regulations
CBAM 2026 - EU Carbon Border Tax: What It Is
December 20, 20259 min readPaweł Dubel
Importing steel, aluminium or cement from outside the EU? From 2026, you'll pay for embedded CO₂ emissions. Learn how CBAM works and what it costs.
What is CBAM?
CBAM (Carbon Border Adjustment Mechanism) is the EU's carbon border tax that charges for CO₂ emissions embedded in imported goods. From 1 January 2026, importers of steel, aluminium, cement, fertilisers, hydrogen and electricity from non-EU countries must account for the emissions embedded in their imports; CBAM certificates are purchased from 1 February 2027. They are priced at the EU ETS allowance rate (for imports in Q2 2026, the official price was €75.28/tCO₂e, published by the Commission on 2026-07-06. This price applies to the import quarter in 2026; from 2027, the applicable certificate price is for the week of purchase. Basis: quarterly average of EU ETS auction clearing prices on EEX (Art. 21 as amended by Omnibus 2025/2083)).
CBAM levels the playing field between European producers (who already pay for emissions under ETS) and importers who previously could buy cheaper from countries with no carbon pricing. It is part of the EU's climate policy aiming for climate neutrality by 2050.
Calculate your estimated import costs: CALCULATOR. Find your goods' CN code: TARIFF FINDER.
Who does CBAM apply to?
For 2026, the mass-based exemption applies when the combined annual net mass of covered iron and steel, aluminium, cement and fertiliser goods does not exceed 50 tonnes. The importer must aggregate covered CN codes across all customs clearances made by the importer or on its behalf through every customs agent; the total includes the batch being assessed. Once the threshold is exceeded, obligations cover the covered goods imported during that year, not only the amount above 50 tonnes. Hydrogen and electricity are subject to separate rules and do not benefit from this exemption. CBAM covers these sectors:
- Iron and steel - sheets, bars, tubes (CN codes 72xx, 73xx)
- Aluminium - profiles, sheets, foil (CN codes 76xx)
- Cement - clinker, Portland cement (CN codes 2523)
- Fertilisers - ammonia, urea, nitrates (CN codes 28, 31)
- Hydrogen (CN code 2804 10 00)
- Electricity (CN code 2716)
Mass-based exemption: From 1 January 2026, an importer is exempt from CBAM obligations for covered iron and steel, aluminium, cement and fertiliser goods if their combined annual net mass does not exceed 50 tonnes. The total is aggregated across the covered CN codes and all customs clearances made by or on behalf of the importer through every customs agent; it includes the batch being assessed. Hydrogen and electricity are outside this exemption. Amending Regulation (EU) 2025/2083 entered into force on 20 October 2025, but the exemption applies to imports from 1 January 2026.
Excluded countries (Annex III, Reg. 2023/956): CBAM obligations do not apply to imports from: Iceland, Liechtenstein, Norway, Switzerland (EFTA states participating in EU ETS or linked ETS) and the following special territories: Büsingen, Helgoland, Livigno, Ceuta and Melilla. Importers from these jurisdictions do not need CBAM registration or certificates for goods listed in Annex I.
CBAM Timeline
Transitional period (1 Oct 2023 – 31 Dec 2025)
During the transitional period, importers submitted quarterly CBAM reports through the Transitional Registry - no payments required. This was time to collect data from suppliers and prepare for the definitive phase.
Definitive phase (from 1 Jan 2026)
From 1 January 2026, CBAM entered its definitive phase.
From 1 January 2026, importers must:
- Obtain authorised CBAM declarant status
- Report embedded emissions in imported goods
- Account for emissions in an annual declaration (purchase and surrender of CBAM certificates - from 1 February 2027)
Quarterly holdings: There is no quarterly certificate-holding requirement in 2026. From 2027, at each quarter end, authorised CBAM declarants must hold certificates covering at least 50% of the certificate amount calculated from embedded emissions accumulated since the start of the year, after the free-allocation adjustment and any permitted reduction for a carbon price effectively paid in a third country (Article 22(2) of the CBAM Regulation, as amended by Regulation (EU) 2025/2083). This does not mean that the remaining certificates may be freely sold or that half may be kept until year-end: CBAM certificates cannot be transferred or resold to another company. Certificates for 2026 imports will be available for purchase from 1 February 2027; the first annual declaration and surrender for 2026 imports is due by 30 September 2027.
How to calculate CBAM liability?
CBAM liability = [embedded emissions [tCO₂e/t] − free-allocation deduction (EU benchmark [tCO₂e/t] × free-allowance share)] × volume [t] × certificate price [€/tCO₂e] − possible reduction for a carbon price effectively paid in a third country (not deducted by this calculator) [€]
This follows from Implementing Regulation (EU) 2025/2620: a benchmark-based deduction (the emissions standard of the most efficient EU installations) is subtracted from the embedded emissions, and the entire excess above the benchmark is payable in full already in 2026. The popular simplification “in 2026 you only pay 2.5% of the fee” is wrong.
Step 1: Gather parameters
- Import volume (tonnes)
- Embedded emissions (tCO₂e per tonne of product)
- Third country where a carbon price was effectively paid
- CN code (check in TARIFF FINDER)
Step 2: Subtract the free-allocation deduction
Deduction = EU benchmark for the product × free-allowance share in the given year (Art. 10a(1a) Directive 2003/87/EC; IR (EU) 2025/2620). The CBAM factor reflects the gradual phase-out of free allowances for EU producers - but it applies to the benchmark, NOT to your goods' emissions:
| Year | CBAM Factor | EU Free Allowances |
|---|---|---|
| 2026 | 2.5% | 97.5% |
| 2027 | 5% | 95% |
| 2028 | 10% | 90% |
| 2029 | 22.5% | 77.5% |
| 2030 | 48.5% | 51.5% |
| 2034 | 100% | 0% |
Step 3: Account for deductions
A carbon price paid in the third country may be taken into account only where the importer demonstrates that it was effectively paid and the regulatory conditions are met. A supplier statement or an amount merely charged is not enough; evidence of payment and other required information are needed. Do not apply a deduction without that evidence.
