EU CBAM: What Importers Need to Know in 2026

The European Union Carbon Border Adjustment Mechanism (CBAM) entered its full financial enforcement phase on 1 January 2026. The mechanism is the EU's tool to prevent carbon leakage: it imposes a financial obligation on imported goods equivalent to the carbon price they would have paid if produced under the EU Emissions Trading System (ETS). For importers of in-scope goods, CBAM is now a material cost item alongside customs duty and VAT.

This guide explains the scope, the calculation, the surrender process, and a worked example for a Chinese steel import into Germany.

What CBAM is and is not

CBAM is not a tariff. It is a financial obligation tied to embedded greenhouse gas emissions of imported goods. The legal mechanism: imports of in-scope goods can only be brought into the EU customs territory by an authorized CBAM declarant. Each year, the declarant must surrender enough CBAM certificates to cover the embedded emissions of imports made during that year, minus any carbon price already paid in the country of production.

The annual cycle:

• 31 May: declarant submits the previous year's CBAM declaration covering all in-scope imports.
• Declaration includes embedded emissions per consignment, certificate quantity surrendered.
• Certificates are purchased through the common central platform managed by the Commission, at a price pegged to the EU ETS auction.

Sectors and CN codes in scope

CBAM applies to specific CN codes within these sectors:

• Cement (CN chapter 25 selected codes: clinker, certain cements).
• Iron and steel (chapter 72, 73 selected codes including primary steel and derivative articles).
• Aluminum (chapter 76 selected codes including primary aluminum and selected derivatives).
• Fertilizers (chapter 28, 31 selected codes including ammonia, nitric acid, urea, mixed fertilizers).
• Electricity (chapter 27 electricity import).
• Hydrogen (chapter 28 specified codes).

The Commission has indicated that expansion to chemicals, polymers, and downstream steel/aluminum products is in consultation. Expansion is expected in 2027-28.

Embedded emissions: actual or default

For each in-scope import, the declarant must report embedded emissions in tonnes of CO2-equivalent per tonne of product (or per unit for some categories). Two paths:

1. Actual emissions

Verified by an accredited verifier from a Commission-approved list. The producer (the manufacturer in the country of export) must report:

• Direct emissions (scope 1) from the production process.
• Indirect emissions (scope 2) from electricity used.
• For complex goods, embedded emissions of input materials.

Methodology is in Implementing Regulation 2023/1773.

2. Default emission values

Where actual emissions cannot be verified, the Commission publishes default values per CN code. Defaults are intentionally conservative (high) to incentivize move to actual reporting. For Chinese steel rebar, the default is around 2.6 tCO2e per tonne; for many producers actual is closer to 1.6 to 1.9.

Deducting carbon prices paid in the origin country

If the producer's country has a verifiable carbon price (national ETS, carbon tax) and has paid it on the relevant emissions, the equivalent can be deducted from the CBAM obligation. Requirements:

• The carbon price must be effectively paid, not nominal.
• The price must apply to the emissions actually embedded in the imported goods.
• Documentation: certified statements from the producer, the carbon market regulator, the verifier.

China's national ETS price has hovered around 8 to 12 EUR per tCO2e in 2025-26, well below the EU ETS price (~85 EUR). A Chinese producer that paid the Chinese ETS price can deduct that amount; the net obligation remains substantial.

CBAM certificate price

Each Friday the Commission publishes the weekly CBAM certificate price for the following week, equal to the simple average of the EU ETS auction prices during the prior calendar week. In mid-2026 the price has ranged from about 78 to 95 EUR per certificate (one certificate = one tCO2e).

Worked example: Chinese rebar to Germany

A German importer brings in 10,000 tonnes of hot-rolled steel rebar (CN 7214.20) from China during 2026. Embedded emissions: default value 2.5 tCO2e per tonne (the producer has not verified actuals).

Chinese national ETS price paid in 2026: 9.5 EUR per tCO2e.

Total embedded emissions: 25,000 tCO2e.

Equivalent EU ETS at 85 EUR per tCO2e: 2,125,000 EUR.

