The CBAM is an EU policy that places a carbon cost on certain goods imported into the EU, mirroring the carbon price already paid by EU producers under the EU ETS. It is designed to prevent “carbon leakage,” which is where importers source goods from countries with less stringent climate rules, undercutting domestic producers who bear the cost of emissions compliance.

CBAM directly applies to EU importers of covered goods, but its effects extend across supply chains. Non-EU exporters, including U.S.-based companies, face indirect pressure: EU importers cannot surrender certificates without supplier emissions data, meaning suppliers who cannot provide it risk being replaced.

CBAM currently applies to six sectors. For cement, iron and steel, aluminium, and fertilisers, the threshold is 50 metric tons of imports per year. Electricity and hydrogen have no threshold, meaning all importers are covered regardless of volume.

Companies must report the type and quantity of covered goods by CN code, direct and indirect embedded GHG emissions, country of origin and production facility details, manufacturing processes used, precursor materials, and any carbon price already paid in the country of origin.

Each CBAM certificate represents one tonne of CO₂ equivalent (CO₂e) embedded in imported goods. The price is calculated based on the auction price of EU ETS allowances expressed in €/tonne of CO₂ emitted, as a quarterly average in 2026, and as a weekly average from 2027 onwards. Certificates must be surrendered by September 30th each year, beginning in 2027.

Default values are calculated using the average emissions intensity of the ten highest-emitting exporting countries — meaning they are deliberately set high to create a compliance incentive. If your suppliers operate more efficient or cleaner facilities than that average, using defaults means you are overpaying for certificates you do not owe. That cost gap grows each year: default values increase by 10% in 2026, 20% in 2027, and 30% from 2028 onward. Investing in actual, verified emissions data now protects your cost position as CBAM matures — and companies that build this capability early are better positioned as preferred supply chain partners in an EU market that is increasingly rewarding carbon transparency.

Yes. If a carbon price has already been paid in the country where goods were produced, importers can deduct that amount from the certificates they are required to surrender, preventing double taxation across the supply chain. Supporting documentation must be included in the annual declaration.

Verification can only be provided by entities accredited by a National Accreditation Body (NAB) of an EU member state. Verification entities already accredited under the EU Emissions Trading System (EU ETS) are likely to be among the first to obtain CBAM accreditation.