What is CBAM?

CBAM (Carbon Border Adjustment Mechanism) is the EU's carbon border tax. It's designed to prevent "carbon leakage"—when companies move production to countries with weaker climate policies to avoid EU carbon costs.

Think of it as an extension of the EU's Emissions Trading System (ETS) to imports. Just as EU companies pay for their carbon emissions, importers will now pay for the emissions embedded in goods imported from outside the EU.

Key point: CBAM levels the playing field between EU producers (who pay carbon costs) and non-EU producers (who may not).

CBAM currently applies to imports of carbon-intensive goods:

• Cement: Clinker, cement, and certain cement products
• Iron & Steel: Iron ore, pig iron, steel products, and downstream goods like bolts and tubes
• Aluminum: Unwrought aluminum and aluminum products
• Fertilizers: Ammonia, nitric acid, urea, and mixed fertilizers
• Hydrogen: Pure hydrogen gas
• Electricity: Imported electrical energy

Note: The EU may expand CBAM to other sectors (like chemicals, plastics, or glass) in the future.

CBAM costs depend on three factors:

1. Embedded Emissions: The tonnes of CO₂ emitted during production of your goods. This includes direct emissions (from manufacturing) and indirect emissions (from electricity used).
2. EU ETS Carbon Price: The current price of carbon allowances in the EU Emissions Trading System. This fluctuates but has averaged €60-90/tonne in recent years.
3. Free Allocation Adjustment: During 2026-2034, you can deduct a portion based on the free allowances EU producers receive. This percentage decreases each year:
   • 2026: 97.5% deduction (you pay 2.5%)
   • 2027: 95% deduction (you pay 5%)
   • 2034: 0% deduction (you pay 100%)

Example: Importing 100 tonnes of steel with 2 tonnes CO₂/tonne embedded emissions at €80/tonne carbon price in 2026:
= 100 tonnes × 2 tCO₂ × €80 × 2.5% = €400 CBAM cost

If you're an EU importer of CBAM goods, here's your compliance workflow:

1. Collect Emissions Data: Get emissions data from your suppliers for each shipment. Suppliers must calculate embedded emissions using approved methodologies.
2. Submit Quarterly Reports (Transitional Period): Until end of 2025, report emissions data quarterly through the EU CBAM Registry. No payment required yet.
3. Register as CBAM Declarant: Before 2026, register in the EU CBAM Registry and get authorized to import CBAM goods.
4. Purchase CBAM Certificates: From 2026 onwards, buy enough CBAM certificates to cover your annual imports. Surrender certificates by May 31 each year.
5. Annual CBAM Declaration: Submit a detailed annual declaration with verified emissions data by May 31 for the previous calendar year.

Verification required: From 2026, emissions data must be verified by an accredited third-party verifier before submission.

Enzera provides tools for every stage of CBAM compliance: