CBAM Definitive Phase 2026: Compliance Roadmap for EU Importers

Executive Summary

The EU Carbon Border Adjustment Mechanism (CBAM) entered its definitive phase on January 1, 2026, transforming from a reporting-only obligation into a binding carbon border tax with real financial consequences. EU importers of cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen now face a new compliance regime.

Key facts: importers above the 50-tonne annual threshold must obtain Authorized CBAM Declarant status by March 31, 2026. CBAM certificates go on sale in February 2027, with the first surrender deadline on September 30, 2027. The cost formula is simple — embedded emissions × EU carbon price — but the data requirements are not.

Bottom line: Companies that delay preparation risk operational disruption, higher costs from default values, and competitive disadvantage. Those that act now — collecting supplier emissions data, applying for authorization, and building compliance processes — will minimise costs and maintain supply chain continuity.

Table of Contents

What Happened

The Carbon Border Adjustment Mechanism (CBAM) is the EU's tool to put a fair price on carbon emitted during the production of carbon-intensive goods entering the EU, and to encourage cleaner industrial production in non-EU countries. It aligns the carbon cost of imports with the EU Emissions Trading System (EU ETS).

CBAM has operated in a transitional phase since October 2023, during which importers only had to report embedded emissions quarterly without financial obligations. That phase ended on December 31, 2025.

On January 1, 2026, CBAM entered its definitive phase. The key changes:

• Importers must now apply for Authorized CBAM Declarant status
• A legally binding de minimis exemption of 50 tonnes per year replaces the former €150 consignment value exemption
• Embedded emissions reporting becomes the basis for financial liability
• CBAM certificates will be purchased from national authorities to cover reported emissions

The CBAM Omnibus Regulation, adopted in 2025, and implementing acts published on December 17, 2025, provide the operational framework for the definitive phase.

Why It Matters

CBAM is not a future risk — it is a present obligation. For EU importers of covered goods, the definitive phase means:

• Direct carbon costs on imports, calculated using the EU ETS carbon price (currently €60–80 per tonne CO₂e)
• Authorization requirement — no authorized declarant status means disrupted imports
• Data complexity — embedded emissions must be calculated per product, per supplier, per production facility
• Supplier engagement imperative — default values are penalizing; actual data reduces costs significantly

Beyond direct compliance, CBAM matters because:

• It creates a carbon price signal that reshapes global trade flows
• It incentivises supplier decarbonisation outside the EU
• It is WTO-compatible and likely to influence similar mechanisms in the UK, US, and other jurisdictions
• The Commission has proposed extending CBAM to downstream products by 2028, significantly expanding scope

Who Is Affected

Directly Affected

EU importers (or their indirect customs representatives) of the following goods, importing more than 50 tonnes per year:

• Cement — clinker and cement products
• Iron and steel — including selected downstream products
• Aluminium — unwrought aluminium and aluminium products
• Fertilisers — nitrogen-based fertilisers
• Electricity — imported electricity
• Hydrogen — all hydrogen imports

Indirectly Affected

• Non-EU producers exporting to the EU — must provide emissions data to EU customers
• EU manufacturers using imported CBAM goods as inputs — face higher input costs
• Logistics and customs brokers — must support CBAM compliance processes
• Carbon accounting firms — demand for CBAM-specific services is growing rapidly

Exempt

• Importers below the 50-tonne annual threshold — fully excluded from all obligations
• Goods from countries with equivalent carbon pricing systems (currently none fully equivalent)
• Certain temporary imports and transit goods

The Compliance Roadmap

Phase 1: Authorization (By March 31, 2026)

Importers above the 50-tonne threshold must:

1. Apply for Authorized CBAM Declarant status through the national competent authority in their EU member state of establishment
2. Submit application via the CBAM Registry — the Authorisation Management Module is now open
3. Under the Omnibus Regulation, importers may continue importing while authorization is pending, provided the application is submitted by the March 31, 2026 deadline

Phase 2: Data Collection (Ongoing from January 1, 2026)

From January 1, 2026, importers must maintain accurate records of:

• Quantities imported per CBAM goods category
• Embedded emissions per tonne of product
• Carbon price already paid in the country of production (for deduction)
• Supplier information and production facility data

Two methods for calculating embedded emissions:

• Actual emissions — from supplier data, verified by a third party. This typically results in lower CBAM costs.
• Default values — reference values published by the European Commission. These are intentionally conservative and penalizing.

