From January 1, importers of certain goods will bear the financial costs of CO2 emissions

From January 1, 2026, the European Carbon Border Adjustment Mechanism (CBAM) will become fully operational. Importers of goods in sectors covered by the mechanism will have to purchase appropriate certificates for embedded emissions, paying a carbon price similar to the costs incurred by European producers.

The sectors covered by CBAM are as follows:

• cement,

• aluminum,

• fertilizers,

• ferrous metals,

• hydrogen,

• electricity.

Simplification plus strengthening

This year, the EU adopted new simplified rules to reduce the regulatory burden on businesses. The changes are as follows:

• a minimum weight threshold of 50 tons, which will exempt 90% of importers (mainly small and medium-sized enterprises and individuals) from CBAM tax,

• simplified authorization of declarants, calculation of emissions, reporting requirements, and compliance with financial obligations,
  a strengthened anti-circumvention strategy.

At the same time, in December 2025, the EU strengthened the CBAM by adding a wide range of industrial goods for further processing in the value chain. These are mainly goods with a high steel and aluminum content (79% on average). In total, there are 180 new items – iron and steel products (e.g., pipes, structural steel, railway materials, screws), a specific list of machinery and industrial equipment, and household appliances. The new package announced by the European Commission also strengthens enforcement, eliminates loopholes for circumvention, etc.

The methodology for calculating embedded emissions for electricity has also been changed. The default values for this category will be calculated based on an emission factor that reflects the intensity for all sources in exporting countries, not just fossil fuels, as is currently the case. This will reduce CBAM obligations. In addition, the conditions for declaring actual electricity emissions will be simplified.

What is required

EU importers or their customs representatives who import CBAM goods weighing more than 50 tons into the EU must apply for authorized declarant status under the mechanism (deadline: March 31, 2026).

CBAM certificates must be purchased from the national authorities of the country.

The price of certificates will be calculated based on the auction price of EU ETS allowances. It is expressed in €/ton of CO2 emissions, as the average value for a quarter in 2026 and the average value for a week from 2027.

EU importers will declare the emissions contained in their imports and return the corresponding number of certificates each year.

If importers can prove that the carbon price has already been paid during the production of imported goods, the corresponding amount can be deducted.

Benchmarks for CBAM

Benchmarks for CBAM will be available in 2026 after the European ETS benchmarks have been revised.

The EC will set standard reference values that reflect the typical production process for each product covered by the mechanism. Verified supplier data can be used to demonstrate different production processes, which may result in different benchmarks being applied. Ultimately, these benchmarks will reflect the amount of free allowances that a manufacturer would have received if the product had been produced in the EU.

The rules for calculating embedded emissions for imports will be slightly different from those applied during the transition period.

Deadlines for submitting declarations

Starting May 31, 2027, authorized declarants will have to submit a CBAM declaration for the previous calendar year to the competent authority by May 31 of each year.

Declarants must also submit a certain number of CBAM certificates to the competent authority by July 1 of each year. The number depends on the embedded emissions (the amount per imported product).

Integration into TARIC

From January 1, 2026, specific TARIC document codes (new Y-type certificates) must be declared on the customs declaration for CBAM goods. For example, Y128 is the code for the CBAM account number, Y135 and Y136 are exceptions for goods moved or used in military activities and for electricity/hydrogen production, respectively. Code Y137 covers the De Minimis rule – the minimum threshold (does not apply to electricity and hydrogen). Y238 means that the application for recognition as a CBAM declarant was submitted before March 31, 2026.

Penalties for non-compliance

Certain sanctions are provided for non-compliance with the mechanism. In case of data inconsistency, a fee of €100 per undeclared ton of CO2 will be charged. National authorities may impose administrative fines and require a third-party audit at the importer’s expense. Loss of CBAM declarant status is also provided for repeated/systematic violations.