What is CBAM?

The Carbon Border Adjustment Mechanism (CBAM) is a European regulation that applies a carbon price to certain imported goods. It is designed to prevent “carbon leakage” by ensuring that EU and non-EU producers face similar climate-related costs.

CBAM affects importers of goods like steel, aluminum, cement, fertilizers, and electricity. These companies must report embedded emissions and surrender CBAM certificates based on those emissions.

From 2026 onwards, CBAM will be fully implemented. However, under the Omnibus Proposal, small importers and SMEs would be exempt. A minimum threshold of 50 tonnes of imports per year is to be applied.