Calculate your costs: CALCULATOR
Calculation examples
Selected-batch simulation assumptions: Q2 2026 import, official price for that period of €75.28/tCO₂e, Commission default values under IR (EU) 2025/2621 as corrected by IR (EU) 2026/1740; the Commission's informational workbook was updated on 10 August 2026 and retrieved on 2 October 2026. For CN8 codes in the 7208 group, the benchmark is 1.370 tCO₂e/t (column B, route C; Commission, 13 February 2026). The CSCF is 1 (100%) for 2026–2030 under Article 1 of Implementing Decision (EU) 2026/1862. Binding values come from the legal acts, not from the Commission workbooks alone. Sources: IR 2025/2621, IR 2026/1740, Decision 2026/1862., and no evidenced carbon price effectively paid in the third country. The examples conditionally assume the combined annual net mass of covered goods exceeds 50 tonnes; each amount covers only the selected batch, not the annual settlement. They do not replace checking the annual total across all clearances or using emissions data verified by an accredited verifier.
Steel (hot-rolled sheets CN 7208, Turkey)
- Volume: 50 t
- Default emissions (Turkey × CN 7208): 2.428 tCO₂e/t, with the 10% mark-up (2026) = 2.671 tCO₂e/t
- EU benchmark for CN8 codes in the 7208 group (column B, route C): 1.370 tCO₂e/t; deduction: 1.370 × 97.5% = 1.336 tCO₂e/t
- Payable emissions: (2.671 − 1.336) × 50 t = 66.75 tCO₂e
- Conditional estimate for this batch (not an annual settlement): 66.75 × €75.28 = ≈ €5,025
Aluminium (profiles CN 7604, China)
- Volume: 20 t
- Default emissions (China × CN 7604, direct only): 4.881 tCO₂e/t, with the 10% mark-up (2026) = 5.369 tCO₂e/t
- EU benchmark (route K): 1.485 tCO₂e/t; deduction: 1.485 × 97.5% = 1.448 tCO₂e/t
- Payable emissions: (5.369 − 1.448) × 20 t = 78.42 tCO₂e
- Conditional estimate for this batch (not an annual settlement): 78.42 × €75.28 = ≈ €5,904
Note: in 2034 the free-allocation deduction drops to zero - the full embedded emissions become payable (with a 30% mark-up when default values are used). At the official Q2 2026 price used here (€75.28/tCO₂e), the estimate would be approximately €11,900 (steel) and €9,550 (aluminium); that price applies only to imports in Q2 2026.
Common mistakes
- No supplier data → using Commission default values, which are typically inflated
- Wrong CN code → incorrect classification may result in wrong obligations or exclusion
- Confusing CBAM with EU ETS → CBAM covers imports, EU ETS covers EU installations
- Wrong units → t vs kg, tCO₂e/t vs kgCO₂e/kg
- Ignoring the 50 t/year threshold → check if you qualify for exemption
Frequently asked questions
Does CBAM apply only to raw materials or also finished products?
Currently - mainly raw materials and semi-finished products. The scope covers steel, aluminium, cement, fertilisers, hydrogen and electricity. From 2028, expansion to downstream products is planned.
How often do I need to report?
From 2026 - once a year. You submit an annual declaration by 30 September of the year following importation (first declaration for 2026 by 30 September 2027). Quarterly reports applied only during the transitional period, which ended on 31 December 2025.
What if my supplier doesn't have emissions data?
You can use Commission default values. However, these are typically higher than actual emissions. In parallel, work on obtaining real data from suppliers - this will reduce certificate costs.
Do I need an EORI number?
Yes. An EORI number is required to register as an authorised CBAM declarant and to import goods covered by the mechanism.
Can I deduct carbon tax paid in the third country?
A carbon price paid in the third country may be taken into account only where the importer demonstrates that it was effectively paid and the regulatory conditions are met. A supplier statement or an amount merely charged is not enough; evidence of payment and other required information are needed. Without that evidence, do not apply a deduction.
Legal basis
| Legal act | Scope |
|---|---|
| Regulation (EU) 2023/956 of 10 May 2023 | Establishes the CBAM |
| Regulation (EU) 2025/2083 of 8 October 2025 | CBAM simplifications (50 t threshold, deadlines) |
| Implementing Regulation (EU) 2023/1773 | Reporting rules for transitional period |
| Directive 2003/87/EC (EU ETS) | Emissions trading system - price benchmark |
Useful tools
- CALCULATOR - calculate estimated certificate costs
- TARIFF FINDER - find your goods' CN code
- [DUTY CALCULATOR] - calculate full import costs
Official sources:
Summary
- CBAM applies from 1 January 2026 - importers account for emissions in an annual declaration; certificate purchases start 1 February 2027
- Mass-based exemption - applies when the combined annual net mass of covered goods does not exceed 50 tonnes; aggregate all clearances across agents; hydrogen and electricity are outside this exemption
- CBAM certificates - official quarterly price Q2 2026: €75.28/tCO₂e
- Free-allocation adjustment - depends on the benchmark applicable to the CN code and production route and the factor for the import year; the example uses CSCF 1 (2026–2030) and a 97.5% free-allocation share in 2026
- First compliance deadline - annual declaration for 2026 by 30 September 2027
This article is for informational purposes only and does not constitute legal or tax advice. The CBAM rules stated here were checked against official sources on 2 October 2026; publication and application dates are shown with the relevant rules.
