The CBAM (Carbon Border Adjustment Mechanism) is a measure introduced by the European Union to combat “carbon leakage” and promote the global reduction of CO₂ emissions. Its objective is to ensure that products imported into the EU comply with the same environmental standards as goods produced within the European market, creating fair and sustainable competitive conditions.
In its initial phase, CBAM applies to specific high-emission industrial sectors:
- cement
- iron and steel
- aluminum
- fertilizers
- electricity
- hydrogen
In the future, the mechanism may extend to other production sectors with a significant environmental impact.
How it works
The functioning of CBAM is based on the obligation for European importers to declare the carbon emissions embedded in products imported from non-EU countries. With the recent amendment to Regulation 956/23, starting from 2027, importers will have to purchase CBAM certificates, calculated based on the carbon price in force in the European Emissions Trading System (EU ETS). In this way, the cost of carbon associated with imported products will be aligned with
that borne by European producers, avoiding competitive advantages based on fewer environmental constraints.
Transitional phase (2023–2025)
The transitional phase of CBAM has been in effect since October 1, 2023.
During this period, companies do not incur costs but are obliged to submit quarterly data to the European
Commission regarding:
- direct and indirect emissions of imported products,
- country of origin,
- and quantities traded.
This phase serves to prepare companies for the definitive entry into force of the mechanism, scheduled for January 1, 2026.
From 2026: full operation
With full application, importing companies will have to:
- register as CBAM declarants;
- purchase and hold CBAM certificates in proportion to the emissions of imported goods; (POSTPONED TO FEBRUARY 2027)
- submit an annual official declaration of embedded emissions. (POSTPONED – BY MAY 31, 2027)
Failure to comply with the new rules may result in penalties and import restrictions.
Implications for businesses
The introduction of CBAM requires companies to have greater transparency and traceability of environmental data throughout the supply chain.
It will therefore be essential to develop emission monitoring systems, collect precise information from foreign suppliers, and adopt effective decarbonization strategies.
At the same time, CBAM represents an opportunity for all companies that focus on sustainable and
innovative production processes.
How to prepare
To best face the transition, it is advisable to:
analyze your supply chain and identify products subject to CBAM;
implement digital tools for calculating and reporting emissions;
collaborate with consultants and partners specialized in environmental compliance and CBAM data management.
CBAM marks a decisive step towards a more sustainable and competitive European economy. Adapting to this new regulatory framework not only means complying with an obligation but also investing in the future of the company, improving environmental reputation and business solidity.
Given the complexity of the regulation, CIS offers its selected clients a specific consulting service on the matter and on scheduled compliance.