The EU Carbon Border Adjustment Mechanism (CBAM) entered its definitive period on 1 January 2026. The transitional phase that ran from October 2023 was reporting-only; the definitive period attaches a financial cost to the carbon embedded in imported goods. For producers exporting covered products into the EU, embedded carbon is now a line item at the border — and the quality of your emissions data decides how large it is.
What CBAM is, and what it covers
CBAM is established by Regulation (EU) 2023/956. It applies the EU carbon price to imports of carbon-intensive goods in six sectors: iron and steel, aluminium, cement, fertilisers, hydrogen, and electricity. From 2026, authorised CBAM declarants (the EU importers) must buy and surrender CBAM certificates corresponding to the embedded emissions of the goods they import, priced against the EU Emissions Trading System. Any carbon price already paid in the country of production can be deducted — so a credible domestic carbon price genuinely reduces the CBAM bill.
What changed when the definitive period began
- Reporting became paying: quarterly transitional reports give way to an annual CBAM declaration, with certificates surrendered against verified embedded emissions.
- Only authorised CBAM declarants may import covered goods — registration in the CBAM registry is now a prerequisite, not a formality.
- Verified, installation-level emissions data carries real financial weight; estimates and defaults become the expensive fallback rather than an accepted norm.
The 2025 Omnibus simplification: the 50-tonne threshold
In early 2025 the European Commission proposed a simplification package (the Omnibus) that introduced a de minimis mass threshold of 50 tonnes of covered goods imported per year. The Commission estimated this would exempt roughly 90% of importers — overwhelmingly small and occasional ones — while still capturing around 99% of the embedded emissions in scope. The practical effect: fewer companies face the administrative burden, but the carbon coverage of the mechanism is essentially unchanged. If you ship material volumes of covered goods into the EU, you are still firmly in scope.
Because simplification details were finalised through 2025 and implementing rules continue to evolve, confirm the current thresholds and procedural requirements against the Commission's CBAM guidance for your specific products and volumes.
Default values versus actual data — a margin decision
Where an importer cannot supply verified actual emissions, default values apply. Those defaults are deliberately conservative — set high enough that an efficient producer almost always pays less by providing real, verified installation-level data. Continuing to let your EU customers fall back on defaults is, in effect, choosing to pay a premium on every tonne you ship. The single highest-return action for most exporters is to replace defaults with verified actuals.
What exporters should do now
- Identify exactly which products (by CN code) and which EU destinations fall in scope.
- Calculate embedded emissions at installation level, following the CBAM methodology, using primary data where it is material.
- Get that data verification-ready, and establish a clean channel to supply it to your EU customers and their declarants.
- Price the carbon cost into contracts rather than absorbing it silently as margin erosion.
- Build a decarbonisation response — every tonne of genuine reduction is now a direct, priced advantage.
- Watch scope: the Commission is reviewing extension to downstream products and additional sectors, with chemicals and polymers widely expected candidates.
The strategic read
CBAM is not only a compliance task; it is a competitiveness mechanism. It systematically rewards lower-carbon producers and penalises those who cannot — or do not bother to — prove their carbon performance. Exporters who treat it as a measurement-and-pricing discipline will quietly take share from those who treat it as paperwork.
Sources & further reading
This article is general information, not legal, financial or compliance advice. The regulations and standards referenced here evolve; verify the current position with the issuing body, or ask us. Published June 2026.