CBAM 2026: the real cost of the definitive phase, in six charts and one checklist.

The EU Carbon Border Adjustment Mechanism's transitional phase is over. Since 1 January 2026, importing cement, iron and steel, aluminium, fertilisers, hydrogen or electricity into the EU is a regulated, priced activity: importers must be authorised CBAM declarants, every tonne of embedded emissions accrues a certificate liability, and the first bill, covering the whole of 2026, falls due by 30 September 2027.^1,3

Last updated 4 August 2026. Reflects the CBAM Simplification ("Omnibus") Regulation (EU) 2025/2083 of October 2025, the European Commission's December 2025 implementation package, and the official Q1 and Q2 2026 certificate prices.

Who must comply with CBAM, and from when?

The definitive regime has been live since 1 January 2026. The transitional phase (October 2023 to December 2025) was a reporting exercise: quarterly reports on embedded emissions, no authorisation requirement, no payment. The definitive phase moves the mechanism from paperwork into pricing, and it sorts importers into clear categories.^1,3,6

Mind the cash-flow gap. A common misreading of 2026 is that "nothing is payable yet, so nothing is happening." The liability accrues on every covered import from 1 January 2026; only the cash movement is deferred to 2027. Auditors and CFOs should treat CBAM as a 2026 cost of goods sold that needs a provision on 2026 accounts, not a 2027 surprise.^5,6

The authorisation window has consequences now. Importers who applied for authorised CBAM declarant status by 31 March 2026 may keep importing while their application is decided. An importer above the threshold that never applied cannot lawfully import covered goods until authorisation is granted, and importing without it attracts penalties of up to five times the standard rate.^5,6

The timeline below is the single most useful planning picture for a finance or trade compliance team.

What changed in the October 2025 Omnibus, and what did not?

The original design was heavier. As adopted in 2023, Regulation (EU) 2023/956 exempted only consignments below €150, required certificate purchases through 2026, set the annual declaration deadline at 31 May, and required declarants to hold certificates covering 80% of accrued emissions at each quarter end. The Omnibus package, proposed in February 2025 and adopted on 8 October 2025, recalibrated all four, citing the disproportionate burden on small importers relative to the emissions at stake.^2,4,5

Three points are worth stressing, because they are commonly misread:

• The exemption is about importers, not emissions. The 50-tonne threshold removes roughly 90% of importers, mostly SMEs and individuals, from the regime entirely, while keeping about 99% of embedded emissions in scope. It applies per importer per year across cement, iron and steel, aluminium and fertilisers combined, and it does not apply to hydrogen or electricity at all.^4,7
• Certificates were deferred, not discounted. Moving the first purchases to February 2027 changes when cash leaves the business, not how much. The 2026 liability accrues in full, at prices already being published quarterly by the Commission.^5,8
• Enforcement got sharper, not softer. Penalties mirror the EU ETS excess-emissions penalty (€100 per tonne, indexed), and importing covered goods above the threshold without authorisation can attract up to five times that amount. Anti-circumvention rules, including treating pre-consumer steel and aluminium scrap as precursors and restricting suspicious "actual values" claims, were reinforced in the December 2025 package.^5,9

The practical takeaway mirrors every phased regime: treat the deferral as runway to build the compliance machinery, not as a reprieve from building it.

How is the CBAM certificate price set, and what is it now?

The price is the EU carbon price, averaged. For emissions embedded in 2026 imports, the Commission calculates one certificate price per quarter: the weighted average of EU ETS allowance auction clearing prices over that quarter, published in the first week after the quarter closes. From 2027, pricing moves to a weekly calculation on the same basis.^8,9

Two official prices have been published so far. The first, for Q1 2026, is €75.36 per tonne of CO₂e (published 7 April 2026); the second, for Q2 2026, is €75.28 (published 6 July 2026). The Q3 price is due on 5 October 2026 and the Q4 price on 4 January 2027, just before the sales platform opens.⁸

What you actually surrender is emissions net of two deductions. The number of certificates due is not simply embedded emissions times the price. It is reduced by the free-allocation adjustment, reflecting the free allowances an equivalent EU installation still receives against its sector benchmark, and by any carbon price already paid in the country of origin, where that price is verified by an accredited independent party.^1,5,9

The CBAM charge in outline. In 2026 the free-allocation adjustment removes 97.5% of the benchmark-level charge, which is why the effective cost starts small, and why it will not stay that way.

