The Carbon Border Adjustment Mechanism is no longer a pilot. As of January 1, 2026, it entered its definitive phase — and for companies importing carbon-intensive goods into the EU, the clock is already running. The two-year transitional period was about reporting. This phase is about financial liability. Certificates, thresholds, authorisation requirements — it all applies now. If your supply chain touches steel, aluminium, cement, fertilisers, electricity, or hydrogen, this is not a future consideration. It’s a present one.
TThe EU Carbon Border Adjustment Mechanism is a carbon pricing instrument that places a cost on the embedded greenhouse gas emissions in imports of certain goods entering the EU. It exists to address carbon leakage — the risk that EU producers face stricter emissions rules than their foreign competitors, creating an uneven playing field.
From October 2023 through December 2025, the mechanism operated in a transitional phase. During that period, importers only had to report embedded emissions. No certificates. No financial obligation.
That changed on January 1, 2026.
The definitive regime means three core obligations apply to EU importers (or their indirect customs representatives) who bring more than 50 tonnes of in-scope goods into the EU per year:
One important clarification: there are no certificate purchases in 2026 itself. The financial obligation is retroactive — importers will purchase and surrender certificates in 2027 for goods imported throughout 2026. But the emissions data being collected right now determines what those certificates will cost. will cost.
Before the definitive phase launched, the EU made targeted amendments to the original regulation. Regulation (EU) 2025/2083 — adopted as part of the EU’s broader Omnibus simplification package — entered into force on October 20, 2025.
The most consequential changes:
A new 50-ton de minimis threshold. The former €150 consignment-value exemption has been replaced by a single mass-based threshold. Importers whose total annual in-scope imports remain below 50 tonnes (cumulative net mass) are fully exempt from compliance obligations — no reporting, no authorisation, no certificates. Hydrogen and electricity are excluded from this exemption.
According to the European Commission, this threshold exempts approximately 90% of all EU importers, while still capturing 99% of embedded emissions from covered goods. It significantly reduces the administrative burden for small and medium-sized enterprises.
Certificate purchases postponed to 2027. The original obligation to purchase certificates from January 1, 2026 has been pushed back. Certificate sales will open from February 1, 2027, covering imports made throughout 2026.
Certificate pricing mechanics clarified. For goods imported in 2026, certificate prices will reflect the quarterly average auction price of EU ETS allowances. From 2027 onwards, pricing shifts to a weekly average. The European Commission will publish the applicable price directly in the CBAM Registry accounts of authorised declarants.
The mechanism’s financial impact does not reach 100% immediately. A phase-in factor mirrors the gradual phase-out of free allowances under the EU Emissions Trading System. This ramp-up continues through 2034, at which point certificates will cover the full embedded carbon cost of imports.
Companies that have already started modelling their emissions data will have a clearer picture of how that cost compounds over time.
On December 17, 2025 — days before the definitive phase began — the European Commission published a proposal to significantly expand CBAM’s product scope from January 1, 2028.
The proposal covers approximately 180 downstream products, primarily steel- and aluminium-intensive goods manufactured using materials already covered by CBAM. The proposed additions include:
The Commission estimates the expansion would add roughly 7,500 new importers. China is the most exposed trading partner under this proposal, followed by Türkiye, the United States, the United Kingdom, and Japan.
This proposal still needs to pass through the ordinary EU legislative procedure before it can be adopted. But the direction is clear: it is being built out as a full-value-chain carbon pricing instrument.
The December 2025 package also addressed enforcement. Pre-consumer aluminium and steel scrap is being brought within the accounting framework. Reporting requirements have been tightened to improve traceability and reduce the risk of under-reporting embedded emissions intensity — a particular concern for complex, multi-country supply chains.
Where third-country producers do not provide actual emissions data following the required methodology, importers must use EU-established default values, which are set conservatively.
1. Check the 50-ton threshold. Calculate your total annual net imports of CBAM-covered goods. If you are above 50 tonnes — or likely to be — you need to act immediately.
2. Apply for authorised CBAM declarant status. Applications are open now. Importers who file by March 31, 2026 can continue importing provisionally while the process runs. Missing this window creates real operational disruption.
