CBAM enters a definitive phase: what businesses need to know

As of 1 January 2026, the EU Carbon Border Adjustment Mechanism (CBAM) entered its definitive phase. After two years of transitional reporting, the system is now moving to a stage in which financial consequences will occur over time for importers of CBAM-covered goods. 

During the transitional period, companies were mainly required to report the embedded emissions of certain imported products. From 2026 onwards, CBAM shifts from simply reporting to a financial mechanism. Importers will ultimately need to purchase and turn in CBAM certificates that correspond to the embedded emissions of their goods. The price of these certificates is linked to the EU Emissions Trading System. 

CBAM currently applies to iron and steel, aluminium, cement, fertilisers, hydrogen and electricity. In the first week of the definitive phase, more than 10,000 customs declarations containing CBAM goods were recorded, with iron and steel accounting for the majority. This means that CBAM is no longer theoretical. It is operational and already affecting trade flows.

In mid-December, the European Commission published a large package of implementing rules to make the system operational. These rules cover verification, the CBAM Registry, authorised declarant status, default values and the calculation of embedded emissions. This provides more clarity, but it also adds significant technical detail for companies to consider.

A key requirement is about Authorised CBAM Declarant status. From March 2026 onwards, importers above the applicable threshold must hold this status in order to import CBAM goods into the EU. Obtaining the authorisation is not simply a formality. It requires companies to demonstrate compliance capacity and financial guarantees in certain cases. For businesses that rely on indirect customs representatives, liability allocation and contractual arrangements may require careful review.

The calculation of embedded emissions is essential for the mechanism. Companies can use actual emissions data from producers or rely on default values given by the Commission. However, default values are set up to become increasingly strict over time. In 2026, default values will already include a mark-up, and this will increase in the following years. As a result, relying on default values can significantly raise carbon costs compared to using verified actual data.

At the same time, the use of actual emissions requires verification by a verifier accredited by the EU. This may cause practical problems, especially in the first year of implementation. The full list of accredited verifiers is expected later in 2026, which raises questions about verification capacity and the timing. Companies will need to carefully assess the readiness of their data and verification planning in order to avoid last minute issues. 

CBAM certificates work as digital tools that represent one tonne of embedded CO2. Their price will reflect the average EU ETS price. In 2026, pricing will be based on quarterly averages, while from 2027 onwards the prices will be published every week. The first annual CBAM declaration and receiving the certificates will be due by 30 September 2027. From 2027, authorised declarants will also be required to hold a minimum number of certificates during the year. This introduces additional cash flow considerations.

The Commission is already considering whether CBAM should be extended to additional downstream products. If that happens, more types of goods could fall under the system in the coming years. At the same time, further clarification is still expected on how carbon prices that have already been paid in the country of production will be taken into account when calculating CBAM costs.

For companies involved in international trade, CBAM is therefore not just another environmental rule. It changes how imports are handled in practice. It has an impact on purchasing decisions, supplier relationships, data collection and financial planning. Having reliable emissions data, clear insight into supply chains and early coordination with producers outside the EU will be increasingly important.

Businesses should evaluate whether their current systems allow them to accurately track embedded emissions, whether agreements with suppliers clearly define responsibilities for data and verification, and how possible carbon costs can affect pricing and competitiveness. In sectors such as iron and steel in particular, the impact could be significant. 

CBAM aims to link climate policy more closely with trade. The system will continue to develop, and further changes can be expected. ICC will continue to follow these developments closely, engage with members and contribute to discussions on practical implementation. It remains important that the mechanism is workable, predictable and proportionate for internationally active businesses.

What Remains Uncertain

Several elements are still evolving:

• Final rules on carbon price paid outside the EU.

• Potential extension to downstream products.

• Practical experience with verifier capacity.

• Development of parallel CBAM regimes in other jurisdictions.

For internationally active firms, multiple border carbon systems could emerge rather than convergence toward a single framework.

That possibility should be considered in medium-term compliance planning.

Practical Priorities for 2026

• Confirm authorised declarant status and review contractual allocation of liability.

• Quantify financial exposure under both default and verified emissions scenarios.

• Strengthen supply chain data protocols, particularly for precursor products.

• Integrate CBAM into financial planning, rather than treating it as a reporting obligation.

Early alignment reduces the risk of customs disruption and unexpected certificate costs.