What is CBAM and who is affected?

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EU CBAM Carbon Border Adjustment Mechanism — what it is CBAM is the EU’s “carbon price at the border” for certain carbon‑intensive goods imported into the EU customs territory. Its purpose is to reduce carbon leakage by ensuring imported goods bear a carbon cost comparable to goods produced in the EU under the EU Emissions Trading System ETS. In practice, CBAM links the cost of importing covered goods to their embedded greenhouse gas GHG emissions. Sources: European Commission CBAM page and FAQs EC CBAM portalhttps://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanismen, CBAM Q&A Dec 2024https://taxation-customs.ec.europa.eu/document/download/013fa763-5dce-4726-a204-69fec04d5ce2en; also the earlier Q&A Nov 2023 PDFhttps://taxation-customs.ec.europa.eu/system/files/2023-11/CBAM%20Frequently%20Asked%20QuestionsNovember%202023.pdf. Legal basis core EU legislation - Regulation EU 2023/956 establishing the CBAM framework: scope, obligations, certificates, authorised declarants, verification, penalties. - Implementing Regulation EU 2023/1773 setting detailed rules for the transitional period reporting templates, reporting logic, etc.. These are referenced throughout the Commission’s CBAM “Legislation and guidance” page: CBAM legislation & guidancehttps://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism/cbam-legislation-and-guidanceen. Who is affected most important operationally 1 EU importers of CBAM goods primary impacted party If your company is the “importer” lodging the EU customs import declaration for CBAM-covered goods, you are directly impacted. You must: - During the transitional phase: submit quarterly CBAM reports no payments yet, but reporting is mandatory. - During the definitive phase: be or use an Authorised CBAM Declarant and purchase/surrender CBAM certificates corresponding to embedded emissions net of any eligible carbon price paid abroad, per the CBAM rules. Operational implication: CBAM becomes an additional compliance stream next to customs classification/origin/valuation—requiring supplier emissions data collection and internal controls. Sources: Commission CBAM Q&A and importer guidance Q&A Dec 2024https://taxation-customs.ec.europa.eu/document/download/013fa763-5dce-4726-a204-69fec04d5ce2en, Guidance for EU importers Dec 2023https://taxation-customs.ec.europa.eu/system/files/2023-11/CBAM%20GuidanceEU%20231121%20for%20web0.pdf. 2 Customs representatives / brokers / freight forwarders affected depending on their role You are impacted if you act as: - an indirect customs representative you may carry CBAM obligations depending on the legal setup foreseen by CBAM rules and national implementation, and/or - the party preparing CBAM data/reporting workflows for importers. Even where the importer remains legally liable, brokers/forwarders are operationally impacted because CBAM reporting relies on accurate CN code mapping and import data extraction aligned with customs entries. Sources: Commission CBAM Q&A and guidance Q&A Dec 2024https://taxation-customs.ec.europa.eu/document/download/013fa763-5dce-4726-a204-69fec04d5ce2en, Importer guidancehttps://taxation-customs.ec.europa.eu/system/files/2023-11/CBAM%20GuidanceEU%20231121%20for%20web0.pdf. 3 Non‑EU manufacturers / installation operators outside the EU Even though CBAM is an EU importer obligation, non‑EU producers are materially affected because they must provide: - installation- and product-level emissions data embedded emissions, - methodology evidence/records, and later in the definitive regime data suitable for verification. If a non‑EU producer cannot provide reliable emissions data, importers may be forced into less favorable/default approaches depending on the rules applicable, and the commercial consequence is often a price/market access disadvantage. Source: Commission guidance for non‑EU installation operators Guidance for installation operators outside the EU Dec 2023https://taxation-customs.ec.europa.eu/system/files/2023-12/Guidance%20document%20on%20CBAM%20implementation%20for%20installation%20operators%20outside%20the%20EU.pdf. 4 Exporters to the EU globally Any exporter shipping covered goods into the EU is affected commercially and contractually data provision, audits, contract clauses, responsibility split, Incoterms alignment. For a non‑EU view, the U.S. International Trade Administration provides a practical summary of impacts for exporters and logistics operators: Source: trade.gov