Carbon Border Adjustment Mechanism
An EU levy on the embedded carbon of certain carbon-intensive imports, replacing free allowance allocation for the same sectors.
Aliases: CBAM, Carbon Border Adjustment, Regulation (EU) 2023/956, 碳边境调节机制, 碳关税
The mechanism
The Carbon Border Adjustment Mechanism, Regulation (EU) 2023/956, puts a carbon price on imports of goods whose production emits heavily, so that EU producers subject to the emissions trading system are not disadvantaged against imports from countries without an equivalent price.
Covered goods are cement, iron and steel, aluminium, fertilisers, electricity and hydrogen. The list is defined in the regulation annexes by CN code and includes some downstream products such as certain screws, bolts and similar articles.
Two phases
Transitional period, 1 October 2023 to 31 December 2025. Importers reported embedded emissions quarterly, without paying. The reporting obligation covered actual emissions where available and default values otherwise.
Definitive period, from 1 January 2026. Importers must surrender certificates matching the embedded emissions of their imports. The annual declaration is filed after the year ends, and certificate sales begin ahead of that. Registered importers, not sellers, are the obligated party.
How the obligation reaches a cross-border seller
An importer of record established in the EU carries the legal obligation. In practice the seller supplies the emissions data, because the importer cannot complete a declaration without installation-level information from the producer.
That creates a data dependency: installation identifier, production route, direct and indirect emissions, and the carbon price already paid in the country of origin. A seller who cannot provide those values forces the importer to use default values, which are set above typical actual emissions and therefore raise the cost.
Simplification debate
In 2025 the Commission proposed simplifications, including a mass threshold that would exempt small importers and reduce the number of declarants. Proposals of this kind change the administrative burden but not the underlying logic of the mechanism. Confirm the adopted text and its application date before treating any threshold as operative.
Interaction with other instruments
CBAM shares its emissions vocabulary with the ESPR data requirements and its importer data flows with the customs framework, including ICS2 and the proposed EU customs reform. Goods that are also subject to the EUDR require separate due diligence; the two regimes do not offset each other.
Practical preparation
Identify whether any SKU maps to a covered CN code, then collect installation-level emissions data from the mill or smelter. Where the supplier cannot provide verified figures, model the default-value cost into the landed price rather than discovering it at declaration.
Primary source: Regulation (EU) 2023/956; Commission CBAM implementing regulations.