3. Engage your supply chain on emissions data. The quality of data you collect from third-country producers will directly affect your certificate costs. The mechanism allows a deduction if carbon has already been paid in the country of production — but you need documented proof to claim it.
4. Start modelling CBAM certificate costs. Even though certificates are not purchased until 2027, the embedded emissions from imports made right now determine the financial exposure. Build this into your procurement and sourcing decisions today.
5. Watch the 2028 expansion closely. If your supply chain includes steel or aluminium-intensive downstream goods — machinery, components, fabricated metals — the proposed scope expansion will eventually affect you. Getting the basic compliance framework in place now makes the 2028 transition less disruptive.
The mechanism currently applies to six sectors:
CBAM compliance depends on the quality of your emissions data — and for most companies, that data lives deep in the supply chain. Sprih’s enterprise sustainability platform is built to bring that data to the surface. SustainSense, Sprih’s AI engine, draws from a database covering 120,000+ companies and 300,000+ sustainability reports to give procurement and sustainability teams accurate, traceable emissions intelligence across their supplier base. For companies navigating CBAM’s authorisation requirements, embedded emissions calculations, and certificate planning, having a clear view of what your suppliers are actually emitting — backed by real data — is the difference between a manageable compliance process and a costly one.
The definitive phase started on January 1, 2026. The transitional reporting-only phase ran from October 1, 2023 to December 31, 2025. From 2026, financial obligations — including the purchase and surrender of CBAM certificates — apply to in-scope imports.
It currently covers six sectors: cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen, along with selected precursors within those sectors (such as cement clinker, nitric acid, ferrosilicon, and unwrought aluminium).
Under the Omnibus simplification (Regulation EU 2025/2083), importers whose total annual net imports of covered goods fall below 50 tonnes are fully exempt from all CBAM obligations — including reporting, authorisation, and certificate purchases. Hydrogen and electricity are excluded from this threshold. The European Commission estimates this exempts around 90% of importers while still covering 99% of embedded emissions.
CBAM certificate purchases will open from February 1, 2027. The first annual declaration and certificate surrender deadline is September 30, 2027, covering embedded emissions from imports made throughout 2026. There are no certificate purchases required in 2026 itself.
For goods imported in 2026, CBAM certificate prices are based on the quarterly average auction price of EU ETS allowances. From 2027 onwards, the price will reflect the weekly average ETS allowance price. The European Commission publishes the applicable price in the Registry accounts of authorised declarants.
An authorised CBAM declarant is an EU importer (or their indirect customs representative) registered to import covered goods above the 50-ton annual threshold. Only authorised declarants may import such goods. Importers who submit their application by March 31, 2026 may continue importing provisionally while their application is processed.
The CBAM Omnibus Regulation (Regulation EU 2025/2083) is a set of targeted simplifications to the original CBAM legislation. It entered into force on October 20, 2025 and introduced the 50-ton threshold, postponed certificate purchases to 2027, and replaced the former €150 consignment-value exemption.
Yes. If an importer can demonstrate that a carbon price was already paid during the production of imported goods in the country of origin, the corresponding amount can be deducted from the number of CBAM certificates required. This requires verifiable documentation.
On December 17, 2025, the European Commission proposed expanding CBAM to approximately 180 downstream products from January 1, 2028. These are primarily steel- and aluminium-intensive goods including fabricated metal products, machinery, certain vehicles and components, industrial equipment, and construction products. The proposal is subject to the EU legislative process.
CBAM covers both direct and indirect emissions, though the scope varies by sector. Indirect emissions — those from electricity consumed during production — are covered for cement and fertilisers after the transitional period, based on defined methodology. Direct emissions apply to all covered sectors.
Where third-country producers do not report actual embedded emissions using the required methodology, importers must use EU-established default values. These are set conservatively and may result in higher certificate costs than if actual, lower emissions values had been documented.
CBAM is designed to mirror the EU Emissions Trading System. Its financial impact phases in as ETS free allowances phase out — starting in 2026 and reaching 100% by 2034. This ensures that importers pay a carbon price equivalent to what EU domestic producers face under the ETS.
