The European Union is changing the game for international trade with its new Carbon Border Adjustment Mechanism (CBAM). If your business imports goods into the EU, you need to understand what’s coming.
What Is CBAM?
At its heart, CBAM is pretty simple: companies importing certain goods into the EU will need to pay for their carbon emissions. Think of it as a carbon tax on imports. The EU already makes its own companies pay for their emissions, and now they want to level the playing field with foreign companies.
When Is This Happening?
Right now, we’re in what’s called the transitional period. Until the end of 2025, you only need to report your emissions – no payments required. But from 2026, the full system kicks in. That’s when you’ll need to start buying special certificates to cover your emissions.
Which Products Are Affected?
For now, CBAM focuses on five key products: cement, iron and steel, aluminum, fertilizers, and electricity. These were chosen because they create a lot of carbon emissions during production. More products might be added later, but for now, these are the ones you need to watch.
Why Should You Care as an Importer in EU?
If you’re importing these products into the EU, CBAM will directly affect your costs. Even if you’re not, this could still impact your business. Your suppliers might raise prices to cover their CBAM costs, or your competitors might switch to cleaner production methods to avoid high CBAM fees.
Why Should You Care as an Exporter to the EU?
If you sell these products to EU countries, you’ll need to track and report how much carbon you create when making your products.You might need to change how you make things. Using cleaner energy or more efficient processes could help you pay less in carbon taxes. If you don’t adapt, your products might become too expensive to sell in the EU.
Your EU customers will also want to know about your carbon emissions. They’ll need this information for their own CBAM reports. Having good data could make you a preferred supplier.
Think of CBAM as both a challenge and an opportunity. While it means extra work now, making your production cleaner could give you an edge over competitors who don’t adapt quickly.
Need Help Getting Started with CBAM?
Whether you’re just starting to understand CBAM’s implications for your business or need comprehensive support in preparing for compliance, our team is here to help. At CMetrics, we specialize in helping businesses navigate the complexities of CBAM and emissions tracking.
Ready to take the first step? Reach out to me at isco@c-metrics.com or book a call to discuss how we can help you prepare for CBAM.
