consumer metal scrap into scope. The European Parliament has to adopt its own position before trilogue negotiations begin, so none of that is law yet. Follow it if you import finished or semi-finished metal goods rather than raw materials.

How do you prepare for CBAM, step by step?

1. Work out whether your imports are in scope

Match what you import against the CN codes in Annex I rather than the sector labels. Pull the line items from your import records and check them code by code. Volume matters too: an importer under the 50 tonne threshold is exempt, and that threshold counts iron and steel, aluminium, fertilisers and cement together rather than category by category.

2. Read your obligations from the current text

Reporting duties changed when the transitional phase ended, and the regulation has been amended since. For 2026 imports the two dates to hold are 1 February 2027, when certificate sales open, and 30 September 2027, when the declaration falls due. Put both in your compliance calendar with a named owner, along with the date you will re-read the regulation, because the scope is still under negotiation.

3. Set up a system that can hold the data

Embedded emissions data has to be tracked, recorded and archived at a granularity most purchasing systems were never built for: production process, installation, country of origin and emission factor, per consignment. Decide whether your ERP or P2P system can hold that, or whether it needs a data source to read from.

4. Get emissions data from the organisations you buy from

This step takes the longest, because the number sits with the producer. Requests that work ask for four things:

• Production data. Emissions per tonne of product from the installation that made your goods, not a corporate average.
• Method. How the figure was calculated and which boundaries it covers.
• Independent verification. Whether a third party has checked the figure, and against which standard.
• A contractual route. Data provision written into supply agreements, so the next reporting period does not start from nothing.

Chasing this by email and spreadsheet is where import teams lose a year, and proxy data on its own will not carry a declaration. DitchCarbon provides verified emissions data for over 2 million organisations, so procurement, sustainability and finance teams can measure and act on supply chain and portfolio emissions from one source. For CBAM work that means starting from a supplier-level position instead of a blank template, and spending your chasing on the goods where a supplier-specific figure changes the answer. A recent deployment reached about 60% of a large supplier base within 2 weeks.

Where a figure has to stand up to scrutiny, its provenance matters as much as its value. Every figure carries its source and change history. The DitchCarbon Portal calculator is verified to ISO 14064-3, limited assurance, by UL Solutions, renewed annually, and the emission factor methodology for spend-based Scope 3 categories 1 and 2 was independently assessed by Globus Thenken in August 2025. That combination is what makes a number audit-ready, and auditable by your own third-party auditor. Both reports are in our trust centre.

One boundary worth stating plainly: a CBAM declaration needs installation-level data handled under the regulation's own verification rules, and company-level emissions data does not replace that. What it does is tell you which suppliers and which goods to pursue, give you a defensible position for budgeting and category decisions, and cover the purchased goods emissions that sit outside CBAM.

5. Budget for CBAM certificates

Under the definitive regime importers account for embedded emissions with CBAM certificates priced by reference to EU ETS auction prices. Model it as a budget line: volume of in-scope imports, embedded emissions per tonne, certificate price. Sales open on 1 February 2027, so the cost of goods imported during 2026 lands in the 2027 cash flow rather than the 2026 one.

6. Track carbon prices already paid in the country of origin

A carbon price already paid where the goods were produced may reduce what is owed at the EU border, so a supplier in a country with its own emissions trading system or carbon tax can cost you less in CBAM terms than an identical supplier elsewhere. Record what your suppliers pay and keep the evidence, because a reduction has to be claimed and substantiated.

7. Close the loop for the next reporting period

Each cycle should leave you with better data than the last: more suppliers reporting production figures, fewer defaults, and a record of which figures changed and why. Set a review point for regulatory change as well, because CBAM is still moving.

What does CBAM change beyond compliance?

How does a carbon price on imports change costs?

CBAM moves the cost of emissions into the landed cost of a product, so two suppliers quoting the same price for the same steel stop being equivalent. The one with lower embedded emissions per tonne is cheaper once the border adjustment is counted. That gives a procurement team a commercial reason to fund supplier decarbonisation rather than only an environmental one.

How does CBAM change sourcing decisions?

Knowing the carbon intensity of your supply chain changes what a sourcing decision optimises for. The categories that pay back first are those where embedded emissions are high and suppliers are close on price. That analysis needs supplier-level emissions data across the whole category, not only the two suppliers who answered your last survey.

What should an importer do next?

CBAM rewards importers who know the emissions in their own goods, because the alternative is a default value and a larger bill. That knowledge is a data exercise, and it is the same exercise as Scope 3 category 1, purchased goods and services, where the emissions embedded in what you buy are the whole measurement.

Start with the goods that are in scope, get supplier-level figures where they change the answer, and keep the provenance attached to every number.

If you import into the UK as well, that is a separate regime on its own timetable. The UK carbon border adjustment mechanism starts on 1 January 2027, covers aluminium, cement, fertiliser, hydrogen, and iron and steel, and has a registration threshold of GBP 50,000 of CBAM goods. It sits alongside the UK ETS, SECR and UK SRS in our guide to UK climate legislation.

Get supplier-level emissions data on your imported goods. Send us the suppliers behind your in-scope imports and see what coverage looks like on your own list, with numbers you can defend within 2 weeks. See how the data works, or request a walkthrough.

Being asked for this data yourself? If your customers are the ones chasing embedded emissions figures for their own declarations, publish your data once and reuse it. Claim your company profile.

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