CBAM in full enforcement since January 2026. EU importers of steel, iron, aluminium, cement, fertilisers, hydrogen and electricity must now purchase CBAM certificates covering embedded emissions and surrender them by 31 May 2027 (first deadline, covering 2026 imports). This guide explains how the certificate system works, how prices are set, and how exporters can reduce their buyers' CBAM cost.
How CBAM Certificates Work
A CBAM certificate represents the right to import one tonne of CO₂-equivalent (tCO₂e) of embedded greenhouse gas emissions into the EU. The price of each certificate is set weekly at the average auction price of EU Emissions Trading System (ETS) allowances — so CBAM pricing tracks the EU carbon market in real time.
The obligation sits with the EU importer (the "authorised CBAM declarant"), not the non-EU exporter. However, the cost is directly linked to the emissions certified by the exporter — making accurate emissions reporting a commercial necessity, not just a compliance formality.
The CBAM Certificate Lifecycle
Importer registers as authorised CBAM declarant
The EU importer applies to the competent national authority to become an authorised CBAM declarant. Registration is required before importing any CBAM goods. The importer receives a CBAM account in the EU CBAM registry.
Goods are imported throughout the year
CBAM goods (steel, iron, aluminium, cement, fertilisers, hydrogen, electricity) are imported under standard customs procedures. From January 2026, actual embedded emissions data must accompany each shipment — default values apply if actual data is unavailable but are commercially penalising.
Importer purchases CBAM certificates
The authorised declarant purchases certificates through the CBAM registry at the current weekly average EU ETS price. Certificates can be purchased at any time during the year — importers typically buy ahead to manage price risk. A maximum holding limit applies: no more than one-third of the prior year's total obligation can be held at once (to prevent hoarding).
Annual CBAM declaration filed by 31 May
By 31 May each year, the authorised declarant files the CBAM annual declaration covering all CBAM goods imported in the prior calendar year. The declaration reports: total quantities imported, embedded emissions per shipment (actual or default), and any carbon price paid in the country of origin that qualifies for offset.
Certificates surrendered to cover net obligation
On filing the declaration, the declarant surrenders CBAM certificates equal to the net tCO₂e obligation. Net obligation = total embedded emissions − carbon price offset (carbon cost paid in origin country, converted to equivalent tCO₂e). Certificates are cancelled from the registry account.
Repurchase excess certificates (optional)
Certificates purchased but not surrendered can be sold back to the competent national authority — up to one-third of the total certificates purchased that year. Certificates not sold back and not surrendered are cancelled at year-end and the price is not refunded.
CBAM Certificate Pricing
CBAM certificate prices are set weekly, based on the average auction clearing price of EU ETS allowances (EUAs) in the preceding week. As of 2026, EU ETS prices have ranged approximately €50–70 per tonne CO₂e. This means:
| EU ETS Price | CBAM cost per tonne embedded CO₂e | Example: 1,000t steel @ 1.89 tCO₂e/t |
|---|---|---|
| €50/tCO₂e | €50 | €94,500 CBAM cost |
| €60/tCO₂e | €60 | €113,400 CBAM cost |
| €70/tCO₂e | €70 | €132,300 CBAM cost |
| €80/tCO₂e | €80 | €151,200 CBAM cost |
⚠️ Default vs. Actual Emissions: The Commercial Difference
If your EU buyer uses default emission values (published by the European Commission as conservative estimates), they will almost always be higher than your actual production emissions — meaning they must surrender more certificates than necessary. Providing verified actual emissions data (through a third-party verifier accredited under the CBAM Implementing Regulation) allows your buyer to use actual values, reducing their certificate obligation and making you more cost-competitive than exporters who cannot provide verified data.
The Carbon Price Offset: How to Reduce Your Buyer's CBAM Bill
CBAM includes a deduction mechanism: if a carbon price has already been effectively paid in the country of origin on the embedded emissions, that cost is deducted from the certificate surrender obligation. This prevents double carbon pricing.
To claim the offset, the exporter must provide documentation showing:
- The applicable carbon pricing mechanism in the origin country (carbon tax, ETS, or equivalent)
- The carbon price actually paid per tonne CO₂e, in the currency of the origin country
- Evidence the price was paid and not refunded or rebated
- The calculation methodology used to derive the offset
Countries with carbon pricing mechanisms that may qualify for offset include Canada (federal carbon price), UK (UK ETS), China (national ETS), South Korea (K-ETS) and others. The offset is calculated by converting the foreign carbon price to euros at the exchange rate applicable to the import date.
Key Dates and Deadlines
| Date | Event |
|---|---|
| January 2026 | CBAM full enforcement begins — certificates required for all CBAM imports |
| 31 May 2027 | First CBAM annual declaration filing deadline + certificate surrender (covers 2026 imports) |
| 31 May each year | Annual CBAM declaration and surrender deadline (rolling) |
| 31 December each year | Unsurrendered, unsold CBAM certificates cancelled (no refund) |
Penalties for Non-Compliance
Failure to surrender sufficient CBAM certificates by the annual deadline triggers:
- €100 per excess tonne CO₂e that was not covered by surrendered certificates
- Obligation to surrender the shortfall in the following year
- Potential suspension of authorised declarant status for repeated non-compliance
The €100/tonne penalty is approximately 1.5–2× the current certificate price — a significant deterrent that makes non-compliance substantially more expensive than compliance.
What Non-EU Exporters Must Do
While the legal obligation for CBAM certificates sits with the EU importer, non-EU exporters play a critical role:
- Measure and report actual embedded emissions — using the CBAM Implementing Regulation (EU) 2023/1773 methodology (direct + indirect emissions for most goods)
- Commission third-party verification — from a verifier accredited under the CBAM framework to enable your buyer to use actual rather than default values
- Provide carbon price documentation — if a qualifying carbon price is paid in your country, document it properly to maximise the offset your EU buyer can claim
- Cooperate on CBAM declarations — your EU buyer needs your emissions data before the 31 May deadline
Frequently Asked Questions
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