Deduction for Chinese ETS already paid (9.5 EUR per tCO2e): 237,500 EUR.

Net CBAM obligation: 2,125,000 - 237,500 = 1,887,500 EUR.

Number of CBAM certificates to surrender: roughly 22,200 (after the Chinese deduction calculated in carbon-tonnes equivalents).

On a 10,000-tonne shipment with steel value of, say, 6,000,000 EUR FOB, the CBAM cost (1.89 million EUR) is about 31 percent of FOB. Standard EU customs duty for this CN code is 0 percent; VAT 19 percent in Germany on the customs value plus duty plus inland to first destination. The CBAM cost dominates.

This is exactly the policy intent: make Chinese steel exports priced to reflect the EU's internal carbon price.

Worked example: Aluminum smelter using clean hydropower

A Norwegian aluminum smelter exporting primary aluminum to Germany has reported actual emissions of 4.8 tCO2e per tonne (verified). For 5,000 tonnes:

Total embedded emissions: 24,000 tCO2e.

Norway is in the EU ETS; producer has already paid the EU ETS price. Deduction: full.

Net CBAM obligation: 0.

Norwegian aluminum benefits from clean hydropower; the verified actuals are far below the default 16 tCO2e per tonne. Even if Norway were not in the EU ETS, the clean energy advantage makes Norwegian aluminum hugely advantaged over Chinese aluminum under CBAM.

Becoming an authorized CBAM declarant

To import in-scope goods after 1 January 2026, the importer must hold authorization. Application is made to the competent national authority in the member state of import (DEHSt in Germany, ADEME in France, ETS Spain in Spain, etc.). Criteria:

• EU establishment with a registered EORI.
• Good standing on tax and customs obligations.
• Demonstrate ability to surrender certificates.

Non-EU-established importers can appoint an indirect customs representative who serves as authorized CBAM declarant on their behalf, with joint liability.

Reporting workflow

Each year:

1. Track in-scope imports throughout the year by consignment.
2. Collect embedded emissions data from producers (or use defaults).
3. Track carbon prices effectively paid in countries of production.
4. By 31 May of year N+1, submit annual CBAM declaration through the Commission's central registry.
5. Surrender the appropriate number of CBAM certificates.

Penalty for non-surrender: 100 EUR per missing certificate (price escalates) plus the obligation to surrender certificates retroactively.

How CBAM interacts with customs duty and VAT

CBAM is independent of customs duty and import VAT. The full stack on a Chinese rebar import into Germany:

1. EU CET duty: 0 percent for most rebar lines.
2. Anti-dumping duty: 17.3 to 25 percent if applicable (specific Chinese steel orders).
3. Countervailing duty: as applicable.
4. German import VAT: 19 percent on CIF + duty + inland.
5. CBAM certificate cost: separate budget item, settled annually.

The CBAM obligation does not show on the entry summary. It is calculated and discharged annually.

Defensive strategies

For importers facing high CBAM costs:

• Switch to low-emission producers: pay the verifier fee, move from defaults to actuals.
• Source from countries with linked ETS (UK, Norway, Iceland, Liechtenstein, Switzerland): full deduction.
• Engage long-term in-country carbon pricing: even partial pricing reduces the net CBAM cost.
• Vertical integration with EU-internal production: avoid the import.

How the calculator handles CBAM

The LandedFees calculator for EU destinations flags CBAM-scope CN codes and provides:

• The default emission value for the CN code.
• An estimated CBAM cost at the current weekly certificate price.
• Guidance on the deduction available for verified carbon prices in major origin countries.
• A separate CBAM line item alongside duty and VAT.

The actual annual obligation is settled separately through the Commission's registry; the calculator estimates the in-year cost for budgeting.

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• Steel HS Codes Under Section 232
• Aluminum HS Codes Under Section 232
• What is Section 122? The 2026 Reciprocal Tariff Explained
• Incoterms 2020 vs Landed Cost: A Clear Guide
• Mercosur TEC: Calculating Argentina/Brazil/Paraguay/Uruguay Duty

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