CBAM (Carbon Border Adjustment Mechanism) is the EU's carbon tariff on imported carbon-intensive goods — it makes imports carry the same carbon cost as EU-made products under the EU Emissions Trading System. If you export steel, aluminium, cement, fertiliser, hydrogen or electricity into the EU, this guide covers exactly what it is, what it covers, and what to do about it before certificate purchases begin.
Key takeaways
- CBAM applies to iron & steel, aluminium, cement, fertilisers, hydrogen and electricity imported into the EU — not yet textiles, leather or food.
- A new 50-tonne de minimis exemption removes roughly 90% of importers from the scheme while still capturing ~99% of embedded emissions.
- Reporting obligations apply from 2026, but the actual purchase of CBAM certificates doesn't start until 1 February 2027.
- Certificate cost tracks the EU ETS carbon price — recently trading broadly in the €70–€90 per tonne CO₂ range.
- Using verified actual emissions instead of the EU's conservative default values is the single biggest lever on what you'll actually pay.
What is CBAM?
CBAM began a transitional reporting phase in October 2023 and entered its definitive, financial phase on 1 January 2026. It runs alongside — and often shares data with — parallel EU regulations like CSRD (corporate sustainability reporting) and EUDR (deforestation-free supply chains), all part of the same drive to make environmental impact as auditable as financial results.
A binding simplification package — the CBAM Omnibus Regulation, with implementing acts published 17 December 2025 — changed several key rules right before the definitive phase began. If your understanding of CBAM predates late 2025, the sections below cover exactly what's different now.
What sectors does CBAM cover?
| Sector | In CBAM scope? | Benefits from 50-t exemption? |
|---|---|---|
| Iron & steel | Yes | Yes |
| Aluminium | Yes | Yes |
| Cement | Yes | Yes |
| Fertilisers | Yes | Yes |
| Hydrogen | Yes | No — excluded |
| Electricity | Yes | No — excluded |
| Textiles, leather, food | Not yet | — |
If you export cement, steel or aluminium into the EU, CBAM applies directly. Exporters in textiles and other out-of-scope sectors still face parallel pressure through CSRD and buyer-driven ESG data requests — see our guide on EU carbon compliance for textile exporters.
What is the 50-tonne exemption?
This was the single biggest change introduced by the 2025 Omnibus simplification. The European Commission's rationale: the exempted importers are overwhelmingly small-volume traders, so the threshold cuts administrative burden sharply without giving up meaningful emissions coverage.
When do exporters have to pay?
Under the original rules, certificate sales would have started 1 January 2026. The Omnibus postponed this to 1 February 2027 — declarants buy certificates that year to cover 2026 imports, retroactively. A second relief reduced the quarterly certificate-holding requirement from 80% to 50% of embedded emissions in goods imported since the start of the year.
How is the cost of a CBAM certificate calculated?
The single most important lever on the final bill is using verified actual emissions instead of the EU's default values. Defaults are set deliberately conservative — exporters that can prove lower actual emissions with proper monitoring typically pay significantly less than those relying on the EU's fallback figures. Our free carbon footprint calculator gives you a fast Scope 1 & 2 baseline before you commission full verification.
Can exporters still use default emissions values?
This is a common misunderstanding: exporters assume defaults are the "safe" or simpler option. In practice, defaults exist precisely because the EU doesn't have your verified figures — and because they're set high, they usually cost more per tonne shipped than a properly monitored actual-emissions figure would.
How to prepare for CBAM compliance
- Confirm scope and volume. Total your annual EU-bound tonnage of covered goods against the 50-tonne threshold.
- Map installations and emissions sources. Identify every production route and its direct and indirect emissions.
- Collect verified primary data. Replace EU default values with monitored actual emissions using the GHG/CBAM methodology.
- Coordinate third-party verification. A verifier (TÜV, DNV, SGS or similar) needs to sign off before the data holds up under review.
- Build the importer handover pack. Your EU importer — the "authorised CBAM declarant" — needs your data in the correct format to file.
Our CBAM Embedded Emissions Verification service runs exactly this process, typically over 6–10 weeks, starting at €6,500. Not sure where your Scope 1, 2 and 3 emissions sit first? Start with carbon accounting Scope 1, 2 & 3 demystified.
Common CBAM mistakes
- Assuming the 50-tonne exemption is per shipment — it's cumulative across the whole calendar year and all covered goods.
- Treating the 2027 payment delay as a reporting delay — data-collection obligations still apply from 2026.
- Defaulting to EU default values by habit — usually the more expensive option once actual data collection is possible.
- Leaving the importer handover pack until the last minute — your EU importer can't file without your verified data in the right format.
- Assuming out-of-scope sectors are unaffected — textile and leather exporters still face CSRD-driven Scope 3 data requests from EU buyers.
Get your CBAM exposure mapped, in one call
We'll confirm whether you're above the 50-tonne threshold, what verified-versus-default emissions actually means for your certificate costs, and a realistic timeline before the 2027 payment window opens. Backed by €2.3M PI insurance.
📅 Book a Free 30-Minute CBAM Strategy CallFrequently asked questions
What is CBAM?
The EU's carbon tariff on imported carbon-intensive goods, ensuring imports carry the same carbon cost as EU-made products under the EU ETS. It closes the "carbon leakage" gap and entered its definitive financial phase on 1 January 2026.
What sectors does CBAM cover?
Iron & steel, aluminium, cement, fertilisers, hydrogen and electricity. Textiles, leather and food are not currently in scope.
What is the CBAM 50-tonne exemption?
Importers bringing 50 tonnes or less of CBAM-covered goods into the EU per calendar year are exempt, except for hydrogen and electricity. It removes ~90% of importers while still covering ~99% of embedded emissions.
When do exporters have to pay for CBAM certificates?
Certificate purchases begin 1 February 2027, covering emissions in goods imported during 2026. Reporting obligations still apply from 2026.
How is the cost of a CBAM certificate calculated?
It tracks the weekly average EU ETS auction price, in euros per tonne of CO₂, recently trading broadly in the €70–€90/t range.
Can exporters still use default emissions values?
Yes, as a fallback, but defaults are set deliberately conservative — verifying actual emissions typically costs less in certificates than relying on defaults.
How much does CBAM compliance cost to set up?
A verification engagement covering Scope 1+2 inventory, per-CN-code calculation, verifier coordination and an importer handover pack typically starts around €6,500 over 6–10 weeks.
Sources & further reading
- European Commission — Carbon Border Adjustment Mechanism (official): taxation-customs.ec.europa.eu
- International Carbon Action Partnership — "EU adopts simplifications of CBAM rules ahead of the compliance phase starting in 2026": icapcarbonaction.com
- Reed Smith — "What you need to know as CBAM simplification comes into effect": reedsmith.com
- Herbert Smith Freehills Kramer — "Operationalisation and simplification of the EU CBAM": hsfkramer.com
This article is general guidance, not legal or tax advice. CBAM rules and the EU ETS price change frequently — verify current figures against the official European Commission source before making decisions.