What CBAM actually is — and what it is not

The Carbon Border Adjustment Mechanism is a carbon pricing tool grafted onto EU customs law. Its purpose is simple: if a tonne of steel produced outside the EU emits carbon that would carry a cost under the EU Emissions Trading System (EU ETS) if produced inside the EU, then the importer pays the equivalent charge at the border.

What CBAM is not is a tariff or a trade restriction in the traditional sense. It does not discriminate by country of origin per se — it discriminates by embedded carbon intensity. A Turkish steel mill with verified low-carbon processes can qualify for a reduced certificate obligation. A German-owned facility outside the EU is not exempt just because the parent is European.

For logistics companies, the crucial legal distinction sits in Article 3(1) of Regulation (EU) 2023/956, which defines the "authorised CBAM declarant" as the importer — not the freight forwarder, not the 3PL, not the shipping line. Yet Article 35 creates an indirect obligation by requiring the declarant to use actual embedded emission values from the producer, communicated through what the regulation calls "the default values" structure. Those actual values can only come through the logistics and customs chain.

The four CBAM sectors that dominate freight volumes

Six product categories are in scope under Annex I of the Regulation. Four of them account for the bulk of bulk and break-bulk freight moving into the EU:

Sources: Eurostat Comext, 2024 trade data; IPCC default emission factors; JRC CBAM background report 2022.

The liability chain: who is responsible for what

CBAM creates a tiered obligation chain that logistics companies must understand precisely — because being at the wrong tier when a declaration is challenged can trigger contractual liability even when CBAM itself does not directly penalise the freight provider.

The practical implication: a 3PL that fails to collect producer declarations loses a client's ability to use actual emission values, forcing fallback to default values that are deliberately set high (typically 30–40% above average sector emissions) to incentivise primary data collection. That cost difference gets passed back to the 3PL via service-level penalty clauses increasingly inserted into logistics contracts.

Documents logistics providers must collect from suppliers

Commission Implementing Regulation (EU) 2023/1773, Article 4, specifies the minimum content of embedded emission communications. Every freight forwarder handling CBAM goods needs a structured document collection process. The seven documents below are the practical minimum:

1. Producer Declaration of Embedded Emissions (PDEE)
   Signed by the non-EU installation operator. Must include: installation identifier (national or CBAM Registry ID once available), reporting period, production route code (e.g., "BF-BOF" for blast furnace steel), direct and indirect embedded emissions in t CO₂e per tonne of goods, and the carbon price already paid in the country of origin (for deduction under Article 9).
2. Commercial Invoice with CN Code Declaration
   The invoice must specify the 8-digit Combined Nomenclature code for each line item. Generic descriptions ("steel bars") are insufficient — the freight agent must verify the code matches the goods at loading, not just the buyer's purchase order.
3. Bill of Lading / Air Waybill with Production Facility Address
   Country of origin at production level, not country of export. A steel coil produced in Ukraine but exported from Poland is a Ukrainian-origin CBAM good. The transport document must identify the mill, not the trading intermediary.
4. Third-Party Verification Certificate (where available)
   From 1 January 2026, Article 10 of Regulation (EU) 2023/956 requires accredited verifier sign-off on emission values declared using actual data. The accreditation must be by a body certified under ISO 14065 or equivalent national scheme.
5. Carbon Price Proof (for Article 9 deductions)
   If the producing country has a carbon pricing instrument (e.g., UK ETS, Swiss ETS, certain Chinese ETS schemes), the importer can deduct the equivalent carbon price from CBAM certificate requirements. The 3PL must collect official carbon price documentation issued by the producing country's regulator.
6. Packing List with Net Weight by CN Code Line
   CBAM certificates are calculated per tonne of embedded CO₂, which in turn is calculated per tonne of physical goods. Mixed-product shipments require weight breakdown by CN code, not a single gross weight figure.
7. Subcontractor / Precursor Emission Data (for complex goods)
   Steel pipes, aluminium profiles and fertiliser precursors often contain embedded carbon from upstream subprocesses. Annex III of Implementing Regulation (EU) 2023/1773 specifies how to aggregate precursor embedded emissions. This data must come from upstream suppliers in the non-EU country.

