CBAM

The Carbon Border Adjustment Mechanism (CBAM) is the EU's carbon price on imports of cement, iron and steel, aluminium, fertilisers, electricity and hydrogen. Importers that the 50-tonne yearly exemption doesn't cover buy CBAM certificates, each covering one tonne of CO₂ equivalent (CO₂e) emitted in making the goods, and surrender them once a year. The rules are in the CBAM Regulation (Regulation (EU) 2023/956), as amended by Regulation (EU) 2025/2083.

CBAM exists to stop carbon leakage. EU producers pay for their emissions under the EU Emissions Trading System (EU ETS), but production outside the EU doesn't, so carbon-intensive production could move to countries with less strict climate rules. CBAM applies an equivalent set of rules to imports. The Regulation says CBAM will replace the EU ETS measures against carbon leakage, and the certificates you owe are adjusted to reflect the EU ETS allowances that EU producers of the same goods get free of charge.

Where does CBAM stand now?

CBAM entered into force on 17 May 2023. Its definitive period started on 1 January 2026, when the threshold, the authorisation requirement, declarations and penalties started to apply. The first declaration and surrender, for 2026, are due by 30 September 2027.

A Commission proposal would extend CBAM to downstream goods and add anti-circumvention measures, COM(2025) 989. It is a proposal, not law. As proposed, the extension would apply from 1 January 2028. Our Decode on the downstream proposal follows it.

What did the 2025 simplification change?

The simplification, Regulation (EU) 2025/2083, entered into force on 20 October 2025. Its main changes:

• It added a yearly exemption for importers of 50 tonnes or less.
• It set the declaration and surrender deadline at 30 September of the following year, to give declarants more time.
• It made certificate sales start in 2027, for emissions in goods imported in 2026.
• It cut the quarterly holding from 80% to 50% of embedded emissions.
• It took non-calcined kaolinic clays out of scope.

Our Decode on what the 2025 simplification changed sets out each change next to the old rule.

What happens if I don't comply?

If you don't surrender enough certificates by 30 September, you pay a penalty for each missing certificate and still have to surrender them. The penalty equals the EU ETS excess emissions penalty for the year of import: €100 per tonne of CO₂e, rising with the European index of consumer prices for allowances issued from 1 January 2013. The EU ETS Directive doesn't state today's indexed amount, so we don't give one here. If you fall short because a producer, a verifier or the person certifying your carbon price documents gave you wrong information, the authority can reduce the penalty.

Importing without authorisation costs more. A person other than an authorised CBAM declarant who brings CBAM goods into the EU without meeting the obligations pays three to five times that penalty for each certificate not surrendered. The same applies to an importer without authorisation that exceeds the 50-tonne threshold, counting all its emissions that year; paying releases it from declaring and surrendering for those imports. The authority can lower this penalty, though not below the basic one, if the threshold was exceeded by no more than 10%, or if the importer applied by 31 March 2026, kept importing and was refused.

Customs authorities don't let anyone other than an authorised CBAM declarant import CBAM goods, except under the 50-tonne exemption.

How is CBAM tied to the EU ETS?

The CBAM Regulation ties three things to the EU ETS, which the EU ETS Directive (Directive 2003/87/EC) sets up. Certificate prices follow EU ETS auction prices. The penalty for missing certificates is the EU ETS excess emissions penalty. The certificates due are adjusted for EU ETS free allocation.

CBAM applies to you if you import goods listed in its Annex I that originate outside the EU, unless an exemption covers you. It also covers products processed from those goods under the customs procedure called inward processing, and goods brought to platforms or other structures on an EU country's continental shelf or in its exclusive economic zone.

Which goods are covered?

Annex I lists the goods in six sectors:

• Cement, including cement clinkers and calcined kaolinic clays
• Electricity
• Fertilisers, such as nitrogen fertilisers
• Iron and steel, including some finished articles such as screws, bolts and steel structures
• Aluminium, including aluminium structures and other aluminium articles
• Hydrogen

Goods are identified by their Combined Nomenclature (CN) code, the EU's customs product code. The full list of codes is in Annex I of the Regulation.

Who is exempt under the 50-tonne threshold?

You are exempt from all CBAM obligations in a calendar year if the net mass of the CBAM goods you import stays at or under 50 tonnes, with all CN codes added together. You declare the exemption in your customs declaration. Once you go over 50 tonnes, every obligation applies to all emissions in all goods you imported that year, including those imported before you crossed the threshold.

The exemption never applies to electricity or hydrogen. By 30 April each year, the Commission checks whether the threshold still exempts no more than 1% of the emissions embedded in imports. It changes the threshold only if its calculation differs by more than 15 tonnes, and a new threshold applies from 1 January of the following year. Our explainer on the threshold walks through the test, with an example.

What is out of scope?

These goods are outside CBAM, whatever the quantity:

• Goods originating in Iceland, Liechtenstein, Norway or Switzerland
• Goods originating in Büsingen, Heligoland, Livigno, Ceuta or Melilla
• Goods moved or used for military activities
• Non-calcined kaolinic clays
• Electricity generated, and hydrogen originating, on the continental shelf or in the exclusive economic zone of an EU country or of a country exempted in Annex III

Electricity from a non-EU country whose power market is coupled with the EU's can be exempted, if the Commission finds that the conditions set out in the Regulation are met. The Regulation lists no such country yet.

Who has to act?

The importer is whoever lodges the customs declaration in its own name, or the client on whose behalf an indirect customs representative lodges it. Four groups have a role:

• Importers established in an EU country must hold the status of authorised CBAM declarant before they import CBAM goods, unless the threshold exempts them; they apply when they expect to exceed it.
• Indirect customs representatives, who lodge customs declarations for a client, must get the status before importing, and always need it when the importer isn't established in the EU.
• Producers outside the EU ("operators") can register their installations in the CBAM registry, have their emissions verified and share the data with EU importers; a registration lasts five years. Our guide to what producers outside the EU need to do covers their side.
• Verifiers accredited for CBAM register with a competent authority, but not before 1 September 2026.

Each EU country designates a competent authority, which grants the declarant status. The Commission's list of competent authorities is dated 31 July 2026.