The EU Carbon Border Adjustment Mechanism entered its definitive period on 1 January 2026. It covers cement, iron and steel, aluminium, fertilisers, electricity and hydrogen.
The regulatory obligation falls on the EU importer, who must be an authorised declarant and surrender certificates against the embedded emissions of the goods they bring in. For producers in Asia, the effect is indirect but commercially direct: the importer cannot meet that obligation without embedded emissions data from the production installation.
This article covers what is actually being asked for, and what a producer needs in place to answer it.
The mechanism in outline
CBAM prices the carbon embedded in covered goods entering the EU, adjusted for free allocation under the EU Emissions Trading System. Its purpose is to place imported goods on a comparable carbon cost footing with EU production.
Certificate sales are scheduled to begin on 1 February 2027, and the first surrender deadline is 30 September 2027 covering goods imported during 2026. A mass threshold applies, currently exempting importers below 50 tonnes of CBAM goods per year.
Scope and thresholds have been amended since the mechanism was introduced. Any producer assessing exposure should confirm current classification and thresholds against the legislation rather than an earlier summary -- including this one.
What the importer needs from you
The importer needs embedded emissions at product level, determined at the installation where the goods were produced. Depending on the product category this covers direct emissions and, for some categories, indirect emissions from electricity consumed in production.
This is a different calculation from a corporate greenhouse gas inventory. It is installation-specific and product-specific, and it requires production data at a granularity most organisations do not routinely maintain.
- Product classification against the covered goods list by customs code
- Installation-level production and emissions data
- Direct emissions from the production process
- Indirect emissions from electricity, where the category requires it
- Any carbon price effectively paid in the production country, with evidence
The commercial risk is procurement, not compliance
A producer outside the EU is not exposed to a CBAM penalty. The exposure is that an EU customer needs data to meet their own obligation, and will source from suppliers who can provide it.
That risk applies regardless of the producer's carbon performance. A producer with genuinely low emissions but no installation-level data is harder to buy from than one with higher emissions and complete documentation -- because the second can be declared and the first cannot.
For producers with low emissions intensity, this cuts the other way once the data exists. Verified low embedded emissions translate into a lower certificate cost for the importer, which is a commercial argument rather than a compliance one.
Where to start
Begin with scope, not with measurement. Establish which of your products fall within the covered categories by customs code, and which of your EU customers import them and in what volume. That determines whether this is a material issue for your business at all.
Where it is, the next step is installation-level data collection -- production quantities, fuel and process emissions, electricity consumption -- structured so that it can be reported per unit of product.
This is worth building properly once. The requirement is annual and the data will be subject to verification, so an approach assembled per customer request will not hold.
Topics
- CBAM
- EU
- Export
- Manufacturing
- Embedded emissions
