In one sentence
The legal obligor under the CBAM (Carbon Border Adjustment Mechanism) is the EU importer, not the Chinese exporter — but since the definitive regime began in 2026, every shipment of steel, aluminium, cement, fertilisers, hydrogen and many downstream articles entering the EU needs embedded emissions data to clear customs. The exporter's real job is threefold: ① confirm by CN/HS code whether the goods are on the list (downstream articles count); ② prepare verified actual emissions data so buyers don't declare with the 30%-marked-up defaults and push the cost back to you; ③ write CBAM cost-sharing clauses into contracts. In 2026 there is only reporting, no purchases — certificate sales start 1 February 2027 and the first annual declaration with surrender is due 30 September 2027 — but with free allocation phasing out steeply toward 2030, data capability has to be built now.
1. What the CBAM is: the logic in 30 seconds
The CBAM is the EU's answer to carbon leakage: EU factories pay for every tonne of CO₂ inside the Emissions Trading System (EU ETS), so importing high-carbon goods from countries without a carbon price would simply route around EU carbon costs. The CBAM's fix: make imported goods "buy the ticket" for the emissions embedded in their production, at EU ETS prices.
Mechanically: the EU importer (an authorised declarant) buys CBAM certificates matching the shipment's embedded emissions. Certificate prices track the EU ETS auction average, set quarterly (around €75.36/t in Q1 2026 and €75.28/t in Q2 2026). The legal basis is Regulation (EU) 2023/956 (in force May 2023); the simplification package Regulation (EU) 2025/2083 (the "Omnibus", in force 20 October 2025) streamlined the rules; and Implementing Regulation (EU) 2024/2456 governs definitive-period calculation, verification and declarations.
In plain terms: the EU ETS is the carbon bill for EU factories — the CBAM extends that bill to imported goods. From 2026, carbon cost is a line item in EU-facing quotes that will not go away.
2. Scope: six sectors and the misreadings that catch exporters out
CBAM covers six sectors. Whether a good is in scope must be checked by CN code (first 6 digits align with HS) against Annex I of the regulation — never by product name:
| Sector | Main code ranges | Typical China exports | Note |
|---|---|---|---|
| Iron & steel | CN ch. 72 plus many ch. 73 articles | Billets, HRC/cold-rolled, galvanised, stainless, rebar, structures 7308, bolts/nuts 7318, tubes & fittings | Widest coverage; downstream articles most often missed |
| Aluminium | CN ch. 76 plus downstream articles | Unwrought aluminium, sheet/strip/foil 7606/7607, profiles, aluminium articles | High indirect emissions make verified data most valuable |
| Cement | CN 2523 etc. | Portland cement, clinker, white cement | Mostly clinker and bagged cement |
| Fertilisers | CN 2808/2814/2834/3102/3105 etc. | Urea, ammonium nitrate, NPK compounds | Ammonia and nitrogen fertiliser makers watch closely |
| Hydrogen | CN 2804.10 | Pure hydrogen | Green hydrogen's advantage is explicit |
| Electricity | CN 2716 | — | Physical power imports; rarely relevant to Chinese shippers |
The three misreadings that cost Chinese exporters the most:
- Downstream articles count. For steel and aluminium the list goes far beyond raw material: fasteners, structures, tubes, sheet, foil and profiles are all in. Hardware, building-material and aluminium-product exporters are not exempt just because "only steel mills are affected".
- The 50-tonne exemption protects the EU importer, not you. From 2026, importers bringing in under 50 tonnes of CBAM goods per year are exempt (covering ~90% of the smallest importers). The test runs on the buyer's total annual tonnage — an exporter cannot assume it away.
- The scope is still expanding. The European Commission has tabled proposals to bring further steel and aluminium downstream articles into scope (from 2027) alongside anti-circumvention measures; legislation is in progress — review the list quarterly.
