Preparing for the CBAM: What European Importers and Exporters Need to Know

The EU’s Carbon Border Adjustment Mechanism (CBAM) represents a landmark policy to safeguard EU climate ambitions and industry competitiveness by addressing carbon leakage. CBAM imposes a carbon price on imports of energy-intensive goods, reflecting the price paid under the ETS.

What You Need to Know

  • Effective Date: CBAM launches in 2026 for selected goods such as steel, cement, and electricity.

  • Key Obligations: Importers must report and buy CBAM certificates equivalent to the embedded carbon emissions in their goods, purchasing and surrendering them annually, with adjustments for carbon costs already paid abroad.

  • Scope: CBAM covers six carbon-intensive and trade-exposed sectors, with plans to expand by 2030 to include additional sectors, such as ceramics, pulp & paper, glass, and bulk organic chemicals.

  • Working Alongside EU ETS: CBAM is structured to run in parallel with the EU ETS (from 2026 to 2034). During this period, free allocations under the ETS will be phased out, pushing carbon pricing to reflect real market dynamics.

 

Supply Chain and Financial Impacts

CBAM compliance requires accurate calculation of embedded emissions, reliable data reporting, and certificate acquisitions, introducing operational complexity and potential cash flow challenges. Preparing early enhances competitiveness by avoiding disruptive costs and reputational risks.

 

Emerging Developments to Watch

  • The scope of CBAM will likely expand post-2026 to include additional goods and sectors.

  • Global dialogue around carbon pricing harmonisation is intensifying, which may ease compliance.

  • Digital reporting tools and EU registries will standardise and simplify CBAM processes.

 

Grey Epoch’s CBAM Support

By partnering with Grey Epoch, you can secure early EUA purchases to hedge expected CBAM-related costs and adapt procurement to favour lower-carbon suppliers, successfully minimising compliance exposure.

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