The Carbon Border Adjustment Mechanism (CBAM), introduced in October 2023, is a regulation introduced by the European Union (EU) to fight climate change. It ensures that products imported into the EU face the same carbon pricing as those produced inside the EU. In short, if you export to Europe, you’ll now need to show how much carbon your product emits and possibly pay a carbon fee if it’s too high.
What is Carbon Pricing?
It is a market-based strategy for lowering global warming emissions. The aim is to put a price on carbon emissions, an actual monetary value, so that the costs of climate impacts and the opportunities for low-carbon energy options are better reflected in the production and consumption choices.
What is Carbon tax?
A carbon tax is a fee imposed on the burning of carbon-based fuels (coal, oil, gas). It is the core policy for reducing and eventually eliminating the use of fossil fuels whose combustion is destabilizing and destroying our climate.
What is CBAM?
CBAM works like a carbon tax on imports. It covers high-emission industries such as:
From 2026, exporters to the EU must report the carbon emissions associated with their products. If your country does not have its own carbon pricing system, you may need to pay for the emissions through CBAM certificates.
How will exporters be affected?
The transitional phase of the CBAM runs from 1 October 2023 to 31 December 2025. During this period, importers of goods like cement, steel, aluminium, fertilizers, electricity, and hydrogen are required to report the greenhouse gas emissions embedded in their imports, but no payments or CBAM certificates are needed yet. Reporting can be done using EU-approved methods, third-country systems, or default values starting in 2025. The European Commission has provided tools like a Transitional Registry, IT systems, and detailed guidance to support both EU importers and non-EU producers. This phase acts as a pilot to help all stakeholders prepare before financial obligations begin in January 2026.
5 Steps to Comply with CBAM
CBAM and Omnibus
While we read about CBAM, you cannot skip the word Omnibus, as it refers to the legislative package used to make necessary adjustments in various EU regulations to support the effective implementation of CBAM. The Omnibus package helps align related laws such as customs procedures, emissions reporting rules, and updates to the EU Emissions Trading System (ETS) ensuring that all legal and technical frameworks work together smoothly. This comprehensive approach allows the EU to operationalize CBAM effectively and integrate it into its broader climate policy objectives.
Latest CBAM Updates (2025)
The EU recently announced plans to use CBAM revenues to compensate exporters like steel and aluminium producers, helping them stay competitive as free carbon allowances phase out. A new agreement simplifies CBAM rules by introducing a 50-ton/year exemption for small importers, excluding certain downstream products, and streamlining reporting. The EU has also launched a public consultation to possibly expand CBAM to include more finished goods. CBAM is undergoing significant refinement before its full rollout in 2026, aimed at facilitating implementation, protecting EU industry, expanding coverage, and engaging international stakeholders.
How Can ARRO Help Exporters with CBAM?
At CeroED, we provide exporters with the tools and support they need to meet CBAM requirements effectively and confidently.
Final Thought
CBAM is not just a regulatory hurdle, it’s a wake-up call for global exporters to align with climate goals. Companies that start early will not only avoid penalties but also gain an edge in sustainable trade.
Need help with CBAM compliance? Connect us today @ info@ceroed.com