CBAM: The Carbon Tariff Raising the Cost of Imported Steel & Aluminium.

Regulation (EU) 2023/956 initially covers six categories: iron and steel, aluminium, cement, fertilisers, hydrogen, and electricity. Within each category, specific CN codes (Combined Nomenclature customs codes) define the exact scope. The Commission periodically evaluates extending coverage to other carbon-leakage-risk sectors, such as organic chemicals and polymers, before 2030.

During the transitional period (1 Oct 2023 – 31 Dec 2025), importers only need to submit quarterly reports on the embedded emissions of imported goods, with no financial payment. From 1 January 2026, the definitive regime begins: the importer must be an "authorised CBAM declarant," must declare emissions annually, and must purchase CBAM certificates equivalent to the carbon price that would have been paid under the EU ETS if the product had been manufactured in the EU.

Embedded emissions are the CO2 emissions (and, for some products, other greenhouse gases) generated during the production process of the imported good, including direct process emissions and, in certain cases, indirect emissions from the electricity consumed. The importer must obtain this data from the non-EU producer following the Commission's standard methodology, or use published default values when verified producer data is unavailable.

Any EU-established importer that wants to bring CBAM goods into the EU from 1 January 2026 must apply for authorised declarant status. The application is processed through the national CBAM registry before that date. Without this status, it will not be possible to import the covered products starting in 2026.

During the transitional period, failing to submit the quarterly report or submitting incorrect data can be penalised between €10 and €50 per tonne of undeclared emissions, depending on the severity of the breach. In the definitive phase, not holding enough CBAM certificates to cover declared emissions triggers additional penalties equivalent to those applied for EU ETS non-compliance.

Even when the manufacturer is not the direct importer (often a supplier or intermediary handles that role), the cost of CBAM certificates is passed through to the price of imported raw material, making non-EU steel or aluminium more expensive relative to EU-produced material. Manufacturers who buy directly from non-EU suppliers should check whether they themselves need to register as authorised declarants.

Yes, progressively. As CBAM is fully phased in between 2026 and 2034, free allocation of ETS allowances for the sectors covered by CBAM is gradually reduced until it disappears, preventing EU producers from receiving double protection against external competition.

This page provides the general overview of CBAM for industrial companies. For the detailed calendar of quarterly reporting deadlines, see our Spanish-language CBAM FAQ page, and to estimate certificate costs based on your import volumes use the CBAM calculator for importers.