The free-allocation phase-out: why 2026 is the cheap year

The mechanism is designed to grow in bite. CBAM ramps up exactly as free EU ETS allocation for the same sectors ramps down, governed by the "CBAM factor", the share of the benchmark-level charge importers actually bear. It starts at 2.5% in 2026 and reaches 100% in 2034, with the steepest single step between 2029 and 2030, when the factor more than doubles from 22.5% to 48.5%.^1,10

Worked through a real import book, the ramp is stark. Take a mid-market importer bringing in 10,000 tonnes of steel a year with embedded emissions of roughly 2 tCO₂e per tonne, 20,000 tCO₂e in total, produced at around the EU benchmark, with no carbon price paid at origin. At a €75 certificate price held flat:

What must an authorised CBAM declarant actually do in 2026 and 2027?

2026 is a data year; 2027 is a cash year. Through 2026, the work is collecting installation-level embedded emissions data from suppliers under the Commission's December 2025 methodology rules, or applying the published default values where actual data is unavailable, and keeping the evidence organised in the CBAM registry. Verification of actual values is performed by accredited verifiers, with an on-site inspection required in the first year an installation's data is used.⁹

From 2027 the obligations become financial and rhythmic:

• Buy certificates from 1 February 2027 on the Commission's central platform, at the published prices for the quarter of import.^6,8
• Hold at least 50% of your accrued liability in certificates at each quarter end, the Omnibus reduced this from the originally legislated 80%, easing working-capital pressure but not removing the discipline of quarterly reconciliation.⁵
• File the annual CBAM declaration and surrender certificates by 30 September of the following year, so 30 September 2027 for 2026 imports, with verified emissions data and evidence for any deductions claimed.^5,6

Note what no longer exists: the quarterly CBAM report. The transitional quarterly reporting cycle ended with the Q4 2025 report. Teams that built their process around quarterly filings need to re-plumb it around continuous emissions accrual, quarterly certificate holdings and a single annual declaration.⁶

How will CBAM's scope expand?

The December 2025 package points firmly outward. Alongside eight implementing acts operationalising the definitive phase, the Commission proposed extending CBAM to roughly 180 downstream steel- and aluminium-intensive goods, from fasteners, netting and metal furniture to pumps, motors, gearboxes and vehicle parts, with a target start of 1 January 2028. The proposal is now with the Parliament and Council, and Member States agreed their negotiating position in 2026.^9,11

Two quieter changes deserve as much attention. First, pre-consumer steel and aluminium scrap is to be treated as a CBAM precursor, closing a route by which high-carbon material could re-enter as "low-carbon" scrap. Second, the Commission must reassess default values, including a gradual mark-up, by December 2027, so importers relying on defaults instead of actual supplier data should expect that convenience to get progressively more expensive.⁹

For any importer whose products sit just outside today's Annex I, the planning assumption should be that the boundary moves toward you, not away.

How does the EU CBAM compare with the UK CBAM?

Groups importing into both markets face two mechanisms a year apart. The UK's CBAM starts on 1 January 2027, covering iron and steel, aluminium, cement, fertilisers and hydrogen, but not electricity, and it works differently: a tax with rates set per product group by the government, rather than certificates tracking a traded carbon price, with a £50,000 rolling 12-month registration threshold.^12,13

The linkage question hangs over both. The EU and UK agreed in May 2025 to work toward linking their emissions trading systems, which would in principle exempt UK goods from EU CBAM and vice versa. Until linkage is legally in force, on a timeline that remains uncertain, cross-Channel groups should build for double compliance and treat any exemption as upside.¹³

First-declaration checklist: what should an importer do before 30 September 2027?

For teams inside the regime, or hovering near the 50-tonne line, the sequence below reflects both the rules and where early compliance reviews are finding gaps.

• Confirm your status against the threshold. Aggregate expected annual imports of cement, iron and steel, aluminium and fertilisers across the calendar year; remember hydrogen and electricity have no de minimis. Importers near the line should monitor cumulatively, exceeding 50 tonnes without authorisation is a penalty event, not a rounding error.^5,7
• Secure or evidence authorised declarant status. If your application predates 31 March 2026 you may import while it is decided; keep the acknowledgment on file. If you have not applied and expect to exceed the threshold, apply before importing further.⁵
• Map every SKU against Annex I CN codes. Classification drives everything downstream; get customs and sustainability teams working off the same product master, and screen the proposed 180 downstream codes while you are at it.^9,11
• Get installation-level data from every supplier. Actual verified values almost always beat default values on cost, and the default-value mark-up planned from the December 2027 reassessment will widen that gap. A signed supplier data sheet per installation, per period, is the unit of evidence.⁹
• Book the accrual now. Multiply each quarter's embedded emissions by the published quarterly price and the 2.5% effective factor, and provision it. Your auditors will ask; the Q1 and Q2 2026 prices are already official.⁸
• Claim your deductions properly. A carbon price paid at origin is deductible only if verified by an accredited independent party, and the free-allocation adjustment follows the Commission's benchmark methodology, both need documentation, not assertion.^5,9
• Model the ramp into commercial decisions. Re-run sourcing economics at the 2030 factor (48.5%) and 2034 (100%), not just today's 2.5%; long-term supply contracts signed in 2026 will live most of their lives under a much heavier charge.
• Assign an owner and build the evidence trail. One accountable role for the CBAM ledger, with method, source and sign-off recorded against every shipment, is what turns the 2027 declaration, and any competent-authority query after it, into a verification exercise rather than an archaeology project.

