CBAM – Carbon Border Adjustment Mechanism

What is the European Carbon Border Adjustment Mechanism?

Since 2005, European emissions trading has been an essential part of the European Union's climate strategy. The large CO2 emitters in the EU must compensate for every tonne of CO2 emitted with EU certificates - this is intended to create a financial incentive to reduce emissions.

Certain goods, such as steel and aluminium, are particularly emission-intensive in production. A CO2 price would put EU producers at a competitive disadvantage and there would be a risk that production would be moved to a non-EU country without CO2 levies. To prevent this, the Carbon Leakage Regulation has so far provided the plants concerned with free certificates.

With the Carbon Border Adjustment Mechanism (CBAM), it is planned to impose a CO2 tax on particularly energy-intensive product groups from non-EU countries where there is a risk of migration. This is intended to compensate for the competitive disadvantage of European industry.

The CBAM thus plays an important role in the efforts to achieve climate neutrality in the EU: on 10 June 2023, the EU adopted the regulation to create a CBAM.

Which goods are affected by CBAM?

The following product groups, as well as intermediate and end products from these areas, are primarily affected:




Iron and Steel



The more precise provisions according to the customs tariff number are set out in Appendix 1 of the regulation


An "importer“ is either

  • the person who, in his own name and on his own account, lodges a customs declaration for the release of goods for free circulation, or
  • the person on whose behalf the declaration is made (where the customs declaration is made by an indirect customs representative in accordance with Article 18 of Regulation (EU) No 952/2013).


Each Member State designates an authority to carry out the tasks and responsibilities under the Regulation. This is mainly the registration of applicants in the CBAM register and the communication between the Commission and CBAM applicants.

Customs authorities

The customs authorities now only allow authorised declarants to import the goods concerned. They also provide the Commission with the specific information on the imported goods.


The European Commission is responsible for establishing the CBAM registry and a platform for the sale of CO2 allowances. It also assumes the supervisory function of the CBAM declarations.

Test centres

CBAM declarations shall be subject to verification as from 2026. Any person accredited in accordance with Implementing Regulation (EU) 2018/2067 for relevant activities shall be an accredited verifier for the purposes thereof.

Installation operators

Operators of installations in third countries have the possibility to register in a CBAM register of the Commission. There, the emissions of the goods produced in the installation are to be reported, calculated according to the specifications of the regulation. This information is then available for CBAM registrants to view in order to prepare their CBAM declaration. The calculation of the emissions must be verified by an accredited testing body.

The person responsible is the person who is also responsible for the customs declaration of the goods. This is either an importer established in the EU or, if the importer is not established in the EU, an indirect customs representative designated by the importer.

The responsible persons are referred to in the Regulation as CBAM declarants.

What are the obligations of the CBAM applicant?

  • CBAM reports: Importers and indirect customs representatives (subsequent authorised declarants) of affected goods are obliged to send a report to the Commission on the quantity and emissions of imported goods of a quarter. The CBAM report is to be submitted in the first month after the end of the quarter as of 01.10.2023.
  • For the import of affected goods, importers must submit an application for approval as CBAM declarant in the CBAM register set up for this purpose as of 01.01.25. As of 01.01.2026, only authorised declarants are entitled to import affected goods.
  • From the reporting year 2026 onwards, CBAM declarants are obliged to submit an annual declaration on the quantities and emissions of imported goods by 31 May of the following year. The quantity of allowances to be surrendered is determined on the basis of this declaration.
  • The CBAM declaration is subject to verification as of the reporting year 2026.
  • CBAM certificates are to be procured and surrendered by 31 May each year, commencing in 2027.
Timeline of the CBAM development

What does the CBAM report contain?

The CBAM report primarily contains information on the imported quantity of goods and their "grey emissions" (see next question). The corresponding goods are to be broken down in a list by installation and country of origin.

The total emissions of all goods are to be indicated, as well as the emissions per tonne of each type of goods. If a CO2 price has already been paid in a country of origin, this must also be stated.

What are grey emissions and how are they calculated?

Grey emissions are the direct and indirect emissions released during the production of goods.
The regulation distinguishes between "simple goods" and "complex goods". Simple goods are goods whose production only requires input materials (precursor materials) and fuels. All other goods are considered complex goods.

The CO2 emissions for simple goods are calculated according to the following formula:

Formula for calculating the specific grey emissions

CO2 emissions for complex goods are calculated as follows:

Formula for calculating the specific grey emissions

Direct emissions are the emissions directly caused by the manufacturing process. They shall be expressed in tonnes of CO2e, within the system boundaries referred to in Article 7(7) of the adopted implementing act.

Indirect emissions are those resulting from the generation of electricity consumed during the production of the goods. They shall also be expressed in tonnes of CO2e, within the system boundaries referred to in Article 7(7) of the adopted implementing act.

Activity rate The quantity (in tonnes) of goods produced in the installation during the reporting period.

Mi is the mass of input material i used in the manufacturing process.

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If possible, the actual values of the installation in the country of origin shall be determined for the calculation of emission quantities. If these are not available, literature and default values shall be used. The default values correspond to the average emission intensity of each exporting country with a proportionally designed mark-up by type of goods.

If this is also not possible, default values from the range of EU ETS installations with the worst values shall be applied.

The Commission will publish further implementing regulations on this.

If operators of installations in third countries register in an EU registry and deposit information on the emissions of their goods there, it must be verified by an accredited verification body in the EU that the emissions have been calculated in accordance with the requirements of the CBAM Regulation and further implementing regulations. This verified information is then visible to approved notifiers and facilitates their own calculations.

If a price for the grey emissions has already been paid on the goods in a third country, this can be directly credited. The maximum creditable price corresponds to the price of a CBAM certificate.

The quantity of CBAM allowances to be surrendered will be adjusted in line with the free allocation of EU ETS allowances. In the further course, the EU ETS allowances are to be reduced.