What is CBAM and how does it work?
The Carbon Border Adjustment Mechanism (CBAM) is an EU regulation designed to prevent carbon leakage by ensuring that imported goods with significant embedded emissions are subject to a carbon price equivalent to that applied under the EU Emissions Trading System (EU ETS). It is being implemented in stages, beginning with a transitional period, which concluded on December 31, 2025, followed by the definitive regime.
From January 1, 2026, the definitive CBAM regime enters into force. Importers must submit annual CBAM declarations covering embedded emissions in goods imported during the reporting year.
The definitive period introduces accredited third-party verification requirements exclusively to importers reporting with actual emissions data. Importers relying on default values are not subject to verification.
Financial obligations also begin in 2026. Importers must purchase and surrender CBAM certificates in 2027 corresponding to the embedded emissions of goods imported in 2026.