Done in that order, the first declaration becomes a foundation rather than a scramble, and each later step of the phase-in lands on infrastructure that already exists.

Frequently asked questions

When does CBAM start costing importers money?

The liability accrues on all covered imports from 1 January 2026, but no certificates are bought in 2026 itself. Sales open on 1 February 2027, and the first annual CBAM declaration, with certificate surrender for 2026 imports, is due by 30 September 2027. Because EU producers still receive 97.5% of free allocation in 2026, the effective charge starts at roughly 2.5% of the full carbon cost and rises to 100% by 2034.

Who is exempt from CBAM under the 50-tonne rule?

Importers bringing in less than 50 tonnes per year of cement, iron and steel, aluminium and fertilisers combined are outside the regime entirely, a change that removes about 90% of importers while keeping about 99% of embedded emissions covered. The exemption does not apply to hydrogen or electricity imports, which are in scope at any volume.

What is the current CBAM certificate price?

For 2026, the Commission publishes one price per quarter, calculated as the weighted average of EU ETS auction clearing prices for that quarter. The Q1 2026 price is €75.36 per tonne of CO₂e and the Q2 2026 price is €75.28. From 2027, prices will be calculated weekly on the same basis.

Do importers still file quarterly CBAM reports in 2026?

No. The transitional quarterly reporting cycle ended with the report for Q4 2025. Under the definitive regime there is a single annual CBAM declaration, due by 30 September of the year after import, plus, from 2027, a requirement to hold certificates covering at least 50% of the accrued liability at the end of each quarter.

What are the penalties for not complying with CBAM?

Failing to surrender the required certificates attracts a penalty mirroring the EU ETS excess-emissions penalty, €100 per tonne of CO₂e, indexed, and still leaves the certificates owing. Importing covered goods above the threshold without authorised CBAM declarant status can attract penalties of up to five times that amount.

Can a carbon price paid outside the EU be deducted?

Yes. A carbon price effectively paid in the country of origin reduces the number of certificates to surrender, provided both the price paid and the actual embedded emissions are verified by an accredited independent party and properly documented in the declaration.

Will CBAM be extended to more products?

A Commission proposal from December 2025 would add around 180 downstream steel- and aluminium-intensive goods, including fasteners, metal furniture, pumps, motors and vehicle parts, from 1 January 2028. It is currently in the EU legislative process. The Commission must also reassess default emission values, including a gradual mark-up, by December 2027.

References

1. EUR-Lex, Regulation (EU) 2023/956 establishing a carbon border adjustment mechanism, accessed August 2026.
2. EUR-Lex, Regulation (EU) 2025/2083 amending Regulation (EU) 2023/956 as regards simplifying and strengthening the carbon border adjustment mechanism, accessed August 2026.
3. European Commission, Taxation and Customs Union, Carbon Border Adjustment Mechanism, accessed August 2026.
4. European Parliament, CBAM: Parliament adopts simplifications to the EU carbon leakage instrument, 10 September 2025, accessed August 2026.
5. Reed Smith, What you need to know as CBAM simplification comes into effect, accessed August 2026.
6. International Carbon Action Partnership, EU CBAM enters compliance phase and outlines path ahead, accessed August 2026.
7. Slaughter and May, EU CBAM amended to exclude 90% of importers but include 99% of emissions, accessed August 2026.
8. European Commission, Taxation and Customs Union, Price of CBAM certificates (Q1 2026: €75.36; Q2 2026: €75.28), accessed August 2026.
9. Mayer Brown, European Commission Issues CBAM Operational Rules and Proposes Downstream Extension of the CBAM Scope, accessed August 2026.
10. EUR-Lex, Directive (EU) 2023/959 amending the EU ETS Directive (free allocation phase-out for CBAM sectors), accessed August 2026.
11. ESG Today, EU Member States Agree to Expand CBAM Carbon Import Tax to Downstream Products, accessed August 2026.
12. International Carbon Action Partnership, UK outlines details for Carbon Border Adjustment Mechanism introduction from 2027, accessed August 2026.
13. Deloitte, UK Tax Policy Map: UK Emissions Trading System and CBAM, accessed August 2026.

This guide is general information, not legal, tax or customs advice. Figures in the worked examples are illustrative; measures described as proposed, including the downstream scope extension, remain subject to the EU legislative process. Check the primary sources above for the current position.