3. Who owes what: the EU importer, the DDP seller, and the Chinese factory
The declaration and payment obligor is the importer established in the EU holding authorisation as an authorised CBAM declarant from its national competent authority. The start of the definitive regime came with a buffer: importers that had applied could keep importing, but that buffer ended 31 March 2026 — since 1 April 2026 unauthorised declarants cannot import CBAM goods at all.
That creates a three-way split of duties:
- EU buyer (importer): obtains authorised declarant status, opens an account in the CBAM Registry, files the annual CBAM declaration, buys and surrenders certificates, and carries the penalty risk.
- Chinese exporter (factory/trader): supplies embedded emissions data per shipment by CN code — ideally a verified actual-data report — and keeps production records for audit. Not providing data has a price (see default values below).
- Non-EU companies: cannot be declarants themselves; they act through an EU-established indirect customs representative that holds the authorisation.
DDP warning: under DDP the seller handles EU import clearance, so the seller's EU indirect customs representative typically becomes the CBAM declarant — compliance duties and certificate costs land on the DDP seller. Anyone selling DDP into the EU must confirm their representative's CBAM authorisation and re-quote DDP prices. See our DDP Shipping Guide and Incoterms 2020 guide.
Non-compliance is expensive: failing to surrender certificates on time can cost €100 per certificate; reporting failures run €10–50 per tonne of unreported emissions (member states set details); goods imported without authorisation can be refused release. This is precisely why EU buyers started asking Chinese suppliers for emissions data in bulk from 2026 — their deadlines and data gaps turn directly into fines.
4. The definitive-period timeline
| Date | What happens / what to do |
|---|---|
| 1 Oct 2023 – 31 Dec 2025 | Transitional period: quarterly CBAM reports, reporting only; the last quarterly report (Q4 2025) was due 31 January 2026 |
| 20 Oct 2025 | Simplification Regulation (EU) 2025/2083 in force: 50-tonne exemption, deferred certificate sales, lighter declaration rules |
| 1 Jan 2026 | Definitive regime starts: annual declarations replace quarterly reports; only authorised declarants (or applicants) may import |
| 31 Mar / 1 Apr 2026 | Authorisation buffer ends; from 1 April unauthorised declarants cannot import CBAM goods |
| Throughout 2026 | Data obligations only: record embedded emissions (actual or default) per import for the annual declaration; no certificate purchases yet |
| 1 Feb 2027 | CBAM certificate sales begin (covering 2026 imports); quarterly holding checkpoints apply thereafter |
| 30 Sep 2027 | First annual CBAM declaration + certificate surrender deadline (covering all 2026 imports) |
| 2026 – 2034 | EU ETS free allocation phases out and the CBAM surrender share rises in step (below), reaching 100% in 2034 |
Don't misread the calendar: nothing is purchased in 2026, but the quality of the 2026 data determines how much your buyer (or you, on DDP) pays at the first surrender in September 2027. Data records, verification and contract clauses all belong to 2026.
5. Embedded emissions: actual values vs default values
Embedded emissions are the direct emissions from producing the imported goods plus the indirect emissions from the electricity consumed. In the transitional period indirect emissions were mandatory only for cement and fertilisers; in the definitive period direct + indirect applies to all sectors — a major factor for coal-grid aluminium and steel, and a genuine cost advantage for low-carbon capacity.
In the definitive period the data source is either (or a mix):
- Actual values: measured and calculated by the producing plant per production process and verified by an accredited verifier under Implementing Regulation (EU) 2024/2456. Verification can be done annually per installation and product, covering the whole year's shipments — not per consignment.
- Default values: the EU's country- and product-specific fallback factors. Easy but costly — from 2026 default values carry a 30% mark-up (rising in later years) as a deliberate penalty to push the system toward actual data.
This is the real reason EU buyers are suddenly requesting "measured emissions data plus a verification report" from Chinese suppliers: the same shipment declared on marked-up defaults can cost far more in certificates than on verified actuals, and the difference will surface in purchase negotiations. For Chinese factories, a verified low-carbon data report is rapidly becoming a standard shipping document, like a quality inspection report.
