What are the phases of CBAM implementation?

The Carbon Border Adjustment Mechanism (CBAM) is being implemented in two phases: a transitional phase and a permanent phase.The CBAM transitional phase runs from October 1, 2023 to December 31, 2025 and requires EU importers to report the embedded greenhouse gas emissions of in-scope goods on a quarterly basis, without purchasing CBAM certificates.The CBAM permanent phase begins on January 1, 2026. From this point forward, importers must submit annual emissions declarations and purchase CBAM certificates to cover a growing share of embedded emissions, with full financial coverage required by 2034.

What is the Carbon Border Adjustment Mechanism (CBAM)?

The Carbon Border Adjustment Mechanism (CBAM) is an EU regulation that places a carbon price on certain imported goods based on their embedded emissions.CBAM is designed to prevent carbon leakage by ensuring imported products face a comparable carbon cost to goods produced within the EU under the EU Emissions Trading System (EU ETS). The regulation currently applies to carbon-intensive goods such as iron and steel, aluminum, cement, fertilizers, electricity, and hydrogen, and requires importers to calculate and report emissions using defined EU methodologies.

What is a CBAM certificate?

A CBAM certificate is a tradable unit that represents one tonne of CO₂-equivalent emissions embedded in imported goods subject to the Carbon Border Adjustment Mechanism.During the CBAM permanent phase, EU importers must purchase and surrender CBAM certificates annually to account for the emissions associated with their imports. Certificate prices are linked to the average EU ETS carbon price, and the number of certificates required may be reduced if a carbon price was already paid in the country of origin. Accurate supplier emissions data helps minimize certificate costs.

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