Three case studies: what logistics companies actually faced

Building a CBAM data process: eight steps for logistics companies

There is no single "CBAM data management" software that solves the whole problem. The process requires a combination of contract management, supplier engagement and data validation. Here is a structured approach that reflects what compliant forwarders have built in practice:

1. 1
   Screen your commodity portfolio by CN code

   Pull all import declarations from the past 12 months and filter by the Annex I CN codes of Regulation (EU) 2023/956. Identify the top 20 suppliers by volume in those codes — that is your minimum CBAM data collection universe.

2. 2
   Insert CBAM data clauses into logistics contracts

   Before the next contract renewal, add a clause requiring the shipper to provide compliant PDEE data no later than 30 days before the shipment's estimated arrival at the EU port of entry. Include a force majeure carve-out for verifier unavailability, and specify the default-value fallback cost allocation.

3. 3
   Create a standardised PDEE questionnaire for producers

   Map the fields from Annex III of Implementing Regulation (EU) 2023/1773 into a bilingual (English + local language) PDF or web form. Key fields: installation name and address, production route code, reporting year, direct/indirect emissions per tonne, fuel mix, electricity source mix, carbon price paid.

4. 4
   Validate CN codes at shipment booking stage

   Do not rely on the shipper's stated HS code. Add a CN code validation step to your booking workflow using your customs classification software. A single digit error (e.g., 7208 vs 7209 for flat-rolled steel) changes the CBAM obligation and the applicable default value.

5. 5
   Build a CBAM document repository with shipment linkage

   Link each PDEE to the corresponding MRN (Master Reference Number) from the customs entry. When your client files their CBAM declaration in the CBAM Registry, they will need to cite the specific import declarations to which each PDEE applies. Your repository must support that traceability.

6. 6
   Engage accredited verifiers for your key producers

   From 1 January 2026, actual emission values require third-party verification under Article 10. Identify which of your top producers already have ISO 14065-accredited verifier relationships. For those that do not, share a list of verifiers active in their country (EMAS accreditation bodies and SAS/DAkkS-accredited bodies cover most EU-exporting countries).

7. 7
   Run a quarterly reconciliation before the May 31 deadline

   Your importer clients must file their CBAM annual declaration by 31 May each year (Article 6 of Regulation (EU) 2023/956). Run a reconciliation in April to identify any shipments from the prior year where PDEE data is missing or deficient. This gives enough time to request supplements or accept default value treatment.

8. 8
   Prepare for CBAM scope expansion to 2027–2030

   The European Commission is mandated under Article 30 to review CBAM scope by 2025, with a likely expansion to additional ETS sectors (chemicals, plastics, indirect electricity emissions for all sectors, road transport) by 2030. Any data infrastructure you build now should be extensible to new CN code ranges without full redesign.

For more information and a reference guide about this vertical, visit our Igera pillar page.

Frequently asked questions

Legal references: Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishing a carbon border adjustment mechanism (OJ L 130, 16.5.2023, p. 52) · Commission Implementing Regulation (EU) 2023/1773 of 17 August 2023 laying down the rules for the application of Regulation (EU) 2023/956 (OJ L 228, 15.9.2023, p. 1) · Finance Act 2024 (UK), Schedule 12 (UK CBAM) · Commission Delegated Regulation (EU) 2024/[forthcoming] on CBAM Registry · Eurostat Comext, 2024 EU import trade data · British International Freight Association (BIFA), CBAM Readiness Survey Q1 2026 · JRC Technical Report "Carbon Border Adjustment Mechanism: Implications for International Trade" (2022) · GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard · ISO 14064-1:2018 (Quantification and reporting of GHG emissions) · ISO 14065:2020 (GHG validation and verification bodies).