Fundamentals
What is CBAM (the EU Carbon Border Adjustment Mechanism)?
The EU Carbon Border Adjustment Mechanism in plain language: what it covers, who it binds, and the cost it puts on embedded emissions in imported goods.
This page covers the EU Carbon Border Adjustment Mechanism under Regulation (EU) 2023/956. It does not cover the UK's separate carbon border regime.
On this page
Direct answer
CBAM is an EU mechanism that puts a carbon price on selected imports equivalent to the price paid by EU producers under the EU Emissions Trading System. It applies to imports of cement, iron and steel, aluminium, fertilisers, hydrogen, and electricity.
Why CBAM exists
The EU has tightened its domestic carbon constraint through the EU ETS. Without a corresponding measure on imports, production could shift to jurisdictions with weaker climate policy, a concern known as carbon leakage. CBAM addresses this by pricing the embedded emissions of imported goods at the same level that EU installations pay.
What it covers today
- Cement
- Iron and steel and selected downstream products
- Aluminium and selected downstream products
- Fertilisers
- Hydrogen
- Electricity
Who must comply
The legal obligation sits with the importer of record into the EU, acting through an authorised CBAM declarant. Non-EU producers and installation operators do not file CBAM returns themselves, but they are usually the only party able to supply verified emissions data their EU customers need.
Transitional and definitive phases
The transitional phase ran from 1 October 2023 to 31 December 2025, with quarterly reporting and no financial obligation. The definitive phase starts 1 January 2026; from that date imports of covered goods may only be made by authorised CBAM declarants, and from 2027 onwards declarants must surrender CBAM certificates against the emissions declared for the previous year.