market intelligence notehttps://www.trade.gov/market-intelligence/eu-carbon-border-adjustment-mechanism-impact-us-exporters-and-cargo-firms. Which goods/sectors are covered initial scope CBAM starts with selected carbon-intensive sectors, as reflected in the Commission’s CBAM materials: - Cement - Iron and steel - Aluminium - Fertilisers - Electricity - Hydrogen Coverage is determined by the CN codes listed in the CBAM Regulation annexes and Commission guidance/FAQs scope is not “all goods” from those industries; it is tied to specific CN codes. Sources: Commission CBAM portal and Q&A CBAM portalhttps://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanismen, Q&A Dec 2024https://taxation-customs.ec.europa.eu/document/download/013fa763-5dce-4726-a204-69fec04d5ce2en. Timeline what applies when Transitional phase reporting only - Started 1 October 2023 and runs until 31 December 2025 per Commission CBAM communications and FAQs. Source: trade.gov summaryhttps://www.trade.gov/market-intelligence/eu-carbon-border-adjustment-mechanism-impact-us-exporters-and-cargo-firms and Commission FAQs Q&A Dec 2024https://taxation-customs.ec.europa.eu/document/download/013fa763-5dce-4726-a204-69fec04d5ce2en. Definitive phase certificates/financial adjustment - From 2026 onward CBAM moves to its “definitive” regime purchase and surrender of CBAM certificates via the authorised declarant model. The Commission also announced that CBAM “successfully entered into force on 1 January 2026” in its news update. Source: European Commission news item: CBAM entered into force on 1 January 2026https://taxation-customs.ec.europa.eu/news/cbam-successfully-entered-force-1-january-2026-2026-01-14en. Practical “quick test” — are you affected? You are affected if you import into the EU i.e., lodge import declarations any goods falling under CBAM-covered CN codes in the sectors above, including when: - you import for your own use manufacturer importing inputs, - you import for resale trader/distributor, - you use an indirect representative / broker you still need governance over CBAM data flows. You are also affected indirectly if you are a: - non‑EU producer supplying the EU market you must provide robust emissions data, or - logistics/customs service provider supporting those import flows process and data impacts. Sources official and operational - European Commission — CBAM main page: https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanismenhttps://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanismen - European Commission — CBAM Q&A Dec 2024: https://taxation-customs.ec.europa.eu/document/download/013fa763-5dce-4726-a204-69fec04d5ce2enhttps://taxation-customs.ec.europa.eu/document/download/013fa763-5dce-4726-a204-69fec04d5ce2en - European Commission — CBAM Q&A Nov 2023 PDF: https://taxation-customs.ec.europa.eu/system/files/2023-11/CBAM%20Frequently%20Asked%20QuestionsNovember%202023.pdfhttps://taxation-customs.ec.europa.eu/system/files/2023-11/CBAM%20Frequently%20Asked%20QuestionsNovember%202023.pdf - European Commission — Guidance for EU importers Dec 2023: https://taxation-customs.ec.europa.eu/system/files/2023-11/CBAM%20GuidanceEU%20231121%20for%20web0.pdfhttps://taxation-customs.ec.europa.eu/system/files/2023-11/CBAM%20GuidanceEU%20231121%20for%20web0.pdf - European Commission — Guidance for non‑EU installation operators Dec 2023: https://taxation-customs.ec.europa.eu/system/files/2023-12/Guidance%20document%20on%20CBAM%20implementation%20for%20installation%20operators%20outside%20the%20EU.pdfhttps://taxation-customs.ec.europa.eu/system/files/2023-12/Guidance%20document%20on%20CBAM%20implementation%20for%20installation%20operators%20outside%20the%20EU.pdf - European Commission — Legislation & guidance hub: https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism/cbam-legislation-and-guidanceenhttps://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism/cbam-legislation-and-guidanceen - U.S. International Trade Administration market impact overview: https://www.trade.gov/market-intelligence/eu-carbon-border-adjustment-mechanism-impact-us-exporters-and-cargo-firmshttps://www.trade.gov/market-intelligence/eu-carbon-border-adjustment-mechanism-impact-us-exporters-and-cargo-firms > ⚠️ This analysis is provided for information purposes and does not constitute legal advice. For transactions that engage your liability, consult an EU customs representative and/or specialised legal counsel.

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What is CBAM and who is affected?