CBAM​

The EU’s Carbon Border Adjustment Mechanism (CBAM) applies a carbon price to imports of emissions-intensive goods to align them with the EU Emissions Trading System (EU ETS). Its goal is to prevent carbon leakage and maintain fair competition as Europe decarbonises its industries.

CBAM affects importers, producers, and traders of steel, aluminium, cement, fertilizers, hydrogen, and electricity entering the EU. Indirectly, it impacts global suppliers, contract negotiators, and procurement teams in value chains linked to these commodities.

The transitional phase runs through 2025. From January 2026 the definitive phase starts, with importers needing to purchase and surrender CBAM certificates. This is aligned with the phase out of free EU ETS allowances progressively until 2034 to support the decarbonisation of EU industry.

Liabilities depend on verified embedded emissions multiplied by the average quarterly EU ETS price in 2026 and average weekly price from 2027. The effective cost can be reduced if the exporting country already applies an equivalent carbon price and proper documentation is provided.

Businesses must gather verified emissions data from non-EU producers, maintain auditable reporting for customs declarations, and calculate quarterly liabilities. Strong internal data integration between procurement, sustainability, and finance is essential for accuracy and transparency.

CBAM introduces a new cost layer based on carbon intensity. Suppliers with lower emissions gain a competitive advantage, while importers face higher landed costs for carbon-heavy products. Companies are already reassessing sourcing, contract terms, and margin exposure in response.

CBAM mirrors the EU ETS price and methodology to maintain parity between domestic and imported goods. As the EU tightens allowance supply under Phase 5, EU ETS prices are expected to rise, directly influencing CBAM certificate costs.

Key risks include carbon cost volatility, delayed pricing visibility, compliance complexity, and potential supply-chain disruption. Importers must plan for certificate purchases, allocate responsibility in contracts, and manage cash-flow exposure tied to EU ETS price swings.

The Fastmarkets CBAM Intelligence Suite provides data, models, and forecasts to quantify exposure, benchmark emissions, and test cost scenarios. Through its Excel-based CBAM Cost Calculator, Strategic Forecasts, and Trade Flow Analytics, businesses can plan, hedge, and report with confidence.