Phase 3: Reporting (Annual, First Deadline September 30, 2027)

• First annual CBAM declaration due September 30, 2027, covering 2026 imports
• Declaration must include total embedded emissions and corresponding certificate requirements
• Reporting can be delegated to an authorized representative

Phase 4: Certificate Purchase and Surrender (From February 2027)

• CBAM certificates go on sale from February 2027
• Price based on EU ETS allowance auction prices
• 2026: quarterly average price
• 2027 onwards: weekly average price
• Certificates must be surrendered by September 30 each year

CBAM Certificate Costs

The cost formula is straightforward:

CBAM Cost = (Embedded Emissions in tonnes CO₂e) × (EU ETS Allowance Price)

Example Calculation

An importer brings in 1,000 tonnes of steel with embedded emissions of 1.8 tonnes CO₂e per tonne of steel:

• Total embedded emissions: 1,000 × 1.8 = 1,800 tonnes CO₂e
• EU ETS price (assumed): €70 per tonne
• CBAM cost: 1,800 × €70 = €126,000

If the steel producer already paid a carbon price of €20 per tonne in their home country:

• Deductible: 1,800 × €20 = €36,000
• Net CBAM cost: €126,000 − €36,000 = €90,000

Actual Data vs Default Values

The choice of emissions data method has significant cost implications:

• Actual verified data — reflects real production emissions, typically lower than defaults
• Default values — conservative estimates that often result in materially higher costs

Terrnix perspective: Investing in supplier data collection is not just a compliance exercise — it is a direct cost reduction strategy. The difference between actual and default values can represent 20–40% of total CBAM costs.

Key Takeaways

• CBAM is now financially binding. The transitional phase ended December 31, 2025. Imports from January 1, 2026 generate certificate liability.
• Authorization deadline is March 31, 2026. Importers above 50 tonnes/year must apply for Authorized CBAM Declarant status.
• Certificates go on sale February 2027. First surrender deadline: September 30, 2027. But record-keeping starts now.
• Actual supplier data reduces costs. Default values are penalizing. Supplier engagement is a cost-saving imperative.
• The 50-tonne exemption simplifies compliance for small importers. No authorization, reporting, or certificates required below this threshold.
• CBAM may expand to downstream products by 2028. The Commission has proposed extending scope — monitor legislative developments.

Industry Impact

Steel and Aluminium

The steel and aluminium sectors face the highest CBAM exposure due to carbon-intensive production processes. EU importers sourcing from coal-based production (e.g., certain Chinese, Indian, or Russian steel) will face significant cost increases. Action: Prioritise supplier data collection; evaluate alternative sourcing from lower-carbon producers.

Cement

Cement production is inherently carbon-intensive due to process emissions from clinker production. CBAM covers both direct and indirect emissions for cement. Action: Engage suppliers on alternative cement blends (e.g., calcined clay, fly ash) that reduce clinker content and embedded emissions.

Fertilisers

Nitrogen-based fertilisers rely on natural gas feedstock, making them sensitive to both energy prices and carbon costs. CBAM indirect emissions coverage means electricity used in production is also counted. Action: Map supplier energy sources; prioritise suppliers using renewable electricity.

Electricity

Imported electricity from carbon-intensive grids (e.g., coal-heavy regions) will face high CBAM costs. Action: Evaluate power purchase agreements (PPAs) with renewable generators in export countries.

Hydrogen

As a new addition to CBAM scope, hydrogen importers face uncertainty in emissions calculation methodologies. Grey hydrogen (from natural gas) will face significant costs; green hydrogen (from renewables) will have minimal CBAM liability. Action: Verify supplier production method and emissions data.

