The short answer. The EU Carbon Border Adjustment Mechanism (CBAM) entered its definitive, paid phase on 1 January 2026. The trial phase, when companies only reported, is over. If you export iron and steel, aluminium, cement, fertilisers, hydrogen or electricity to the European Union, your EU buyers now pay for the carbon emissions embedded in those goods, and they need verified emissions data from you to avoid being charged on higher default values. The first CBAM certificate sales open on 1 February 2027, and the first annual declaration, covering 2026 imports, is due by 30 September 2027. The measurement and verification work needs to start in 2026, not 2027.
What changed on 1 January 2026?
CBAM is the EU's tool to stop "carbon leakage," the risk that EU climate rules simply push production to countries with weaker rules. It puts a carbon price on selected imports equal to the price EU producers pay under the EU Emissions Trading System (EU ETS).
From October 2023 to December 2025, CBAM ran as a transitional phase. Importers only had to report the emissions embedded in covered goods. There was no money involved. That grace period ended on 31 December 2025.
Since 1 January 2026, CBAM is in its definitive regime. Covered imports now carry a financial obligation. In practice that means EU importers must hold a status called "authorised CBAM declarant," report the embedded emissions of what they import, and eventually buy and surrender CBAM certificates to cover those emissions. The price of a certificate follows the EU ETS carbon price, calculated as a quarterly average in 2026 and a weekly average from 2027 onwards.
For a producer in Singapore, Malaysia, Indonesia, India or the wider region, the headline is simple: your product just became more expensive for your EU customer unless you can prove its carbon footprint is low, and prove it with verified data.
Does CBAM apply to you?
CBAM covers six sectors: iron and steel, aluminium, cement, fertilisers, electricity and hydrogen, plus a range of downstream products made from them (for example many steel and aluminium articles). If you do not make or export any of these to the EU, CBAM does not apply to you today. The European Commission has said it will assess whether to extend the scope to more sectors in early 2026, so this list is under review, not fixed forever.
A key point that trips people up: the legal obligation sits with the EU importer, not with you. The company that files the CBAM declaration and buys the certificates is the EU-based buyer. As a non-EU exporter, you have no direct filing deadline with Brussels.
But that is not the same as being unaffected. Your EU customer cannot calculate their CBAM bill without knowing the emissions embedded in your goods. If you cannot give them verified figures, they must use EU default values, which are deliberately set high. A higher CBAM bill on your product makes it less competitive against lower-carbon rivals. So the obligation is legally theirs, but the commercial pressure lands on you.
The 50-tonne threshold. A simplification adopted in 2025 introduced a single mass-based "de minimis" threshold: an importer bringing in 50 tonnes or less of covered goods per year is exempt. The European Parliament states this removes about 90% of importers from the system, mostly small businesses, while still capturing roughly 99% of the emissions from iron, steel, aluminium, cement and fertiliser imports. In plain terms: the small players are out, but almost all the actual carbon, and therefore almost all large industrial exporters, stay firmly in scope.
What are the key CBAM deadlines?
These are the definitive-period milestones that decide when the money moves:
- 31 December 2025: the transitional, report-only phase ends.
- 1 January 2026: the definitive period begins, and emissions from 2026 imports now carry a cost.
- By 31 March 2026: EU importers should apply for authorised CBAM declarant status. Applying by this date lets imports continue while the request is assessed.
- 1 February 2027: CBAM certificate sales open, and importers can start buying certificates for 2026 emissions.
- 30 September 2027: the first annual CBAM declaration, covering 2026 imports, is due.
The gap between the two years matters. Your product's 2026 carbon footprint is being priced now, but the paperwork and payment happen in 2027. That is exactly why the data work cannot wait: the emissions being counted are this year's.
(Dates reflect the CBAM regulation as amended in 2025. Confirm specifics against the European Commission's official CBAM pages before making commercial decisions.)
Default values versus your actual emissions: the data that sets the cost
This is the part that decides how much CBAM costs your customers, and how competitive you stay.
When an EU importer declares the emissions in your goods, they can use one of two things: default values set by the EU, or your actual, verified emissions data.
Default values are the fallback for importers who cannot get real data from the producer. To discourage over-reliance on them, the EU adds a mark-up on top of most default values: 10% in 2026, rising to 20% in 2027 and 30% from 2028. In other words, if your buyer has to guess your footprint using EU defaults, they pay a penalty premium, and they will pass that cost back to you.
Actual data works the other way. If you can show that your production is genuinely lower-carbon than the default assumption, and back it with verification, your customer's CBAM bill falls. Actual emissions data must be measured at the installation and production-process level and verified by an accredited third party.
The choice between the two comes down to four things:
- Who provides the data: the EU sets default values, while you, the producer, provide the verified actual data.
- Effort required from you: none for default values; for actual data you must measure, allocate and verify your emissions.
- Cost effect for your buyer: default values are higher and carry a rising mark-up on most values (10% in 2026, 20% in 2027, 30% from 2028), while verified actual data reflects your real footprint, which is often lower.
