The Carbon Border Adjustment Mechanism (CBAM) will officially take effect on 1 January 2026, marking a significant step in the EU’s efforts to reduce carbon leakage and promote global climate action. CBAM is designed to impose a carbon price on imports of certain goods from outside the EU, ensuring that imported products face similar carbon costs as those produced within the EU under the Emissions Trading System (ETS). This mechanism targets sectors with high carbon emissions, such as cement, steel, aluminum, fertilizers, and electricity generation. To be ready for CBAM’s implementation, importers must start preparing early by understanding the reporting and verification requirements. Initially, from 2023, importers are required to report the embedded emissions in their goods, enabling a smooth transition to full compliance in 2026. Companies should assess their supply chains, collect accurate emissions data, and establish processes for timely reporting and purchasing CBAM certificates. Early readiness is crucial to avoid disruptions, additional costs, or penalties. Stakeholders, including businesses and customs authorities, are encouraged to engage with guidance materials and training to ensure compliance. Overall, CBAM represents a transformative regulatory change aimed at leveling the playing field and encouraging greener production practices worldwide.

Published on: 2026-01-16 at 00:15:02