EU CBAM Compliance Guide: Carbon Border Tax for Importers — Reporting, Certificates and Deadlines

CBAM currently covers six sectors: (1) iron and steel (CN codes 72-73), including articles like pipes, tubes and structural elements; (2) aluminium (CN 76); (3) cement (CN 2523); (4) fertilisers (CN 31); (5) electricity (CN 2716); (6) hydrogen (CN 280410). The scope is defined by CN (Combined Nomenclature) codes — check the EU's TARIC database for your product's classification. Embedded emissions include both direct emissions (from the production process) and, for certain products, indirect emissions (from electricity used in production). By 2030, the scope is expected to expand to cover organic chemicals, polymers, and other goods with significant carbon content. Even if your product is not directly covered, it may be captured through downstream supply chain reporting requirements.

During the transitional phase, authorised CBAM reporters (EU importers or their indirect customs representatives) must submit quarterly CBAM reports via the CBAM Transitional Registry. Each report must include: (1) total quantity of goods imported by CN code; (2) total embedded emissions — both direct (tonnes CO₂ per tonne of product) and indirect (where applicable); (3) the carbon price due in the country of origin for the embedded emissions. Reports are due within one month of the end of each quarter: Q1 → 30 April; Q2 → 31 July; Q3 → 31 October; Q4 → 31 January. During the transitional phase, no financial payments are required — this is a reporting-only period designed to help importers build data collection systems. However, penalties for non-compliance (failure to report or inaccurate reporting) range from €10-50 per tonne of unreported emissions.

From 1 January 2026, importers must surrender CBAM certificates for each tonne of embedded emissions in their imported goods. The certificate price is based on the weekly average of EU ETS auction prices — this was approximately €55-80 per tonne of CO₂ in 2025, and the trajectory depends on EU climate policy. Importers can deduct any carbon price already paid in the country of origin (e.g., China's national ETS for the power sector, or the EU ETS if the goods originate from an ETS-linked country). The deduction requires documented proof of the carbon price paid. CBAM certificates are purchased through the CBAM Registry platform. The number of certificates required decreases over time as free EU ETS allowances are phased out (2026-2034 transition). By 2034, all CBAM-covered imports will need full certificate coverage with no free allowance offset.

Chinese exporters of steel and aluminium face a dual burden: existing EU anti-dumping duties (up to 75.8% for certain steel products) plus the new CBAM carbon cost. To prepare: (1) Obtain verified emissions data from your production facilities — CBAM requires actual embedded emissions data, not default values (defaults are punitive and set at the average of the worst-performing 10% of EU installations); (2) Register in the CBAM Transitional Registry and start quarterly reporting immediately; (3) Document any carbon price paid under China's national ETS (currently covers power generation, expanding to steel and aluminium); (4) Work with EU importers to ensure they have the data needed for CBAM declarations; (5) Consider investing in lower-carbon production processes (electric arc furnaces, hydrogen-based reduction) to reduce future CBAM liability. The EU importer is legally responsible for CBAM compliance, but they will pass costs back to the exporter through pricing negotiations.

Penalties vary by type of non-compliance: (1) Failure to submit a CBAM report during the transitional phase: €10-50 per tonne of unreported embedded emissions, with a minimum penalty of €500; (2) Submitting an inaccurate or incomplete report: same range, plus the competent authority may require corrective submission within 30 days; (3) In the definitive phase, failure to surrender sufficient CBAM certificates: excess emissions are charged at €100 per tonne of CO₂ (plus the obligation to purchase the missing certificates); (4) Failure to register as an authorised CBAM declarant when required: member states may impose administrative penalties and suspend importation of the affected goods. Repeated non-compliance can result in the importer being blacklisted from the CBAM system. Member states are responsible for enforcement, and penalty levels may vary.