CBAM

If your company imports steel, aluminium, cement, fertilisers, hydrogen or electricity into the EU, CBAM is now a cost line. From 2026, importers above a small threshold pay for the greenhouse gases emitted when those goods were made, at a price linked to the EU carbon market. How much you pay depends on data that only your suppliers have.

That makes CBAM a purchasing topic as much as a sustainability one. It is also the driver in this class where LCA habits help most, and where assuming “it’s just an LCA” goes most wrong.

What CBAM is

The Carbon Border Adjustment Mechanism (CBAM) was set up by Regulation (EU) 2023/956 of 10 May 2023. It mirrors the EU Emissions Trading System (ETS), under which EU producers of these goods pay for their emissions. CBAM puts an equivalent price on the emissions embedded in the same goods when they are imported, so that production doesn’t simply move outside the EU (the risk known as carbon leakage).

In costing terms, CBAM behaves like an import charge whose rate depends on how the goods were made: the more carbon-intensive the supplier’s process, the more certificates you must buy.

Which goods

CBAM applies to goods listed by Combined Nomenclature (CN) code in Annex I of the regulation, in six sectors:

• cement (including clinker and some clays)
• iron and steel (most of CN chapter 72, some iron ore products, and a number of articles of iron or steel such as tubes, sheet piling, railway material, screws and bolts)
• aluminium
• fertilisers (nitrogen-based fertilisers, ammonia, nitric acid and related goods)
• hydrogen
• electricity

The CN code decides whether a good is in scope, not what you call it. Check each import line against Annex I.

The timeline

Period	What applied
1 October 2023 to 31 December 2025: transitional period	Importers reported the emissions embedded in their imports every quarter. No payment. The last quarterly report, for Q4 2025, was due by 31 January 2026.
From 1 January 2026: definitive period	Importers must be authorised, declare embedded emissions every year and surrender CBAM certificates to cover them.

In the definitive period, for goods imported in year n:

• Authorisation first. Only an authorised CBAM declarant may import CBAM goods above the threshold. The status is granted by the national competent authority in the Member State where the importer is established.
• Certificates on sale from 1 February 2027. Member States sell CBAM certificates on a common central platform. For 2026 imports, declarants buy their certificates in 2027.
• Quarterly holding from 2027. At the end of each quarter, a declarant must hold certificates covering at least 50% of the embedded emissions in goods imported since the start of the year.
• Annual declaration and surrender by 30 September of year n+1. The first deadline is 30 September 2027, for goods imported in 2026.
• Price. The certificate price follows the EU ETS auction price: a quarterly average in 2026 and a weekly average from 2027.

The number of certificates to surrender is reduced to reflect the free allocation that EU producers still receive under the ETS, and any carbon price effectively paid in the country of production.

The 2025 simplification: a 50-tonne threshold

Regulation (EU) 2025/2083 of 8 October 2025 amended CBAM before the definitive period began. The change most companies notice is a single mass-based threshold:

• An importer whose imports of CBAM goods total no more than 50 tonnes net mass in a calendar year is exempt from CBAM obligations for that year.
• The threshold is cumulative: it adds up iron and steel, aluminium, fertilisers and cement together, across all CN codes, per importer.
• It does not apply to electricity or hydrogen. Importers of those must always be authorised.
• If you cross 50 tonnes during the year, all your imports in that year are covered, not just the tonnes above 50.
• The Commission reviews the threshold every year, aiming for the exemption to cover no more than 1% of embedded emissions.

The same regulation also moved the annual deadline from 31 May to 30 September, cut the quarterly holding requirement from 80% to 50%, limited verification to actual (not default) values, and changed the rules on authorisation and on deducting a carbon price paid abroad. One point matters for planning: an importer that expects to cross the threshold should obtain authorisation before it does, or face penalties.

Still changing

In December 2025 the Commission proposed a further revision of CBAM, which the co-legislators are discussing. The outcome can’t be anticipated. Check the Commission’s CBAM pages before relying on any detail here for a real decision.

Embedded emissions

CBAM counts embedded emissions: the greenhouse gases released in producing the goods.

• Direct emissions come from the production processes, including producing the heat and cooling they use, even if the heat is made elsewhere.
• Indirect emissions come from producing the electricity consumed in production. They count only for some goods: cement and fertilisers (and agglomerated iron ore). For iron and steel, aluminium and hydrogen, only direct emissions count.
• Precursors. For complex goods (goods made from other CBAM goods), the embedded emissions of the relevant precursors are added. Clinker in cement is the typical example. Simple goods are made from inputs treated as having zero embedded emissions.

There are two ways to get the number:

1. Actual emissions, calculated by the producer with the CBAM methodology (set out in Implementing Regulation (EU) 2025/2547) and verified by an accredited CBAM verifier.
2. Default values, published by the Commission per good and per country (in Implementing Regulation (EU) 2025/2621), for when verified actual data are not available. Default values carry a mark-up: 10% in 2026, 20% in 2027 and 30% from 2028 (1% for fertilisers). They are designed not to underestimate, so for most suppliers actual data will cost less.

CBAM is not an LCA

This is the point people miss most often, so it is worth being blunt. CBAM has its own embedded-emissions methodology, derived from the EU ETS monitoring rules. It is not an ISO 14044 LCA, not an ISO 14067 carbon footprint and not an EPD. A supplier’s EPD or PCF cannot simply be copied into a CBAM declaration.

