Carbon Border Adjustment Mechanism.
The EU carbon pricing mechanism on imports of carbon-intensive goods from countries without equivalent carbon pricing.
What is CBAM?
CBAM (Regulation 2023/956) puts a carbon price on imports of certain goods from outside the EU to prevent carbon leakage — the risk that EU climate policies push production to countries with less stringent rules. It effectively extends EU carbon pricing to imports by requiring importers to purchase CBAM certificates corresponding to the carbon price that would have been paid under EU ETS.
Who does it apply to?
EU importers of covered goods: cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen. The regulation is being phased in gradually. A transitional reporting phase ran from October 2023. Full financial obligations begin in January 2026.
Key requirements
Importers must register as CBAM declarants, report the quantity of goods imported and their embedded greenhouse gas emissions, purchase CBAM certificates at a price reflecting the EU ETS carbon price, and surrender certificates annually.