CBAM stopped being a future problem on January 1, 2026. The mechanism's definitive phase is now in force, and the reporting-only grace period that let importers get comfortable with the paperwork is over. This is what it actually requires, who it applies to, and how the number on the invoice gets calculated.
- CBAM's definitive phase began January 1, 2026. Certificate sales open February 1, 2027, with the first surrender due September 30, 2027, for 2026 imports.
- A 50 tonne per year exemption now removes roughly 90% of importers from full obligations while still covering about 99% of embedded emissions.
- 2026 certificate pricing uses quarterly EU ETS averages. From 2027, it shifts to weekly averages, tracked live on our EU ETS carbon price page.
- Six sectors are covered: cement, iron and steel, aluminium, fertilisers, hydrogen, and electricity, with a scope expansion proposed from 2028.
What CBAM Actually Does
The Carbon Border Adjustment Mechanism exists to close a loophole in the EU's own carbon pricing system. EU manufacturers pay for their emissions under the EU ETS, buying allowances for every tonne of CO2 they emit. Without CBAM, a company could sidestep that cost entirely by manufacturing the same product outside the EU and importing it, undercutting EU producers on price without actually cutting emissions, just moving them somewhere the EU can't see them. That's carbon leakage, and CBAM is the EU's answer to it.
In practice, CBAM requires importers of certain carbon-intensive goods to buy certificates reflecting the emissions embedded in what they're bringing in, priced to roughly match what an EU producer would have paid under the EU ETS for making the same thing domestically.
CBAM is established under Regulation (EU) 2023/956, adopted in May 2023. The regulation itself hasn't changed since, but the Omnibus simplification package adopted in October 2025 meaningfully changed who has to comply and how, which is most of what's new for 2026.
The Timeline: Transitional Phase to Definitive Phase
CBAM didn't arrive all at once. It's been rolling out in stages since 2023.
| Phase | Dates | What it required |
|---|---|---|
| Transitional | Oct 2023 to Dec 2025 | Quarterly emissions reporting only. No certificates, no payments. |
| Definitive | Started Jan 1, 2026 | Financial obligations begin. Importers must register as authorised CBAM declarants. |
| Certificate sales open | Feb 1, 2027 | Certificates covering 2026 imports become purchasable via the CBAM Registry. |
| First surrender deadline | Sep 30, 2027 | Certificates covering all of 2026's imports must be surrendered. |
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So while the definitive phase is live right now, in 2026, the actual cash cost doesn't land until 2027. That gap matters: it means 2026 is the year to get emissions tracking and cost modeling right, not the year the invoice arrives. Companies that wait until 2027 to figure out their exposure will be doing it under deadline pressure.
Who CBAM Applies To
CBAM currently covers six sectors: cement, iron and steel, aluminium, fertilisers, hydrogen, and electricity, along with specific precursor goods within those categories like cement clinker and unwrought aluminium. A scope expansion has been proposed to take effect from January 2028, so this list is expected to grow.
The bigger practical change for 2026 is the exemption threshold introduced by the Omnibus simplification. Importers bringing in less than 50 tonnes of CBAM goods per year are now fully exempt, no reporting, no authorisation, no certificates. The European Commission estimates this removes roughly 90% of importers from the system entirely, while still capturing about 99% of the embedded emissions CBAM was designed to price, since the exemption is aimed at high-volume, low-frequency importers rather than the handful of companies moving the bulk of the tonnage. Hydrogen and electricity imports are excluded from this exemption regardless of volume.
How the Certificate Price Is Calculated
This is where CBAM and the EU ETS are directly linked, and where a lot of confusion comes from, because they're related but not identical.
For goods imported during 2026, the CBAM certificate price is set as the quarterly average of EU ETS auction prices for that period. From 2027 onward, that shifts to a weekly average, a tighter, more current figure. The European Commission publishes the applicable rate directly into each authorised declarant's CBAM Registry account, so it isn't something companies calculate themselves.
You can track the live EU ETS price, along with the current published quarterly CBAM certificate figure, on our EU ETS Carbon Price page, updated automatically throughout the day.
The financial impact also isn't 100% from day one. A phase-in factor mirrors the EU ETS's own gradual phase-out of free allowances, ramping up through 2034 under current law, at which point CBAM certificates will cover the full embedded carbon cost. A Commission proposal of 17 July 2026 would slow this and extend it to 2038; it has not been adopted. And if an importer can demonstrate a carbon price was already paid where the goods were actually produced, that amount gets deducted from what's owed under CBAM, so double-charging isn't the intent.
Penalty exposure is real. Non-compliance carries a €100 per excess tonne penalty. For a company importing thousands of tonnes of CBAM-covered goods annually, getting registration and reporting wrong isn't a minor administrative slip.
What Importers Need to Do in 2026
- Confirm exposure. Check actual annual import volumes of CBAM-covered goods against the 50 tonne exemption threshold before assuming either way.
- Register as an authorised CBAM declarant if exposure applies. This is a prerequisite for the 2027 certificate purchase and surrender process.
- Build emissions data now. Third-party verification is mandatory under the definitive phase, and 2026's data is what gets surrendered by September 2027.
- Model the cost, even though payment isn't due yet. The certificate price tracks the EU ETS, which means it moves. Budgeting against a single static number is a mistake, track it the way you'd track any other input cost.
Working out how CBAM interacts with voluntary market purchases is a separate question. CBAM certificates are a compliance instrument and cannot be met with voluntary carbon credits. For the distinction between the two systems, see our guide to voluntary versus compliance carbon markets, or the longer-range view in our EU ETS carbon price forecast to 2030.
Modeling CBAM exposure against a moving EU ETS price?
The CRBN.CREDIT terminal shows EU allowance auction prices and the published CBAM certificate price in one place.
Frequently Asked Questions
What is CBAM in simple terms?
CBAM is a carbon price applied to certain goods imported into the EU, cement, steel, aluminium, fertilisers, hydrogen, and electricity. It makes sure imported goods carry roughly the same carbon cost that EU-made goods already pay under the EU ETS, so producers can't avoid carbon pricing just by manufacturing outside the EU.
When did CBAM's definitive phase start?
January 1, 2026. Before that, from October 2023 through the end of 2025, importers only had to report emissions data quarterly, no certificates and no payments were required.
Do all importers have to comply with CBAM?
No. A 2025 simplification introduced a 50 tonne per year exemption threshold for most CBAM goods, which the European Commission estimates removes about 90% of importers from full obligations while still covering roughly 99% of the embedded emissions CBAM is meant to price. Hydrogen and electricity imports are not covered by this exemption.
When do importers actually have to pay for CBAM certificates?
Certificate sales open February 1, 2027. The first surrender, covering everything imported during 2026, is due by September 30, 2027. So 2026 is a reporting and cost-modeling year, the actual cash outlay starts in 2027.
How is the CBAM certificate price calculated?
For 2026 imports, the certificate price is the quarterly average of EU ETS auction prices. From 2027 onward, it shifts to a weekly average. The European Commission publishes the applicable figure directly in each declarant's CBAM Registry account.
Can importers reduce what they owe under CBAM?
Yes. If an importer can prove a carbon price was already paid where the goods were produced, that amount is deducted from what's owed under CBAM. The mechanism also phases in gradually through 2034 under current law, mirroring the phase-out of free EU ETS allowances, so the full cost doesn't apply immediately.
A note on this article. CBAM regulation is actively evolving, including a proposed scope expansion from 2028. Figures and thresholds above reflect the rules in force as of publication. This is for informational purposes and is not legal, tax, or investment advice. Always confirm current requirements against the European Commission's own CBAM guidance before making compliance decisions.