Navigating the EU CBAM: What Importers Need to Know

The EU Carbon Border Adjustment Mechanism (CBAM) is set to reshape international trade by imposing carbon costs on certain imported goods. For importers, understanding and complying with CBAM is essential to maintain market access, avoid penalties, and minimise carbon costs. This quick guide provides an overview of the mechanism’s purpose, timeline, compliance requirements, and recent updates.

Understanding CBAM

CBAM is the EU's initiative to level the playing field by equalising carbon costs between domestic products and imports. It targets goods with high carbon emissions during production and at significant risk of carbon leakage — particularly iron and steel, aluminium, cement, fertilisers, hydrogen, and electricity.

By requiring importers to pay for the embedded emissions in these goods, CBAM aims to prevent “carbon leakage”, which refers to the relocation of production to countries with weaker environmental regulations or the replacement of EU products with more carbon-intensive imports.

CBAM Implementation Timeline

October 1, 2023 – December 31, 2025: Transitional Phase

This phase serves as a pilot and learning period for all stakeholders (importers, manufacturers, and authorities), and is used to collect valuable data on embedded emissions to refine the methodology for the definitive phase.

Importers must submit quarterly reports on the embedded emissions of covered goods but are not yet subject to financial obligations. The first reporting deadline was January 31, 2024, and the final one is set for January 31, 2026.

January 1, 2026: Definitive Phase Begins

Importers must begin purchasing and surrendering CBAM certificates corresponding to the emissions of their imports. Third-party verification of emissions data becomes mandatory where actual emissions are reported.

February 2027: Delayed Certificate Sales

According to the Commission’s proposed simplification reforms, the sale of CBAM certificates would be postponed to February 2027, rather than beginning in 2026 as originally planned. This delay is intended to give businesses additional time to adapt, even though the obligation to monitor and report emissions still starts in January 2026.

Compliance Requirements for Importers

Transitional Phase

Emissions Reporting

During the transitional phase, importers are required to submit quarterly reports via the CBAM Transitional Registry, which is accessed through the National Competent Authority (NCA) of the Member State in which the importer is established. These reports must include:

Quantity of imported goods
Actual direct and indirect embedded emissions (note: during the definitive phase, indirect emissions will only be covered for cement and fertilisers)
Any carbon price paid in the country of origin

Reporting Methodology

Throughout 2024, importers could report embedded emissions using one of three methods:

Until July 2024: Reporting based on default reference values published by the Commission for each CN code
Until the end of 2024: Reporting using a method equivalent to the EU method (three options available)
From 2025 onwards: Full reporting according to the EU method

Definitive Phase

Registration as an Authorised CBAM Declarant

Importers expecting to exceed the new de minimis mass-based threshold of 50 tonnes per year must become an authorised CBAM declarant before the start of the definitive period.

This status is mandatory to manage CBAM obligations, including emissions reporting and certificate surrender. Applications must be submitted electronically via the CBAM Registry in the Member State of establishment.

Emissions Reporting

Importers may report using default values or actual emissions data from suppliers. However, default values will be intentionally punitive to incentivise reporting of actual emissions, thus increasing costs for importers relying on defaults.

Verification

If importers use actual emissions data, it must be verified by an independent third party.

CBAM Certificates

Starting in 2027, importers must purchase CBAM certificates to cover the emissions associated with their imports. Certificate prices will be tied to the weekly average auction price of EU Emissions Trading System (ETS) allowances — except for emissions in 2026, for which the quarterly average price will apply.

Although certificate sales start in 2027, emissions from January 2026 onwards will count toward certificate obligations.

Recent CBAM Updates and Simplifications

To reduce the administrative burden on SMEs and occasional importers, the EU Commission has proposed several reforms to the CBAM Regulation. These are currently undergoing the legislative process, with trialogue discussions set to begin shortly. Key proposed changes include:

New De Minimis Threshold

Importers bringing in less than 50 tonnes of CBAM-covered goods annually would be exempt from CBAM obligations. This change is expected to relieve 90% of importers from administrative requirements while still covering 99% of carbon emissions from iron, steel, aluminium, and cement imports.

Delayed Certificate Sales

The start of CBAM certificate sales would be postponed to February 2027, providing additional time for businesses to adapt.

We’ve explained the full set of proposed simplifications here.

Preparing for CBAM Compliance

To ensure readiness for CBAM, importers should take the following steps:

Assess Product Scope: Determine whether your imported goods fall under the EU CBAM scope.
Monitor the 50-Tonne Threshold: Track whether your imports exceed the de minimis threshold.
Apply for CBAM Authorisation: If you expect to exceed the de minimis threshold, apply for CBAM authorisation promptly to avoid delays or disruptions in your supply chain.
Engage with Suppliers: Work closely with suppliers to gather actual emissions data and avoid the higher costs associated with default values.
Prepare Financially: Budget for anticipated carbon costs as CBAM is phased in. Finance teams should also strategise certificate purchases throughout each quarter to take advantage of EU ETS price fluctuations and secure certificates at the most favourable rates.
Identify Low-Carbon Suppliers: Include CBAM-related carbon costs in your procurement strategy to prioritise lower-emission suppliers and minimise carbon costs.
Implement Data Management Systems: Invest in robust, purpose-built systems to ensure CBAM compliance and effectively manage and reduce carbon costs.
Monitor Regulatory Updates: Stay informed about CBAM developments and adjust compliance strategies accordingly.

Looking for a CBAM Solutions Provider?

At Carbon Glance, we specialise in CBAM. We offer comprehensive CBAM solutions—from regulatory reporting and emissions analytics to procurement tools that help minimise carbon costs.