	EPD or PCF (LCA-based)	CBAM embedded emissions
Rulebook	ISO 14044, ISO 14067, EN 15804, PCRs	Regulation (EU) 2023/956 and its implementing acts
Boundary	The whole life cycle or cradle-to-gate supply chain	The production processes at the installation, plus listed precursors, and electricity only for some goods
Unit	Declared or functional unit (per kg, per m²)	Per tonne of good (per MWh for electricity)
Gases	All greenhouse gases, as CO₂-eq	The gases listed for each good in Annex I
Checked by	EPD verifier or critical reviewer	Accredited CBAM verifier
Purpose	Information and comparison	Calculating a financial obligation

How LCA thinking still helps

The method is different, but the habits carry over directly:

• Boundaries. You know to ask “what’s inside this number?” before you use it. For CBAM that means: which installation, which production process, which precursors, and whether electricity is in or out.
• Precursors are a bill of materials. A complex good’s embedded emissions are built up from its inputs, just as a cradle-to-gate footprint is. If your supplier makes steel tubes from purchased coil, the coil’s embedded emissions (and where it came from) matter.
• Mass balance and yield. As in LCA 202, what you put in counts, not what ends up in the product. The Commission’s Q&A confirms that for steel products made from precursors, the precursor mass entering the process (before cutting) is used.
• Data quality. Actual, verified, installation-specific data beat defaults, just as supplier data beat database averages. You know how to check a figure before you rely on it.

What purchasing needs from suppliers

For each CBAM good you import, ask your supplier (or the producing installation) for:

1. Identification: the installation that produced the goods, its location and the production route.
2. Goods and quantities: CN codes and net mass, matching your customs declarations.
3. Specific embedded emissions: direct emissions per tonne and, for cement and fertilisers, indirect emissions (electricity consumed and the emission factor used).
4. Precursors: which precursors were used, how much, where they came from, and their embedded emissions.
5. Carbon price paid: any carbon price effectively paid in the country of production, with evidence.
6. Verification: confirmation that actual emissions were verified by an accredited verifier, and the reporting period covered.

Build this into supplier onboarding and contracts: who provides the data, by when, in what format, and what happens if it is missing. Without it, you pay on default values with a mark-up.

Worked example: why supplier data is worth chasing

Hypothetical, simplified

All figures are invented. The “default value” is not a real Annex value, and the example ignores the free allocation adjustment and any carbon price paid abroad, both of which reduce the real obligation. It only shows how the pieces multiply.

An importer brings in 400 tonnes of steel sections in 2027. The supplier’s verified actual direct emissions are 1.8 t CO₂e per tonne. The (hypothetical) default value for that good and country is 2.3 t CO₂e per tonne, with the 2027 mark-up of 20%. Assume a certificate price of €80 per tonne.

With actual data:   400 t × 1.8                  =   720 t CO₂e
With default value: 400 t × 2.3 × 1.20           = 1,104 t CO₂e
Difference:         1,104 − 720                  =   384 t CO₂e
At €80 per tonne:   384 × €80                    = €30,720 before adjustments

The supplier’s verified data are worth about €31,000 on this one product line in this simplified case. That is the business case for the data request above.

Exercise

1. In 2026 your company imports 30 tonnes of steel fasteners, 15 tonnes of aluminium profiles and 8 tonnes of cement. Are you inside or outside CBAM for 2026? If inside, which imports are covered, and when is your first declaration due?
2. A steel supplier sends its EN 15804+A2 EPD, showing GWP-total for A1–A3 of 2.1 kg CO₂-eq per kg, and says “use this for CBAM”. What do you reply?

Answer

1. The threshold is cumulative across iron and steel, aluminium, fertilisers and cement: 30 + 15 + 8 = 53 tonnes, which exceeds 50. You are inside CBAM, and all 53 tonnes are covered, not just 3. (This assumes the fasteners’ CN codes are listed in Annex I; check them.) You need to be an authorised CBAM declarant, and your first annual declaration and certificate surrender are due by 30 September 2027.
2. Thank them, but explain that CBAM uses its own methodology: embedded emissions per tonne at the producing installation, with the precursors CBAM lists and verification by an accredited CBAM verifier. An EPD covers a different boundary (the whole cradle-to-gate supply chain, all greenhouse gases) and is checked against different rules. Ask for the installation’s CBAM emissions data and verification instead. The EPD is still useful as a sanity check: if the two figures are wildly different, ask why.

What you should now be able to do

• Say which goods CBAM covers and how to check whether an import is in scope.
• Explain the transitional and definitive periods, and the key dates for 2026 imports.
• Apply the 50-tonne threshold correctly, including what happens when you cross it.
• Explain direct and indirect embedded emissions, precursors, and actual versus default values.
• Explain why CBAM is not an LCA or an EPD, and how LCA habits still help.
• List what to ask suppliers for.

Sources

• Regulation (EU) 2023/956 of 10 May 2023 establishing a carbon border adjustment mechanism, EUR-Lex (Articles 7, 8 and 36; Annexes I and II). Text read via the EU Publications Office.
• Regulation (EU) 2025/2083 of 8 October 2025 amending Regulation (EU) 2023/956 as regards simplifying and strengthening the CBAM, EUR-Lex (recitals 10, 15, 19 and 28; new Article 2a on the threshold; amended Articles 6, 20 and 22). Text read via the EU Publications Office.
• European Commission, Carbon Border Adjustment Mechanism and CBAM definitive regime (certificate pricing, sectors).
• European Commission, CBAM Questions and Answers, last updated 27 May 2026 (obligations and dates, direct and indirect emissions, precursors, precursor mass before cutting, default values and mark-ups, the December 2025 proposal).

Checked: 2026-09-29