What Is CBAM?
CBAM stands for the Carbon Border Adjustment Mechanism, the EU’s carbon pricing system for imports of carbon-intensive goods. It is the first regulation of its kind globally, designed to apply a carbon price to imported products.
The goals of CBAM are to:
- Prevent carbon leakage, where production shifts to countries with weaker climate policies.
- Protect EU industries that already pay for emissions under the EU ETS.
Changes to CBAM in June 2025
In June 2025, the European Union adopted a simplification package (known as the Omnibus update) that introduced several key changes to the CBAM framework. Two important changes are:
1. New Exemption Threshold: 50 Tonnes
Importers whose annual CBAM-covered imports result in less than 50 tonnes of embedded CO₂ emissions are now exempt from reporting and certificate obligations. This change is expected to exclude 80–90% of importers from full CBAM compliance. The exemption applies only to the importing entity; third-country producers and intermediaries may still need to provide emissions data.
2. Certificate Surrender Delayed to 2027
The purchase and surrender of CBAM certificates is now expected to begin in early 2027. This provides companies with more time to prepare financially.
How Does CBAM Work?
CBAM is being implemented in stages:
Transitional Phase (2023–2025)
During the transitional period, EU importers are required to:
- Submit quarterly CBAM reports detailing embedded emissions (including both direct and indirect emissions).
- Use actual emissions data wherever possible. Since Q3 2024, default values may only be used for up to 20% of reported goods, and only under specific conditions.
- Register in the CBAM Transitional Registry as an authorised CBAM declarant.
No certificate purchase or payment is required yet, but reporting obligations are mandatory and enforced.
Definitive Phase (from 2026)
The definitive phase begins on 1 January 2026.
- In 2026, importers must continue reporting emissions, but instead of quarterly reports, they will submit an annual report.
- The first annual report is due by 31 August 2027 and must include verified emissions data covering all relevant imports from 2026.
- From 2027 onwards, importers must purchase and surrender CBAM certificates, with the quantity matched to their declared emissions.
What Data and Reports Are Required?
Since mid-2024, importers are expected to use actual emissions data where possible. Default values are permitted only in limited cases. To comply with CBAM rules from 2026, importers must collect and submit:
- Verified data on direct and indirect emissions embedded in CBAM goods.
- Evidence of supply chain emissions, including energy use and production processes.
- Annual declarations to national competent authorities via the CBAM registry.
- Supporting documentation demonstrating adherence to the EU method for emissions calculation.
Failing to submit CBAM reports or purchasing insufficient certificates could result in penalties and the loss of authorisation to import CBAM goods.
How CBAM Relates to Product Carbon Footprint and EPDs
Because CBAM focuses on embodied emissions, companies must track product-level impact – similar to preparing a Product Carbon Footprint or Environmental Product Declaration (EPD).
Key connections:
- Product carbon footprint calculations quantify emissions per unit of product.
- EPDs document environmental performance, including carbon emissions and resource use.
- Existing emissions data and verification processes can streamline CBAM compliance.
Companies with robust data collection systems and life cycle assessments already in place face the most significant risk reduction under CBAM.
Why CBAM Matters for Global Climate Goals
CBAM plays a significant role in advancing broader environmental goals and accelerating the global transition towards greener production. By imposing a carbon levy on imported goods, CBAM encourages cleaner manufacturing practices and reduces the risk of carbon leakage, where production shifts to countries with less stringent climate policies.
This approach incentivises producers outside the EU to invest in greener technologies and renewable energy, thereby supporting the worldwide reduction of emissions and helping to meet the objectives of the Paris Agreement.
How EandoX Helps You Navigate CBAM Compliance
EandoX is purpose-built to support companies tackling CBAM obligations and emissions reporting.
With EandoX, you can:
- Automate the calculation of embedded emissions for covered products.
- Import actual data from suppliers across your supply chain.
- Fuel CBAM reports aligned with the EU method.
- Integrate with ERP and procurement systems to centralise compliance.
From the transitional phase to the definitive carbon levy, EandoX enables transparent reporting and helps avoid the risk of carbon leakage penalties.
FAQ: Carbon Border Adjustment Mechanism (CBAM)
When do CBAM reporting obligations start?
Quarterly reporting started in October 2023. Payments via CBAM certificates are expected to begin in 2027.
Which emissions are reported?
You must declare embedded greenhouse gas emissions, including both direct and indirect emissions.
What is a CBAM certificate?
A credit you purchase to cover the carbon emissions embedded in your imports. The cost reflects the EU ETS carbon price.
Which products are covered by CBAM reporting requirements?
CBAM currently applies to imports of iron, steel, aluminum, cement, fertilizers, hydrogen, and electricity. Importers bringing these goods into the EU must submit regular reports on their embedded carbon emissions, following CBAM rules. The list covers a broad range of primary and semi-finished products within these sectors.
