EU CBAM began its definitive period on January 1, 2026, turning a climate rule into a trade-cost reality.
EU CBAM moves beyond “learning mode” and into enforcement, with importers expected to prepare for paid carbon certificates and stricter checks. ([Taxation and Customs Union][1])
What changed on January 1, 2026
EU CBAM now operates under its definitive regime. The European Commission states that “the CBAM definitive period will start on 1 January 2026.” ([Taxation and Customs Union][1])
During the transitional phase, firms mainly filed quarterly emissions reports without buying certificates. That reporting-only approach ends with EU CBAM’s definitive period. ([Taxation and Customs Union][1])
EU CBAM also tightens who can import. The Commission urges importers to apply for authorised CBAM declarant status and points firms to its authorisation module. ([Taxation and Customs Union][1])
Which goods and sectors EU CBAM targets
EU CBAM focuses on carbon-intensive goods that face “carbon leakage” risk. The Commission lists six initial sectors: cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen. ([Taxation and Customs Union][1])
That sector list explains why EU CBAM is politically sensitive. These are foundational inputs for construction, autos, grid investment, and food systems. Even small cost changes can travel far through pricing.
EU CBAM also uses a threshold. The Commission says importers above a 50-tonne mass-based threshold must apply for authorised declarant status and will buy certificates from national authorities. ([Taxation and Customs Union][1])
How EU CBAM payments and certificates work
EU CBAM is designed to mirror the EU Emissions Trading System. The Commission says certificate prices are based on EU ETS allowance auction prices. ([Taxation and Customs Union][1])
Pricing mechanics matter for planning. The Commission says certificate prices are a quarterly average in 2026 and a weekly average from 2027 onwards. ([Taxation and Customs Union][1])
Operationally, EU CBAM means two linked tasks. Firms must measure embedded emissions and then surrender certificates that match those emissions. The Commission says importers will declare embedded emissions and surrender the corresponding certificates each year. ([Taxation and Customs Union][1])
EU CBAM also allows deductions. If a carbon price was already paid in the country of production, importers can deduct the corresponding amount, if they can prove it. ([Taxation and Customs Union][1])
One nuance is timing. Industry summaries note certificate sales and annual settlement mechanics can be structured so that certificates are acquired later while covering 2026 imports retroactively. That still makes EU CBAM a 2026 cost driver in practice. ([icapcarbonaction.com][2])
Why EU CBAM raises trade-friction risk
EU CBAM is climate policy enforced through borders. That is why trading partners call it a barrier. The Financial Times reported opposition from major partners, including China, India, and Brazil, and described the risk of retaliation narratives. ([Financial Times][3])
The Guardian described EU CBAM as a “green tariff” on high-carbon goods and highlighted confusion and political tension around implementation. ([The Guardian][4])
Euronews reported that steel and aluminium exporters will start paying for embedded emissions from January 1, 2026, and noted criticism that EU CBAM is protectionist. ([euronews][5])
This matters for supply chains. EU CBAM can change sourcing decisions for metal, cement, and fertiliser inputs. It can also push exporters to document emissions more rigorously, or shift production to cleaner power.
What companies should do now
EU CBAM is not just a tax. It is a data and audit program tied to customs flows. Firms exposed to EU CBAM should focus on five practical steps:
Map which SKUs fall in scope, including precursors and origin rules.
Secure authorised CBAM declarant status where required. ([Taxation and Customs Union][1])
Build supplier emissions data pipelines and verification routines.
Stress-test margins under EU ETS-linked certificate pricing. ([Taxation and Customs Union][1])
Review contracts for cost pass-through and reporting obligations.
EU CBAM will reward early movers. Firms that can document lower embedded emissions should gain pricing and market-access advantages.
Market and policy implications
EU CBAM signals that the EU is willing to use trade tools to enforce climate goals. That can accelerate carbon-price convergence. It can also raise near-term volatility in affected sectors.
For European industry, EU CBAM aims to level costs against imports while the EU phases out free ETS allowances over time. For exporters, EU CBAM becomes a recurring compliance cost and a commercial negotiating point. ([Taxation and Customs Union][1])
For policymakers, EU CBAM is now a live test. If administration proves “clunky,” pressure for simplification will grow. The Financial Times has reported EU officials have already acknowledged design and loophole issues, alongside efforts to tighten the regime. ([Financial Times][6])