System boundaries, the simple/complex goods rules (emissions in input materials), and the list of accredited verifiers follow Implementing Regulation (EU) 2024/2456 and Commission guidance. First-time reporters should engage a verifier with EU accreditation or ISO 14064 experience.
6. Modeling the cost: certificate price, phase-out factor, examples
6.1 Basic formula
Certificates due = embedded emissions (t CO₂) × CBAM phase-out factor − deductible carbon price paid in the country of origin
Certificate prices float with the quarterly EU ETS auction average (about €75.36/t in Q1 2026, €75.28/t in Q2 2026). The phase-out factor is the key variable: to avoid double protection, EU ETS free allocation shrinks as CBAM rises — in 2026 only 2.5% of emissions must be covered by certificates, then the share climbs:
| Year | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 |
|---|---|---|---|---|---|---|---|---|---|
| Surrender share | 2.5% | 5% | 10% | 22.5% | 48.5% | 61% | 73.5% | 86% | 100% |
6.2 Certificate cost per tonne of product
At a certificate price of €75/t with actual (verified) emission intensities — illustrative only; always model on your own verified data and the current quarter's price:
| Product (illustrative) | Embedded emissions (t CO₂/t) |
2026 cost (2.5%) |
2030 cost (48.5%) |
2034 cost (100%) |
|---|---|---|---|---|
| Primary aluminium (coal grid, direct+indirect) | ~16 | ~€30/t | ~€582/t | ~€1,200/t |
| Steel (BF-BOF route) | ~2.0 | ~€3.8/t | ~€73/t | ~€150/t |
| Steel (EAF route) | ~0.7 | ~€1.3/t | ~€25/t | ~€53/t |
| Cement | ~0.8 | ~€1.5/t | ~€29/t | ~€60/t |
Three takeaways: ① 2026 costs little (2.5%) — the real watershed comes around 2030, so long-term supply agreements need price-adjustment mechanisms mapped to the phase-out curve; ② the gap inside each industry widens — EAF vs BF-BOF steel, hydro-powered vs coal-powered aluminium differ by tens to over a thousand euros per tonne, so low-carbon capacity monetizes for the first time; ③ a carbon price paid at origin is deductible — China's national ETS has covered steel, cement and aluminium smelting since 2025, and allowance costs actually paid for domestic compliance can be claimed as a deduction by the EU declarant with proof. Keep the records.
7. The 2026 exporter action checklist
- Screen your codes first: run every EU-bound product against Annex I by CN/HS code — don't miss fasteners, profiles and foil. Classify anything uncertain (see our HS Code Lookup & Classification Guide).
- Check your buyers' authorisation: confirm each major EU customer holds authorised declarant status and clears the 50-tonne annual threshold. Without it their imports simply stop at the border.
- Start actual-data accounting: build a product carbon-footprint ledger by process, engage a qualified verifier for an annual installation+product report, and evaluate decarbonisation paths (green power, EAF/short-process routes).
- Put CBAM into contracts: agree the scope and timing of emissions data supply, how any default-vs-actual gap is shared, and how certificate costs (rising with the phase-out curve) pass through prices; for DDP, spell out declaration cooperation. Review alongside our destination clearance and DDU/DAP cost guide.
- Keep domestic carbon-price records: steel, cement and aluminium smelters should retain China ETS allowance surrender proof for deduction claims.
- Don't model costs in isolation: CBAM cost, China's rebate changes (see 2026 Export Tax Rebate Changes guide) and freight volatility belong in one pricing model, reviewed quarterly.
8. How Mighty International can help
Carbon accounting and CBAM filings are specialist work that we leave to accredited verifiers and advisors. What we own is keeping your goods moving into the EU:
- First-pass CBAM screening: send product names and declaration elements — our customs team checks them against the code list and our case history and responds within one business day.
