The EU’s Carbon Border Adjustment Mechanism (CBAM) moves from the transitional reporting phase to full implementation this year. However, due to the complexities facing EU importers some new, simplified rulings are starting.
New Minimum Threshold for 2026
The EU have therefore introduced a single, annual “De minimis” weight threshold. If the importer brings in less than 50 tonnes a year of CBAM covered goods they are exempt from obligations.
This starts from 1st January 2026 with the first years recordable period ending 31st December 2026. The threshold is applied cumulatively across all CBAM HS codes over this period.
The company that is the “importer of record” will need to start paying in 2027 although this will cover 2026 period imports to the EU. They will need to register, report emissions, buy and surrender carbon credits.
The consideration here for UK business is that if shipping DDP terms, they are the importer of record and therefore must comply with CBAM. Alternatively, if the customer is the importer of record, for DAP incoterm consignments for example, then the UK company will not be liable. They may be required to provide CBAM related information to the customer though, to facilitate correct reporting.
To calculate how much you will need to pay for your CBAM covered goods the EU has developed a matrix whereby you can extrapolate your default emissions for reporting. However, these calculations are quite generic and slightly inaccurate as a result. If your EU imports are high tonnage or ongoing it might be prudent to engage with a consultant to accurately calculate your CBAM liability.
What is Carbon Border Adjustment Mechanism (CBAM)?
This is a procedure introduced by the European Union (EU) that helps manage Carbon Pollution. Factories in the EU have to pay extra for Carbon pollution via a system called The EU Emission Trading System (ETS).
Countries outside of the EU don’t have this regulation, therefore it becomes cheaper to import goods from outside of the EU, where these rules don’t apply.
CBAM has been introduced to make it a level playing field and companies importing from outside of the EU must pay the same carbon costs as EU producers.
It will remove the incentive to buy cheaper product alternatives from outside the EU therefore there will be no economic advantage to importing these goods. It should also encourage corporations in non-EU countries to pursue greener manufacturing if they want to trade with Europe.
Does CBAM apply in the UK?
If you are shipping DDP terms into the EU, then the UK customer will be responsible for the CBAM costs.
The UK is also looking to introduce our own version of CBAM as of 2027 which will be structurally similar to the existing EU system.
That sounds a long way off, but it will come around quickly. Therefore, I think all UK companies need to start thinking about this.
The good news is smaller importers will be exempt (importers of less than 50 tonnes per year).
Registering for CBAM is a straightforward process, just click this link and follow the instructions.
How does CBAM work?
CBAM is a tool which will put a fair price on certain goods entering the EU by calculating carbon emissions during production.
Any business importing liable products will need to buy CBAM certificates, the price of which will be set weekly based on weekly average auction costs of emissions allowances under the ETS.
Determining how much to charge based on the goods being imported will be defined by the “embedded emissions” or direct greenhouse emissions during manufacturing.
What are CBAM goods?
Goods that have carbon intensive production such as from the energy, aviation transport and maritime transport sectors and manufacturing in the following industries:
- Oil refining
- Metals such as Iron, Steel or Aluminium
- Cement
- Lime
- Glass
- Ceramics
- Pulp,
- Paper
- Cardboard
- Acids
Importing goods like Aluminium, Cement, fertiliser, hydrogen and steel from non-EU Countries where ETS isn’t applied is called Carbon leakage.
If you would like to look at the default emissions yourself you can follow this link. This shows values for the transitional period to the end of 2025, but these are still applicable until the EU publishes new ones.
When was CBAM introduced?
From 2023 to 2025 there has been a transitional phase where importers have had to report how much CO2 has been emitted to make their goods for goods entering the EU.
As of 2026 Importers in the EU will need to buy CBAM certificates, these will need to match the amount of CO2 in their imported goods. However, these certificates will need to be purchased in 2027 to offset carbon from 2026.
Moving goods into or out of the EU can sound complicated but we have years of experience making sure we are up to date on changes to rules and regulations ensuring smooth transits between the UK and EU, and EU and UK.
