On 1 January 2026, a new kind of cost appeared on every customs declaration for carbon-intensive imports into the European Union.

It wasn’t a headline. There was no countdown clock. But for thousands of companies importing steel, aluminium, cement, fertilisers, electricity, or hydrogen into EU markets, the Carbon Border Adjustment Mechanism — CBAM — entered its definitive phase quietly and permanently.

This is not a pilot. It is not a reporting exercise. It is a financial obligation with real penalties, real certificates to purchase, and a first annual declaration due by 30 September 2027 for all goods imported in 2026.

If your company imports any of those products into the EU — or if you supply them to European buyers — CBAM affects your costs, your supply chain, and your competitive position.

Here’s what you need to understand.

What CBAM Actually Is

The Carbon Border Adjustment Mechanism is the EU’s carbon border tariff. EU manufacturers already pay for their carbon emissions through the EU Emissions Trading System (ETS). Without CBAM, importers from countries with weaker climate rules could undercut EU producers purely because their carbon costs were lower.

CBAM closes that gap. It requires EU importers to purchase CBAM certificates — priced at the weekly EU ETS allowance price — to cover the verified carbon embedded in their imported goods.

The key word is embedded. Not the carbon from shipping. Not the corporate footprint of the exporting company. The carbon baked into the product itself during production — the Scope 1 emissions at the manufacturing facility.

Currently in scope: iron & steel, aluminium, cement, fertilisers, electricity, hydrogen.

Likely next: chemicals, polymers, and downstream steel/aluminium products from 2028.

The Transitional Phase Is Over

From October 2023 to December 2025, CBAM was in a transitional period. Importers had to report their embedded emissions quarterly — but there was no financial consequence. Many companies treated it as a learning exercise. Some barely engaged at all.

That grace period is finished.

From 1 January 2026:

• Financial obligations are active
• Every tonne of covered goods imported above the 50-tonne annual threshold carries a carbon cost
• Importers who are not registered as Authorized CBAM Declarants risk having goods blocked at EU customs
• The penalty for undeclared or under-declared emissions is €100 per tonne of CO₂

The 50-tonne “de minimis” threshold introduced by the EU Omnibus simplification in October 2025 exempts the smallest importers — approximately 90% of importers by number, but a small fraction by volume. If your company imports any meaningful volume of CBAM goods, you are in scope.

What You Actually Have to Do

Step 1: Register as an Authorized CBAM Declarant The registration deadline was 31 March 2026. Companies that applied by this date can continue importing provisionally while their application is reviewed. If you haven’t registered yet, this is your most urgent action.

Registration is through the CBAM Registry (taxation-customs.ec.europa.eu), which connects to national competent authorities in your EU member state.

Step 2: Collect Verified Emissions Data from Suppliers This is where most companies are struggling. CBAM requires emissions data at the installation level — not company averages, not industry benchmarks if avoidable. Your supplier in Turkey, India, Brazil, or China needs to give you their specific production emissions per tonne of product.

If they can’t or won’t, you fall back on EU default values — set at the highest emission intensity observed globally for each product type. In practice, that means paying the maximum possible CBAM cost.

Step 3: Track and Forecast Certificate Costs From 1 February 2027, certificates are available for purchase via the EU central platform, priced at the quarterly average 2026 ETS price. You will need to have your 2026 embedded emissions quantified before purchasing.

Step 4: Submit the First Annual CBAM Declaration Due: 30 September 2027, covering all 2026 imports. This is your first formal CBAM compliance filing — and it will require verified data, certificate surrender, and potentially third-party verification.

Why This Is Harder Than It Sounds

Most companies import from multiple countries, through multiple suppliers, using multiple logistics routes. Each supplier has a different carbon intensity. Each product has a different CN code. Each country may or may not have a recognisable carbon pricing mechanism that allows for partial deduction.

Getting this right requires:

• A supply chain emissions mapping exercise
• Engagement with each relevant supplier to obtain installation-level data
• Verification by an accredited third-party verifier (when using actual rather than default values)
• Integration with your customs and procurement systems
• Coordination across sustainability, finance, legal, and operations teams

Many companies — even large ones — underestimated the complexity during the transitional phase. They now face 2026 with incomplete data, unregistered supplier plants, and no clear process for managing certificate costs.

The Hidden Opportunity: CBAM + CSRD Data Synergy

Here is something most companies are missing: CBAM and CSRD need the same underlying data.

If your company is subject to CSRD reporting (and if you’re reading this, you probably are), you’re already building Scope 3 supply chain emissions infrastructure for ESRS E1. The embedded emissions calculations for CBAM are essentially the same exercise — Scope 3 Category 1 (purchased goods) — measured at installation level.

A company that builds a proper CBAM data system has effectively built its supply chain Scope 3 reporting infrastructure for CSRD at the same time. The investment serves both.

Similarly, GHG Protocol Scope 3 accounting, GRI 305-3 disclosures, MITECO carbon footprint reporting in Spain, and SFDR PAI indicators for financial market participants all draw from the same pool of supply chain carbon data.

CBAM is not an isolated compliance cost. It is a forcing function for the supply chain emissions data quality that every other framework also needs.

For Non-EU Producers: This Is Now a Sales Issue

If your company manufactures steel, aluminium, fertilisers, cement, or hydrogen and sells to EU buyers, CBAM is already affecting your commercial relationships.

EU importers are paying your embedded carbon. If you can demonstrate a lower emission intensity than the EU default — through verified, installation-level data — you become a cheaper option for your EU client. Your low-carbon production is now a price advantage, not just a sustainability talking point.

Companies that invest in quality emissions data and verification now will strengthen EU client relationships and protect market share. Companies that leave their EU clients dependent on default values may see procurement decisions shift to lower-carbon alternative suppliers.

The Regulatory Horizon: CBAM Is Getting Bigger

CBAM as it stands today covers six sectors. The EU Commission is expected to:

• Expand scope to downstream goods and additional ETS sectors in 2028
• Add UK CBAM from 1 January 2027 (same sectors, similar structure)
• Move toward 100% certificate coverage as ETS free allowances phase out completely by 2034

This is a 10-year ramp in financial exposure. Companies building compliance infrastructure now are positioning for a cost structure that is only going to increase.

Where Does Your Company Stand?

We talk to companies every week that find themselves in one of these situations:

• 😤 “We did the quarterly reports during the transitional phase but have no idea how to manage the financial phase.”
• ❓ “We don’t know if we’re above or below the 50-tonne threshold.”
• 📊 “Our suppliers have never heard of CBAM and won’t provide emissions data.”
• 👥 “We have one person in sustainability and this is completely outside their expertise.”
• 🗂 “We’re trying to manage CBAM and CSRD at the same time and have no idea where they overlap.”

If any of these sound familiar, we can help.

At TSN — The Sustainability Network, we work with companies across Europe and globally to build the data infrastructure, supplier engagement processes, and compliance workflows that CBAM demands — integrated with CSRD, GHG Protocol, and the broader reporting architecture.

Book a free 30-minute session. We’ll map your exposure, identify your most urgent gaps, and outline a practical roadmap — no jargon, no obligation.

👉 Schedule your free session at https://calendly.com/tsn-sustainability/demo

#CBAM #CarbonBorderAdjustment #Sustainability #ESG #CarbonPrice #ETS #CSRD #SupplyChainEmissions #CarbonLeakage #SustainabilityCompliance #EUGreenDeal #GHGProtocol #Decarbonization #TSN #SustainabilityReporting #ClimatePolicy #CarbonTax