Revenue Projections
2026 (First year)€0.5-0.7 billion
2028€1.0-1.3 billion
2030 (Full scope)€1.5-2.1 billion
CBAM Q1 2026 - ✓ Fully Operational Since January 1, 2026CBAM Q1 2026 - Active
CBAM 2026 - EU Carbon Border Adjustment Mechanism
The EU's groundbreaking policy to equalize CO₂ costs for domestic and imported products while protecting climate ambitions
Current Phase: Fully Operational
CBAM is fully operational since January 1, 2026. The transitional period (October 2023 - December 2025) is complete. Companies must now purchase CBAM certificates corresponding to the embedded emissions of their imports. Financial adjustments are in effect.
Production snapshot · As of 27 August 2026 · Instrument, source and licence not identified by the original
What is CBAM?
The Carbon Border Adjustment Mechanism (CBAM) is the EU's pioneering policy tool designed to prevent carbon leakage by equalizing CO₂ costs between EU-produced and imported goods. It ensures that the carbon price of imports matches that of domestic production, protecting EU competitiveness while maintaining ambitious climate targets.
Purpose
Prevent carbon leakage and maintain EU industrial competitiveness by applying equivalent carbon costs to imports
Mechanism
Importers must purchase CBAM certificates corresponding to the carbon costs that would have been incurred if produced in the EU
2026 Update: Revenue
Q1 2026: Projected €3-3.5 billion annually by 2030 with expanded sectors and €78 carbon prices
Coverage Progress
Q1 2026: 6 sectors fully operational. CBAM in effect since January 2026. Full EU ETS coverage by 2030.
How CBAM Works
Process Flow
Registration
EU importers register with national authorities to import CBAM goods and become authorized declarants
Quarterly Reporting
Submit quarterly CBAM reports detailing quantities imported and embedded emissions
Emissions Calculation
Calculate emissions using actual data from producers or EU default values
Certificate Purchase
Buy CBAM certificates at EU ETS price (from 2026)
Annual Declaration
Submit annual CBAM declaration by May 31st and surrender certificates
Emissions Calculation
Emissions = Direct Emissions + Indirect Emissions (electricity) - Carbon Tax Already Paid
Default Values
EU Commission provides default emission factors for each product category
Actual Emissions
Verified data from production facilities with accredited verification
Indirect Emissions
Electricity consumed in production process included in calculations
Carbon Tax Deduction
Credit for carbon taxes paid in country of origin (with proof)
Compliance Requirements
| Requirement | Frequency | Deadline | Status |
|---|---|---|---|
| CBAM Registry Registration | One-time | Before first import | Active |
| Quarterly CBAM Reports | Quarterly | 30 days after quarter end | Current |
| Annual CBAM Declaration | Annually | May 31st | From 2026 |
| Certificate Purchase & Surrender | Annually | With annual declaration | From 2026 |
| Record Keeping | Continuous | 5 years retention | Active |
Impact on Stakeholders
EU Importers
Mandatory registration in CBAM registry
Quarterly reporting requirements
Financial obligations from 2026
EU Producers
Level playing field with imports
Reduced risk of carbon leakage
Gradual phase-out of free allowances
Non-EU Exporters
Additional compliance requirements
Incentive to decarbonize production
Credit for carbon taxes paid locally
Financial Implications
Cost Examples by Sector
Steel (per ton)€150-180
Cement (per ton)€70-85
Aluminum (per ton)€550-650
Fertilizers (per ton)€200-240
Important Upcoming Deadlines
EU ETS surrender deadline: Surrender allowances for 2025 emissions by September 30, 2026
Last transitional report: Q4 2025 (Due January 31, 2026)
First CBAM certificates purchase: January 1, 2026
First annual declaration with payment: May 31, 2027
CBAM Implementation Timeline
- Completed
Transitional Period Begins
Start of CBAM reporting obligations without financial payments. Importers must submit quarterly reports on embedded emissions in their goods, establishing the foundation for the future financial mechanism.
Progress100% - Completed
Reporting-Only Phase (completed)
The transitional phase (October 2023 - December 2025) is complete. Since January 2026, companies must purchase CBAM certificates. The system is now fully operational with financial adjustments in effect.
Progress100% - Current Phase
Full CBAM Implementation
Financial adjustments begin. Importers must purchase CBAM certificates corresponding to the carbon emissions embedded in their imports. Certificate prices mirror EU ETS prices, ensuring equal treatment of domestic and imported goods.
Progress100%Active Phase - Upcoming
Free Allowances Phase-Out
Gradual reduction of free EU ETS allowances from 100% to 0%. CBAM coverage increases proportionally, ensuring continuous carbon leakage protection while transitioning to full carbon pricing.
- Upcoming
Sector Expansion
Planned expansion to all EU ETS sectors including chemicals, polymers, petroleum products, glass, ceramics, and pulp & paper. This comprehensive coverage will align with EU's climate neutrality goals.
Covered Sectors
Currently Covered (from 2023)
Future Expansion
Organic Chemicals
Petrochemicals, aromatics, olefins
Polymers & Plastics
PVC, polyethylene, polypropylene
Petroleum Products
Refined petroleum, lubricants
Glass & Ceramics
Flat glass, container glass, tiles
Pulp & Paper
Paper pulp, paperboard, packaging
Other EU ETS Sectors
All remaining covered sectors
Iron & Steel
All products including downstream products
Default: 2.1 tCO₂/t
Covers: bars, rods, angles, shapes, sections
Cement
Including clinkers and hydraulic cement
Default: 0.93 tCO₂/t
Covers: Portland cement, aluminous cement
Fertilizers
Nitrogenous fertilizers and ammonia
Default: 2.79 tCO₂/t
Covers: urea, ammonium nitrate
Aluminum
Primary aluminum and products
Default: 7.5 tCO₂/t
Covers: unwrought aluminum, aluminum powders
Electricity
Imported electricity generation
Default: Variable
Based on grid emission factors
Hydrogen
All forms of hydrogen production
Default: 8.85 tCO₂/t
Covers: grey, blue, and green hydrogen
CBAM – Carbon Border Adjustment Mechanism
The Carbon Border Adjustment Mechanism (CBAM) is the EU carbon border adjustment system, fully in force since January 2026. It ensures that imported goods bear the same carbon price as goods manufactured in the EU.
CBAM timeline
- October 2023 – December 2025: transitional phase — reporting obligations only, no payments yet
- January 2026: full implementation — CBAM certificates must be purchased for all imports
- 2026–2034: gradual phase-out of free EU ETS allocation alongside the introduction of CBAM
- from 2027: possible sector expansion (review additional industries)
Affected sectors (CBAM Phase I)
- Steel & iron (HS chapters 72, 73)
- Aluminium (HS chapter 76)
- Cement (HS chapter 2523)
- Fertilisers (HS chapter 31)
- Electricity (HS chapter 2716)
- Hydrogen (HS chapter 2804)
How does CBAM work?
EU importers must buy CBAM certificates priced in line with EU ETS allowances (EUA). A carbon price already paid in the country of origin may be credited.
- The importer registers as an authorised CBAM declarant with the national authority
- Quarterly reporting of imported goods volumes and embedded emissions
- Annual surrender of CBAM certificates by 31 May corresponding to verified emissions
- Carbon prices paid in third countries may be credited
Importance for the carbon market
CBAM protects European industry's competitiveness, prevents carbon leakage and encourages third countries to introduce their own carbon pricing systems. For carbon allowance investors, CBAM provides additional structural demand stability in the EU ETS market.
→ EU ETS Market Analysis