CBAM: the carbon price at the EU border

The carbon border adjustment mechanism (CBAM) puts a carbon price on the greenhouse gas emissions released in making certain goods imported into the EU. Its purpose is to stop 'carbon leakage' - production moving to countries with weaker climate rules - and to mirror the carbon cost that EU producers already pay under the EU Emissions Trading System (EU ETS). CBAM is set out in Regulation (EU) 2023/956 of 10 May 2023, amended by Regulation (EU) 2025/2083 of 8 October 2025.

What it covers

CBAM applies to goods listed in Annex I to the regulation that originate in a third country and are released for free circulation in the EU. The sectors are:

• cement;
• electricity;
• fertilisers;
• iron and steel;
• aluminium;
• hydrogen.

Goods originating in Iceland, Liechtenstein, Norway and Switzerland - and in the territories of Büsingen, Heligoland, Livigno, Ceuta and Melilla - are outside the scope (Article 2(4) and Annex III). Whether a product is a 'CBAM good' depends on its exact commodity code, so classification is the starting point.

The timeline

CBAM is being phased in:

• Transitional period, 1 October 2023 to 31 December 2025 - reporting only. Importers filed a quarterly CBAM report on the embedded emissions of their goods. No payment.
• Definitive regime, from 1 January 2026 - only an 'authorised CBAM declarant' may import CBAM goods above the exemption threshold. Emissions must be declared and paid for with CBAM certificates.
• From 1 February 2027 - member states begin selling CBAM certificates.
• By 30 September 2027 - the first annual CBAM declaration is due, covering 2026 imports, with the first surrender of certificates.

Who must act, and the 50-tonne threshold

The importer is, in principle, the person in whose name and on whose behalf the release-for-free-circulation declaration is lodged (Article 3(15)). Where an indirect customs representative acts for an importer not established in the EU, that representative must hold authorised CBAM declarant status (Article 5(2)).

The 2025 amendment introduced a single mass-based de minimis threshold: an importer whose imported CBAM goods do not exceed 50 tonnes net mass in a calendar year, across all commodity codes, is exempt from the obligations (Article 2a and Annex VII). This replaced the earlier threshold of 150 EUR per consignment. The threshold does not apply to electricity or hydrogen.

What you present at import

From 1 January 2026, a document code is declared at import (TARIC integration of 4 December 2025). The main codes are:

Y128 - the declarant is an authorised CBAM declarant, with its CBAM account number;
Y137 - de minimis exemption, below the 50-tonne threshold;
Y135 - goods for military use;
Y136 - electricity or hydrogen from the exclusive economic zone or continental shelf of a member state;
Y134 - goods originating in Büsingen, Heligoland or Livigno;
Y237 - goods of EU origin;
Y238 - an application for authorised CBAM declarant status was submitted by 31 March 2026.

Penalties, and 'other persons'

An authorised CBAM declarant who fails to surrender enough certificates pays a penalty equal to the EU ETS excess-emissions penalty (Article 26(1)). A person other than an authorised CBAM declarant who brings CBAM goods into the customs territory without meeting the obligations pays three to five times that amount (Article 26(2)). This gap matters where an irregular import - for example a customs debt incurred under Article 79 of the Union Customs Code - means release for free circulation is no longer possible: the party left liable may be one that could not hold declarant status in the first place, such as a non-EU carrier.

What is coming - downstream goods (proposal, as at July 2026)

CBAM already reaches some finished iron and steel and aluminium articles. The Council's general approach of 12 June 2026 would extend it to around 180 downstream products - finished and semi-finished goods with a high steel or aluminium content - from 1 January 2028. Prefabricated steel greenhouses (CN 9406 90 31) are one example. For downstream goods, the embedded emissions are calculated from the metal precursors only, not from the final assembly step. This is still a proposal: the European Parliament must agree its position and a final text must be settled in trilogue, so the list of codes could change. Learn more: 'CBAM goes downstream: what importers of steel and aluminium goods must do before 2028', CCRM Issue 39 (2026).

Use case

Question to Smart Taric AI: "Is fertiliser 2834 21 00 subject to CBAM? I import from TR to FR."

Potassium nitrate, commodity code 2834 21 00, is a fertiliser listed in Annex I, so it is a CBAM good. Smart Taric AI confirms that CBAM applies to this import from Turkey into France: Turkey is a third country and is not on the Annex III exclusion list, so the Article 2(4) exemption does not apply. The CBAM measure is valid from 1 January 2026. To clear customs, the importer must present one of the CBAM document codes - for example Y128 (an authorised CBAM declarant, with its account number), or Y137 (the de minimis exemption, if the importer's CBAM goods stay under 50 tonnes net mass for the calendar year across all CBAM codes).