Recommended Actions

Immediate (This Month)

1. Assess CBAM exposure — Calculate total annual imports of CBAM goods; determine if you exceed the 50-tonne threshold
2. Apply for Authorized CBAM Declarant status — Submit application via the CBAM Registry by March 31, 2026
3. Identify priority suppliers — Focus on suppliers representing >80% of CBAM goods volume
4. Begin emissions data collection — Request embedded emissions data from suppliers; explain the commercial benefit of actual vs default values

Short-Term (Next 3 Months)

1. Establish data collection processes — Create templates for supplier emissions data; define verification requirements
2. Evaluate carbon price deductions — Identify if suppliers have paid carbon prices in their home countries; document for deduction claims
3. Build compliance team — Assign responsibility for CBAM reporting; train customs, procurement, and sustainability teams
4. Assess sourcing alternatives — Evaluate lower-carbon suppliers; model cost implications of switching

Medium-Term (Before Certificate Purchase)

1. Verify supplier data — Engage third-party verifiers for actual emissions data
2. Model CBAM cost scenarios — Compare costs under actual data vs default values; present business case for supplier engagement investment
3. Integrate CBAM into procurement — Add emissions data requirements to supplier contracts and RFQs
4. Monitor scope expansion — Track the Commission's proposal to extend CBAM to downstream products by 2028

Frequently Asked Questions

What is CBAM and when did the definitive phase start?

The Carbon Border Adjustment Mechanism (CBAM) is an EU regulation that places a carbon price on imports of certain carbon-intensive goods. The definitive phase started on January 1, 2026, replacing the transitional reporting-only phase that ran from October 2023 to December 2025.

Which goods are covered by CBAM?

CBAM currently applies to: cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen. The European Commission has also submitted a legislative proposal to extend CBAM to selected downstream products by 2028, though this has not yet been adopted.

What are the CBAM compliance obligations for EU importers?

EU importers (or their indirect customs representatives) importing more than 50 tonnes per year of CBAM goods must: (1) Apply for Authorized CBAM Declarant status, (2) Report embedded emissions in imported goods, (3) Purchase and surrender CBAM certificates corresponding to those emissions. Applications for authorized declarant status must be submitted by March 31, 2026.

How are CBAM certificate costs calculated?

CBAM cost = (embedded emissions in tonnes CO₂e) × (EU ETS allowance price). The EU carbon price is based on the quarterly average auction price of EU ETS allowances in 2026, and the weekly average from 2027 onwards. If importers can prove a carbon price was already paid in the country of production, that amount can be deducted.

When do companies actually pay for CBAM certificates?

While the definitive phase began on January 1, 2026, CBAM certificates do not go on sale until February 2027. The first annual CBAM declaration and certificate surrender deadline is September 30, 2027, covering imports made during 2026. However, importers must maintain accurate records from January 1, 2026, as these imports generate the financial liability.

What is the 50-tonne de minimis exemption?

Importers with total annual net imports below 50 tonnes of CBAM-relevant goods are fully excluded from all CBAM obligations, including reporting, authorization, and certificate purchases. This replaces the former €150 consignment value exemption and applies per importer, not per shipment.

Can actual supplier emissions data reduce CBAM costs?

Yes. Importers can use actual embedded emissions data from suppliers or default reference values. Default values are intentionally conservative and penalizing, often resulting in materially higher CBAM costs than verified supplier data. Third-party verification is mandatory when using actual emissions data. Investing in supplier data collection can significantly reduce certificate costs.

References

• European Commission — Carbon Border Adjustment Mechanism (Official)
• European Commission — CBAM Legislation and Guidance
• European Commission — CBAM Registry and Reporting
• EU Regulation 2023/956 — CBAM Regulation
• European Commission — Proposal to Extend CBAM to Downstream Products (December 2025)

How Terrnix Can Help

CBAM compliance requires accurate embedded emissions calculations, systematic supplier data collection, and robust reporting processes. Terrnix provides: