CBAM: The Definitive Period and What Importers Must Do

The carbon border adjustment mechanism in 2026: the short answer

The EU's carbon border adjustment mechanism (CBAM) entered its definitive period on 1 January 2026. Importers of iron and steel, aluminium, cement, fertilisers, hydrogen and electricity covered by Regulation (EU) 2023/956 must now hold the status of authorised CBAM declarant, unless they stay below the new de minimis threshold of 50 tonnes net mass per year introduced by the simplification Regulation (EU) 2025/2083. The first annual CBAM declaration for 2026 imports is due by 30 September 2027, CBAM certificates will be sold on a common central platform from 1 February 2027, and certificates corresponding to 2026 emissions must be surrendered by 30 September 2027.

For German importers, the competent authority is the German Emissions Trading Authority (Deutsche Emissionshandelsstelle, DEHSt) at the Federal Environment Agency. Customs authorities check at import whether the importer is authorised or covered by the de minimis exemption. The financial impact grows over time as free allocation under the EU Emissions Trading System (EU ETS) is phased out for the CBAM sectors.

Key dates of the carbon border adjustment mechanism

The simplification regulation was adopted on 8 October 2025 and published in the Official Journal on 17 October 2025. It was part of the Commission's first omnibus simplification package and aimed to reduce the burden for small importers while keeping the environmental objective.

The 50-tonne de minimis threshold

Under the new Article 2a of the CBAM Regulation, an importer is exempt from CBAM obligations where the net mass of imported goods in a calendar year does not cumulatively exceed 50 tonnes. The threshold applies to the total net mass of goods under all CN codes aggregated per importer and per year. Electricity and hydrogen are not covered by the mass-based threshold, because their trade patterns differ. Importers relying on the exemption declare it in the customs declaration. The Commission assesses the threshold each year on the basis of import data and can adjust it by delegated act.

The threshold works as a cliff edge: if an importer exceeds 50 tonnes during the year, it becomes subject to all obligations for all embedded emissions in all goods imported in that calendar year, not only for the excess (Article 2a(2)). Importers that expect to exceed the threshold must apply for authorisation in advance. Importers that exceed it without authorisation face penalties, although the amended Regulation provides for lower penalties where the threshold is exceeded only slightly or where an application was pending.

Authorised declarants under the carbon border adjustment mechanism

Only authorised CBAM declarants may import CBAM goods above the threshold. The application is submitted through the CBAM registry to the competent authority of the Member State of establishment, in Germany the DEHSt. The authority checks, among other things, the applicant's compliance record, financial and operational capacity and, in certain cases, requires a guarantee. Indirect customs representatives can act as declarants for importers in some cases.

Importers that had applied by 31 March 2026 were allowed to continue importing provisionally until the authority decides (Article 17(7a)). If the application is refused, the authority determines the emissions embedded in goods imported in the meantime, by reference to default values, and the importer must surrender the corresponding certificates. Applicants should therefore respond quickly to queries and keep their application complete.

Ongoing obligations under the carbon border adjustment mechanism

• Annual declaration. By 30 September each year, starting in 2027 for 2026, authorised declarants submit a CBAM declaration covering quantities of goods, embedded emissions, verification and carbon prices paid abroad.
• Verification. Where actual emissions are used, they must be verified by an accredited verifier. Otherwise, default values apply, which may be less favourable.
• Purchase and surrender of certificates. Certificates are bought on the common central platform from 1 February 2027 and surrendered by 30 September for the previous year. The price of certificates for 2026 emissions reflects the quarterly average EU ETS auction price of the quarter of importation (Article 21(1a)); later the weekly average applies.
• Quarterly holding requirement. From 2027, declarants must hold certificates corresponding to at least 50 % of embedded emissions in goods imported since the start of the year at the end of each quarter (Article 22(2)).
• Deduction for carbon prices paid. A carbon price effectively paid in the country of origin can be deducted, subject to evidence.

Failure to surrender certificates by 30 September triggers a penalty equal to the EU ETS excess emissions penalty for each missing certificate (Article 26(1)). Where the shortfall results from incorrect information provided by an operator, verifier or certifier, the authority may reduce the penalty (Article 26(1a)).

