EU CBAM in its definitive period: what exporters of cement, steel and aluminium need to do

The EU Carbon Border Adjustment Mechanism (CBAM) puts a carbon price on certain imports into the European Union. After a transitional period of reporting only, the definitive period began on 1 January 2026. For producers in the Gulf, India and elsewhere who sell into the EU, accurate embedded emissions data is now a commercial necessity.

Why CBAM exists

EU producers in heavy industry pay for their emissions under the EU Emissions Trading System (EU ETS). Without an equivalent charge on imports, production could shift to countries with weaker climate policies, a risk known as carbon leakage. CBAM addresses this by requiring importers to pay for the emissions embedded in certain goods, at a price linked to the EU ETS. At the same time, the free allowances that EU producers receive under the ETS are being phased out gradually.

Which goods are covered

CBAM currently applies to imports of:

• Cement and clinker
• Iron and steel, including many downstream products such as screws, bolts and similar articles
• Aluminium
• Fertilisers
• Hydrogen
• Electricity

Coverage is defined by customs codes, so exporters should check the exact codes of their products. In December 2025 the European Commission proposed extending coverage to more downstream steel- and aluminium-intensive goods from 2028, so exporters of finished products should follow that proposal.

From transitional to definitive period

During the transitional period, from October 2023 to the end of 2025, importers submitted quarterly CBAM reports on the embedded emissions of their imports but paid nothing.

From 1 January 2026, the definitive period applies. Only authorised CBAM declarants can import covered goods above the applicable threshold. Declarants submit an annual CBAM declaration covering the embedded emissions of the goods imported in the previous year, and surrender CBAM certificates to cover them.

Simplifications adopted in 2025 changed the practical timeline:

• Importers below 50 tonnes net mass per calendar year, added up across all covered goods, are exempt. The threshold does not apply to hydrogen or electricity.
• The deadline for the annual declaration and for surrendering certificates is 30 September of the following year, so the first declaration, covering 2026 imports, is due by 30 September 2027.
• Certificates go on sale from 1 February 2027. For 2026 imports the price follows the quarterly average EU ETS auction price, and from 2027 the weekly average.

Costs on 2026 imports therefore build up now, even though the first payment comes later.

Embedded emissions: actual data versus default values

Embedded emissions are the greenhouse gases released in producing the goods. For cement and fertilisers they include indirect emissions from electricity as well as direct emissions; for iron, steel and aluminium the focus is on direct emissions.

Importers can use actual emissions data supplied by the producer, calculated according to the CBAM methodology and verified by an accredited verifier, or default values set by the European Commission. Default values are designed to be conservative and include a mark-up that starts at 10 percent in 2026 and rises to 30 percent by 2028, with a lower mark-up of 1 percent for fertilisers, so they usually lead to a higher CBAM cost than good actual data. For a producer with an efficient plant, reliable verified data is a competitive advantage.

Carbon price paid in the country of origin

If a carbon price has effectively been paid in the country of production, the importer can claim a reduction in the number of certificates to surrender, subject to evidence. This makes domestic carbon pricing developments in exporting countries, such as emerging carbon markets in the Gulf and India, directly relevant to CBAM costs.

What non-EU producers should do now

1. Identify which of your products fall under CBAM customs codes and which EU customers import them.
2. Set up installation-level monitoring of emissions following the CBAM methodology, including precursors such as clinker or pig iron.
3. Calculate specific embedded emissions per tonne of product for each production route.
4. Prepare for third-party verification by an accredited verifier, with a clear monitoring plan and evidence for each data point.
5. Share emissions data with importers in the format they need, on time.
6. Use the data to find reductions, because every tonne of embedded emissions now has a visible price.

Turning compliance into advantage

CBAM rewards producers who know their emissions precisely and reduce them. A cement plant that lowers its clinker factor or a steel mill that cuts energy use per tonne will see the benefit directly in its customers' CBAM costs.

NCV supports exporters with CBAM readiness assessments, installation-level emissions calculations and verification preparation. SustainOS keeps the underlying data in one auditable place, connected to plant systems where possible, so CBAM reports, customer requests and internal decarbonization tracking all draw on the same numbers.