CBAM 2026: the EU carbon border tax explained for importers
A steel importer gets a bill they did not see coming
In February 2026, a US distributor with an EU subsidiary imports coils of steel from India, as it has for years. This time, the customs broker asks for the importer's authorised CBAM declarant number before clearance can proceed. Without it, the goods sit at the border. That is the reality of the definitive phase of the Carbon Border Adjustment Mechanism (CBAM), live in the EU since 1 January 2026.
After a transitional reporting-only period (October 2023 to December 2025), CBAM now has teeth: importing certain carbon-intensive products into the EU requires buying and surrendering certificates matching the emissions embedded in those goods. This guide explains which products are covered, how the cost is computed, who is exempt, and gives worked examples for steel, aluminium, and fertiliser.
What CBAM actually is
CBAM (Regulation (EU) 2023/956) applies to imports a carbon cost equivalent to what EU producers bear under the EU Emissions Trading System (ETS). The goal is to prevent "carbon leakage" — relocating polluting production outside Europe to dodge the internal carbon price.
In practice, the importer of a covered product must, each year, surrender a number of CBAM certificates equal to the tonnes of CO₂ embedded in that product. The certificate price is indexed to the weekly average EU ETS price. Three dates frame the timeline:
- Oct 2023 – Dec 2025: transitional period, quarterly emissions reporting, no payment.
- 1 January 2026: definitive regime, authorised-declarant status required, emissions accounted for financially.
- 2027: under the 2025 "Omnibus" simplification, the actual sale of CBAM certificates was postponed to February 2027 (for 2026 emissions), with an annual declaration reconciling the prior year.
The six covered sectors (Annex I)
CBAM does not cover all goods — it targets six carbon-intensive industrial families. An importer outside these categories has nothing to declare.
| Sector | Example products | Typical exposure |
|---|---|---|
| Iron & steel | Sheets, sections, tubes, fasteners | High (blast furnace ~2 t CO₂/t) |
| Aluminium | Ingots, extrusions, foil | Very high (electricity-intensive) |
| Cement | Clinker, grey cement | High (~0.6–0.9 t CO₂/t) |
| Fertilisers | Urea, ammonia, nitrates | High (ammonia ~2 t CO₂/t) |
| Electricity | Cross-border power imports | Varies with the grid mix |
| Hydrogen | Hydrogen (non-certified renewable) | Varies |
Key takeaway: steel and aluminium concentrate most CBAM-affected trade by value. Exporters in India, Turkey, the US and the Gulf that ship these products into the EU are directly exposed — their competitiveness on the European market now depends on their carbon intensity, not only on their price per pound.
How the CBAM cost is computed
The base formula is straightforward: CBAM cost = embedded emissions (t CO₂) × certificate price (EUR/t) − carbon price already paid at origin. Two variables deserve attention.
Embedded emissions. They rely first on actual data verified at the producing installation. Failing that, the Commission publishes default values, generally set conservatively (and therefore more costly). That is why obtaining audited emissions data from your supplier pays off.
The certificate price. It tracks the average EU ETS allowance price, typically moving between EUR 70 and EUR 85 per tonne of CO₂ in 2025-2026 (an estimate that fluctuates weekly). A lower-carbon producer — electric-arc-furnace steel instead of blast furnace, hydro-powered aluminium — mechanically cuts the bill.
Three worked examples
Example 1: 25 tonnes of rolled steel imported from India
Volume = 25 t of steel (blast-furnace route)
Embedded emissions ≈ 1.9 t CO₂/t → 47.5 t CO₂
Certificate price ≈ EUR 78/t CO₂
Carbon price paid at origin = EUR 0
CBAM cost = 47.5 × 78 = EUR 3,705 (≈ EUR 148/tonne)
An added cost of nearly EUR 150 per tonne of steel is material on a distribution margin. The same lot from an electric-arc-furnace mill (emissions ~0.4 t CO₂/t) would generate only about EUR 780 of CBAM cost — the supplier's process becomes a purchasing criterion.
