What is CBAM?
The Carbon Border Adjustment Mechanism (CBAM), established by Regulation (EU) 2023/956, is the EU's answer to carbon leakage: the risk that carbon-intensive production simply moves outside the EU to avoid paying for its emissions. By putting a carbon price on imports of covered goods, CBAM ensures that foreign producers face similar carbon costs as EU manufacturers operating under the EU Emissions Trading System (ETS).
The financial phase of CBAM began on 1 January 2026, replacing the transitional reporting-only phase that ran from October 2023.
Which goods are covered?
CBAM currently covers six sectors:
| Sector | Example CN codes |
|---|---|
| Cement | 2523 |
| Iron and steel | 7201–7229 |
| Aluminium | 7601–7616 |
| Fertilisers | 2808, 2814, 3102, 3105 |
| Hydrogen | 2804 10 00 |
| Electricity | Chapter 27 (electricity) |
The Commission is expected to review the scope by 2026 and may add polymers, chemicals, and other carbon-intensive goods before 2030.
How CBAM costs are calculated
The cost of CBAM compliance has three inputs:
1. Embedded emissions
Embedded emissions are the total greenhouse gas emissions associated with producing the imported good. You can calculate them using:
- Default emission factors from Commission Delegated Regulation (EU) 2024/3215: these are conservative (high) estimates based on the world average production route
- Actual emission data from the exporting installation: lower if your supplier uses cleaner production methods and provides verified data under Art. 10 CBAM
Example: You import 1,000 tonnes of hot-rolled steel from India.
Default emission factor: 2.115 tCO₂e / tonne (EU 2024/3215)
Embedded emissions = 1,000 × 2.115 = 2,115 tCO₂e
2. Carbon price deduction
If the exporting country has a carbon pricing mechanism (a carbon tax or ETS), you can deduct the equivalent carbon cost already paid in the country of origin:
Carbon already paid = Carbon price in origin × Quantity (in tonnes of CO₂)
If the exporting country has no carbon price (e.g. China for steel imports), the deduction is zero.
3. CBAM certificate cost
Each CBAM certificate covers 1 tonne of CO₂e. The certificate price is linked to the EU ETS weekly auction price. In 2025–26, prices have ranged from €55 to €75 per tonne.
CBAM cost = Adjusted emissions × EU ETS price
= max(0, Embedded_emissions − Carbon_already_paid) × ETS_price_EUR
For the steel example above (no origin carbon price, ETS at €65/t):
CBAM cost = 2,115 × €65 = €137,475 per shipment
Who must buy CBAM certificates?
Only authorised CBAM declarants: EU-registered companies who have been granted authorisation by their national competent authority: can purchase CBAM certificates. Importers must register before they import covered goods.
The annual declaration deadline is 31 May each year, covering the previous calendar year's imports.
What do you need to do now?
Use the CBAM Cost Estimator on this site to model your certificate cost before committing to import volumes.