- Your competitiveness: default values weaken it, especially if you run efficient plants, while verified data protects it and rewards real decarbonisation.
There is one more lever. If a carbon price has already been paid in the country where the goods were produced, that amount can be deducted from the CBAM charge. So a domestic carbon price is not purely a cost; under CBAM it can reduce what your EU customer owes.
What exporters outside the EU actually need to do
You will not file with the EU, but you do need to become the reliable source of your own carbon numbers. In practice that means:
- Confirm your exposure. Check whether your products fall under the six covered sectors and their downstream product codes, and identify which of your goods go to EU customers.
- Measure embedded emissions at the installation level. CBAM wants emissions tied to specific production processes and allocated to specific goods, not a company-wide average. This covers direct (Scope 1) and, for some goods, indirect (Scope 2) emissions from the electricity you use.
- Use consistent, defensible emission factors and methodology. Your numbers need to hold up against EU rules and, eventually, an auditor.
- Arrange third-party verification. Actual data must be verified by an accredited body to be usable in place of default values.
- Give your EU customers a clean data package. The exporters who make it easy for buyers to use real, verified figures will keep their EU market access and their margins. The ones who cannot will be priced on default values plus the mark-up.
- Track a carbon price you already pay. If your jurisdiction charges you a carbon price, document it, because it can reduce the CBAM charge.
A practical CBAM readiness checklist
- We know which of our products are CBAM-covered and which go to the EU.
- We can measure emissions per installation and per production process, not just company-wide.
- We have a documented, consistent methodology and emission factors.
- We have identified an accredited third-party verifier.
- We can hand EU customers verified emissions data in the format they need.
- We have documented any carbon price already paid at home.
- We have briefed our EU buyers on our numbers ahead of the 2027 deadlines.
How CBAM fits into your wider ESG reporting
CBAM does not stand alone. The same installation-level, verifiable emissions data it demands is the data behind your Scope 1, 2 and 3 reporting, your climate disclosures under standards such as the ISSB (International Sustainability Standards Board) or the EU's CSRD (Corporate Sustainability Reporting Directive), and your customers' supply-chain carbon questions. Building it once, properly, serves all of them.
This is the practical case for treating carbon accounting as a system rather than a spreadsheet. Your numbers are only as strong as the emission factors and methodology behind them. Platforms such as XcelGreen exist to calculate emissions against Greenhouse Gas (GHG) Protocol-aligned factors, keep an audit trail, and produce validated outputs, which is the same discipline CBAM verification requires. The point is not the tool; it is that CBAM rewards companies that can produce defensible, verifiable emissions data on demand, and penalises those who cannot.
The bottom line
CBAM is no longer a future rule or a reporting drill. Since 1 January 2026 it puts a real price on the carbon in your exports, and the cheapest way through it is to prove your footprint with verified data before your buyers are forced onto default values in 2027. The exporters who prepare this year keep their EU market access on their own numbers. The ones who wait will be priced on someone else's.
XcelGreen helps manufacturers and exporters across ASEAN and India calculate embedded emissions against Greenhouse Gas (GHG) Protocol-aligned factors and produce audit-ready outputs. See how it works for manufacturing, or explore ESG reporting and carbon.
Frequently asked questions
Is CBAM a tax I have to pay as a non-EU exporter?
Not directly. The legal duty to declare emissions and buy CBAM certificates sits with the EU importer. But because your carbon footprint sets the size of their bill, the cost pressure is passed back to you commercially.
Which products does CBAM cover?
Iron and steel, aluminium, cement, fertilisers, electricity and hydrogen, plus many downstream products made from them. The European Commission said it would assess extending the scope in early 2026, so the list may grow.
What is the 50-tonne threshold?
An importer bringing in 50 tonnes or less of covered goods per year is exempt. This removes most small importers (about 90%) while still covering about 99% of the emissions from steel, aluminium, cement and fertiliser imports.
What are the main CBAM deadlines?
The definitive period began on 1 January 2026. CBAM certificate sales open on 1 February 2027, and the first annual declaration, for 2026 imports, is due by 30 September 2027.
Why do default values cost more?
Default values are the EU's fallback when real producer data is missing, and most of them carry a mark-up that rises over time (10% in 2026, 20% in 2027 and 30% from 2028). Supplying verified actual data lets your buyer avoid that premium.
Does a carbon price I already pay at home help?
Yes. If a carbon price was paid in the country of production, that amount can be deducted from the CBAM charge, reducing what your EU customer owes.
What is the single most useful thing to do now?
Start measuring your emissions at the installation and process level and arrange third-party verification, so your EU customers can use your real numbers instead of default values before the 2027 deadlines.
Sources: European Commission, Carbon Border Adjustment Mechanism (definitive regime); European Parliament, CBAM simplification (5 September 2025). CBAM's amended timeline and default-value rules are set out in Regulation (EU) 2025/2083 and Implementing Regulation (EU) 2025/2621. Confirm exact dates before relying on this article as formal compliance advice.