What is Carbon Border Adjustment Mechanism (CBAM)?
Many of our customers ask us about the Carbon Border Adjustment Mechanism (CBAM) and what it means for their business. In this article, we outline the key elements of this new regulation and explain how it affects nearly every company importing CBAM‑regulated commodities from non‑EU producers, as well as those acting as an indirect representative of the importer.
At Euro-Rijn we are here to help, if you have any questions or would like to discuss the implications for your organisation, let us know!
CBAM stands for Carbon Border Adjustment Mechanism. It is a measure to create an equal playing field between producers within the European Union and outside the European Union.
CBAM will enforce imports from non-EU producers to acquire CBAM Certificates. The main purpose is to avoid CO2 leakage, rather than to punish pollution itself.
To acquire CBAM certificates you first need to calculate how much carbon pollution was created when a product was made. First, the importer reports how many greenhouse gases were released during production. Then, this amount is compared to the carbon price that European companies pay in the EU Emissions Trading System (ETS).
The importer in the EU or the indirect representative of the importer outside the EU buys CBAM certificates that match the pollution level. If the exporting country already charged a carbon tax, that amount is deducted first. More pollution means higher cost; cleaner production means lower cost.
If an importer brings in less than 50 metric tons per year, they are not required to purchase CBAM certificates.”
In CBAM, the default value is a pre-set pollution (carbon emission) number used when real production data is not provided by the importer.
These default values are set by the EU and are intentionally high, usually based on the most polluting producers. This encourages companies to report real data.
If you use the default value, you have to surrender more CBAM certificates than if you report actual, cleaner emissions.
The actual value can be used when the producer provides verified emission data.
Using actual values usually lowers the amount of CBAM certificates that have to be surrendered if production is cleaner.
The CBAM benchmark is a reference level of CO₂ emissions based on efficient EU producers. It represents the amount of emissions that would have received free allowances in the EU ETS. This benchmark is deducted from imported product emissions to avoid double protection.
The CBAM factor shows how much of the EU’s free carbon allowances still apply.
From 2026, it starts high (about 97.5%) and decreases each year as free allowances in the EU ETS are phased out.
How does it work?
Benchmark × CBAM factor = emissions not charged under CBAM.
As the factor falls to 0 by 2034, importers have to surrender more CBAM certificates over time.
Under CBAM, imports may benefit from a reduction in the number of CBAM certificates to be surrendered if a carbon price was paid in the country of origin. This applies only to the amount effectively paid, meaning the initial price minus any rebate, refund, or other form of compensation (e.g. export incentives) received by the producer.
Requirements for 2026:
Here’s how surrendering of CBAM certificates works in 2026 and what changes in 2027 in clear terms:
2026: First year of financial obligations
2027: When CBAM costs are actually paid
In short, 2026 is about reporting and preparing the first declaration, and 2027 is when the first CBAM certificates need to be surrendered based on imports from 2026.
You buy CBAM certificates in 2027 to cover goods you imported during 2026.
From then on, this cycle repeats every year.
A CBAM account number is a unique identifier given to an authorized CBAM declarant by the EU.
Why importers need it?
In practice, most non-EU producers support CBAM by providing emissions data, while the EU importer holds the CBAM account.
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