- Document consistency control: the export declaration's product name, CN/HS code, quantity and weight feed directly into the EU import declaration; we keep both ends aligned so your buyer's filing has no surprises.
- Europe-bound logistics: FCL/LCL ocean freight (China–Northern Europe, Mediterranean and more) plus China-Europe rail intermodal — using logistics certainty to offset new compliance costs.
- Two-end coordination for DDP shipments: liaising with your EU customs broker and confirming the CBAM data flow so cargo doesn't sit at the terminal.
Not sure whether your product is a CBAM good?
Send us the product name, HS code, export weight and EU destination country — our customs team responds within one business day with a preliminary assessment, a document checklist, and Europe routing options.
Contact Us9. Official sources & filing systems
- European Commission CBAM official page (legislation, guidance, default values, FAQ — the authoritative source)
- Regulation (EU) 2023/956 — the CBAM base regulation (Annex I goods list)
- Regulation (EU) 2025/2083 — the Omnibus simplifications (50-tonne exemption, timeline changes)
- Implementing Regulation (EU) 2024/2456 — definitive-period calculation, verification and declaration rules
- CBAM Registry — the official system where EU importers apply for authorisation and buy, hold and surrender certificates, operated via national competent authorities
The rules keep moving (downstream scope extension and anti-circumvention proposals are in the legislative pipeline). This guide is current as of 28 September 2026 — always verify against the Commission's official page and the latest EUR-Lex texts before acting.
FAQ
Is my product covered by the CBAM, and how do I check?
Check against Annex I of Regulation (EU) 2023/956 by CN code (first 6 digits align with HS). CBAM covers cement, electricity, fertilisers, iron and steel, aluminium, and hydrogen — and for steel and aluminium it includes many downstream articles: bolts and screws (7318), steel structures (7308), tubes and fittings, aluminium sheet/foil and profiles are all listed. Similar names do not mean the same answer — match by code, and classify first when in doubt.
Is the CBAM obligation on the Chinese exporter or the EU buyer?
The legal obligor is the EU importer — the authorised CBAM declarant. Chinese exporters do not declare to the EU directly, but must supply embedded emissions data for each shipment; otherwise the buyer declares on marked-up defaults and the extra cost flows back down the chain. Under DDP, the EU indirect customs representative typically acts as declarant, so compliance and costs effectively sit with the DDP seller.
Do we need to buy CBAM certificates right away in 2026?
No. 2026 carries only a reporting obligation: certificate sales start 1 February 2027, and the first annual declaration with surrender (covering 2026 imports) is due 30 September 2027. But emissions data for every 2026 import must be recorded and declared annually — the work of supplying verified actual data cannot wait.
Can we just use default values? Why do EU buyers insist on measured emissions?
You can, but it costs more. Default values carry a 30% mark-up from 2026 (rising later) to incentivise actual data. Verified actual values usually come in well below the marked-up defaults, so EU buyers widely require verified data from Chinese suppliers to cut certificate costs.
Can a carbon price already paid in China be deducted?
Yes, a deduction can be claimed with proof of the carbon price actually paid in the country of origin (converted to euros, no double counting with free allocation). China's national ETS has covered steel, cement and aluminium smelting since 2025 — keep the allowance surrender records for the EU declarant's annual claim.
References & further reading
- European Commission CBAM official page and definitive-period guidance documents
- Related guides: HS Code Lookup & Classification Guide, DDP Shipping Guide, Incoterms 2020 Complete Guide, 2026 China Export Tax Rebate Changes
- Routing: China–Northern Europe route and International Rail (China-Europe Railway Express)
Disclaimer: This article is general knowledge only. The covered-goods list, default values, timelines and surrender shares are governed by the European Commission's official pages and the latest EUR-Lex texts; emissions accounting and verification follow Implementing Regulation (EU) 2024/2456 and accredited verifiers' opinions. For specific business decisions, combine this with professional carbon-compliance and legal advice.