Example 2: 10 tonnes of primary aluminium
Volume = 10 t primary aluminium (coal-powered smelter)
Embedded emissions ≈ 12 t CO₂/t → 120 t CO₂
Certificate price ≈ EUR 78/t CO₂
CBAM cost = 120 × 78 = EUR 9,360 (≈ EUR 936/tonne)
Aluminium is the hardest-hit sector because it is electricity-intensive: the footprint depends chiefly on the smelter's power mix. Hydro-powered aluminium can show a carbon intensity ten times lower, producing a large competitiveness gap at the EU border.
Example 3: a small importer below the de minimis threshold
Total CBAM goods imported over the year = 30 t
De minimis threshold (Omnibus 2025) = 50 net t/year
Result: below threshold — no certificates due
The Omnibus reform replaced the old EUR 150-per-consignment threshold with a cumulative mass threshold of 50 net tonnes per importer per year. The Commission's stated result: roughly 90% of importers are exempted while still covering close to 99% of the targeted emissions, which are concentrated among large-volume importers.
Declarant status and practical obligations
Above the threshold, importing a covered product requires being an authorised CBAM declarant, a status requested from the competent national authority through the CBAM registry. Without it, customs refuses release into free circulation. Four practical habits matter: apply for the status early (several weeks of processing); collect verified emissions data from suppliers; keep evidence of carbon prices paid at origin; and provision the certificate cost in your landed cost, like any other duty.
Fold the carbon cost into your landed cost
The TRADE-COST calculator models duties, VAT and import surcharges. Add the estimated CBAM cost to your simulation to see the true landed cost of a steel or aluminium consignment.
Run calculation →Conclusion: carbon becomes a sourcing criterion
CBAM turns a supplier's carbon intensity into a direct cost variable, on a par with the customs duty or the freight. For a steel, aluminium, or fertiliser importer, the question is no longer only "what is the FOB price?" but "what is the verified carbon footprint, and does the producer already pay a deductible carbon price?".
To go further, see our guide to the EU regime 42 and import VAT, our article on customs valuation methods (customs value remains the base for duty, separate from CBAM), and our customs duty calculation method to assemble the full import cost.
Frequently asked questions
Does CBAM apply to all my imports from 2026?+
No. CBAM only targets six carbon-intensive product families: iron and steel, aluminium, cement, fertilisers, electricity, and hydrogen (Annex I of Regulation (EU) 2023/956). An importer of apparel, electronics, or furniture is unaffected. On top of that, the 2025 'Omnibus' simplification introduced a mass-based de minimis threshold of 50 net tonnes of covered goods per importer per year — below it, no certificates are due.
How much does a CBAM certificate cost?+
A CBAM certificate price tracks the weekly average price of EU ETS carbon allowances. In 2025-2026 that price typically moves between EUR 70 and EUR 85 per tonne of CO₂ (an estimate that fluctuates weekly). One certificate covers one tonne of CO₂ embedded in the imported product, so the total cost depends on two variables: the product's emissions volume and the carbon price when you buy the certificates.
Do I need to become an authorised CBAM declarant?+
Yes, if you import covered goods above the de minimis threshold. Since 1 January 2026, only an authorised CBAM declarant (a status requested from the competent national authority through the CBAM registry) may release these products into free circulation in the EU. Without it, customs will refuse clearance of the affected goods. Apply early — processing takes several weeks.
Can I deduct a carbon price already paid in the country of origin?+
Yes. If the producer has already paid an explicit carbon price (a national carbon tax or an emissions trading scheme) on the product's emissions, that amount is deductible from the number of CBAM certificates you must surrender, subject to verified evidence. It is one of the few legitimate optimisation levers: source from a producer in a country with carbon pricing, or one using a lower-carbon process such as electric-arc-furnace steel rather than blast furnace.
What happens if I under-report embedded emissions?+
Embedded emissions must rest on actual data verified at the producing installation; failing that, the Commission's published default values apply, and those are usually more penalising. An inaccurate declaration or a shortfall in surrendered certificates exposes you to a penalty per tonne of uncovered CO₂, aligned with the EU ETS sanction regime and potentially above EUR 100 per tonne, without waiving the amount still owed. Documentary rigour is essential.
Marie Fontaine
Marie leads customs research at TRADE-COST. She spent eight years in tariff classification and post-clearance audits before joining the product team to turn customs expertise into software.
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