Supply contracts and cost allocation

The carbon border adjustment mechanism creates a new cost that must be allocated in supply chains. Importers should review purchase contracts with non-EU suppliers for:

• obligations to provide actual emissions data, in the required format and verified by an accredited verifier;
• access rights for verifiers to production sites;
• price adjustment clauses passing on CBAM costs or sharing them;
• evidence of carbon prices paid in the country of origin;
• liability for incorrect data, including indemnities for penalties;
• termination rights if a supplier fails to cooperate.

Downstream, EU customers of importers will want to know how CBAM costs are calculated and passed on. Clear contractual mechanisms reduce disputes. Where long-term contracts were concluded before CBAM costs became foreseeable, parties may need to renegotiate; whether German law allows an adjustment for changed circumstances under § 313 BGB depends on the contract's risk allocation and is uncertain, so express clauses are preferable. Framework agreements and price lists should be updated before the first certificate purchases in 2027. See also our guidance on commercial contracts.

Governance and internal processes

Compliance with the carbon border adjustment mechanism touches several functions: purchasing, customs, finance, sustainability and legal. Companies should appoint a responsible owner, define who monitors the 50-tonne threshold, who collects and checks supplier data, who manages certificate purchases and who signs off the annual declaration. Internal controls should be documented, because the authority and the Commission can review declarations after submission and penalties apply per missing certificate. Management should receive regular reports on volumes, expected costs and open applications, and the finance function should account for certificate obligations in budgets and, where required, in financial statements.

Groups with several importing entities in different Member States face additional complexity, because authorisation is granted per declarant by the competent authority of the Member State of establishment. Centralising imports in one entity can simplify compliance but has customs, tax and contractual consequences that should be assessed before restructuring flows.

Free allocation phase-out and financial impact

The carbon border adjustment mechanism is designed to mirror the EU ETS. As EU producers in the CBAM sectors gradually lose free allocation, the CBAM obligation for imports rises correspondingly: the number of certificates to be surrendered is adjusted to reflect the free allocation that EU producers still receive. In the first years, the financial burden is therefore limited, but it increases each year until free allocation ends. Companies should model their expected CBAM costs over several years, based on import volumes, emissions intensity and expected EU ETS prices, and include them in sourcing decisions.

Illustration: a hypothetical German machinery manufacturer imports 400 tonnes of steel components from Asia each year. It applied for authorised declarant status in early 2026 and imports provisionally while the DEHSt decides. It asks its suppliers for verified actual emissions data, because default values would lead to higher certificate costs, and negotiates a price adjustment clause. It also prepares its first CBAM declaration, due by 30 September 2027, and budgets for certificate purchases from February 2027.

Emissions data and default values

Embedded emissions can be determined on the basis of actual emissions data from the installation or by default values published by the Commission. Default values are set conservatively, which in many cases makes actual data more favourable but also more demanding: suppliers must monitor emissions according to the EU methodology and have them verified by an accredited verifier. Accreditation of verifiers and the guidance on verification were still developing during 2026, so importers should engage with suppliers early. For 2026 imports, default values without the mark-up may be used for the quarterly holding requirement (Article 22(2)).

Customs and CBAM compliance are closely linked. The customs declaration must indicate whether the importer is authorised or relies on the de minimis exemption, and customs authorities share data with the CBAM registry. Errors in tariff classification can lead to goods being wrongly treated as outside or inside the scope. Companies should therefore involve their customs function and their customs representatives in CBAM processes and check classifications of borderline goods.

The Commission has also announced further developments, including a possible extension to certain downstream products and anti-circumvention measures. Their status should be checked before relying on the current scope, as the Regulation empowers the Commission to adjust the system. Companies in sectors adjacent to the covered goods should monitor these developments closely.

Finally, CBAM is relevant in M&A transactions and in financing. Buyers of import-dependent businesses should check whether the target holds authorised declarant status, whether its emissions data are reliable and how CBAM costs are reflected in its contracts and forecasts. Lenders may ask for this information as part of their due diligence and sustainability assessments.

How TRW & Co helps with CBAM

We advise importers and industrial groups on the carbon border adjustment mechanism: scope and de minimis analysis, applications for authorised declarant status, customs and penalty questions, and proceedings before the DEHSt. We draft and renegotiate supply contracts to secure emissions data and allocate costs, and we assess CBAM in transactions. Our work connects with our foreign trade and energy and infrastructure practices. See also tariffs and contract implications. To discuss your CBAM exposure, contact us.