What is CBAM? The EU's carbon border price, explained
The Carbon Border Adjustment Mechanism (CBAM) is the EU's carbon price on certain imported goods, established by Regulation (EU) 2023/956. Importers of goods such as iron and steel, cement, aluminium, fertilisers, electricity, and hydrogen account for the greenhouse-gas emissions embedded in those goods — mirroring the carbon price EU producers pay under the EU Emissions Trading System. CBAM's financial phase began on 1 January 2026.
Last updated: 2 July 2026Sources: Regulation (EU) 2023/956Regulation (EU) 2025/2083COM(2025)989 (European Commission proposal)European Commission — CBAM
Why does CBAM exist?
EU producers of emission-intensive goods pay a carbon price under the EU Emissions Trading System (EU ETS). Without a border mechanism, production could shift to countries with no equivalent carbon cost, and imports could undercut EU-made goods — an effect known as carbon leakage.
CBAM addresses this by putting an equivalent carbon price on the same goods when they enter the EU customs territory. The aim is that a tonne of steel faces a comparable carbon cost whether it is produced in the EU or imported.
Which goods does CBAM cover?
CBAM applies to goods listed by CN code in Annex I of Regulation (EU) 2023/956, across six sectors: cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen. The list also includes certain precursors and some downstream products, such as screws and bolts.
Whether a specific product is covered depends on the CN code it is declared under — not on how the product is described commercially.
How does CBAM work in practice?
Importing CBAM goods in the definitive period requires authorised CBAM declarant (ACD) status, applied for through the national competent authority of the member state where the importer is established (Regulation (EU) 2023/956).
Each year, authorised declarants submit a CBAM declaration covering the previous calendar year's imports and the emissions embedded in them, and surrender CBAM certificates against those emissions. Certificate prices are derived from EU ETS allowance prices.
Regulation (EU) 2025/2083 introduced a de-minimis exemption: importers whose CBAM goods stay under 50 tonnes of cumulative net mass per legal entity per calendar year fall outside the main obligations. The exemption does not apply to electricity or hydrogen.
Where does CBAM stand today?
CBAM began with a reporting-only transitional period, which ran from October 2023 to the end of 2025. The definitive period — the phase with financial obligations — started on 1 January 2026 (Regulation (EU) 2023/956, as amended).
Certificate sales open on 1 February 2027, and the first annual CBAM declaration, covering 2026 imports, is due by 30 September 2027 (Regulation (EU) 2025/2083).
Is CBAM expanding?Proposal — not law
The European Commission has proposed extending CBAM to further downstream products — around 180 additional product categories — from 1 January 2028 (COM(2025)989).
This reflects a legislative proposal (e.g. COM(2025)989) that has not been adopted. Scope, product lists, and dates may change or may not enter into force.
Who feels the impact?
EU importers of covered goods carry the obligations the regulation sets out: authorisation, emissions data, annual declarations, and certificate costs. Customs brokers and indirect customs representatives handle the day-to-day questions, and in defined cases the CBAM obligations can sit with the indirect representative instead of the importer.
ESG, tax, and customs advisors translate the moving rulebook into decisions for the companies they advise — which is exactly the recurring work CBAM Pulse is being built to support.