CBAM 2026: What Commodity Exporters Must Know
The EU Carbon Border Adjustment Mechanism enters full enforcement in January 2026. Here is what every exporter of steel, aluminum, cement, fertilizers, and hydrogen needs to prepare.
What is CBAM?
The Carbon Border Adjustment Mechanism (CBAM) is the European Union's carbon tariff on imports of carbon-intensive goods. It is designed to prevent "carbon leakage" — the practice of relocating production to countries with weaker climate regulations to avoid EU carbon costs.
From January 2026, importers of the following goods into the EU must purchase CBAM certificates equal to the carbon price that would have been paid under the EU Emissions Trading System (ETS):
- Cement (clinker and finished cement)
- Steel and iron (including rebar, billets, wire rod)
- Aluminum (primary and secondary, including alloys)
- Fertilizers (urea, ammonia, nitric acid, DAP, MAP)
- Electricity
- Hydrogen
How is the CBAM Certificate Price Calculated?
The CBAM certificate price is linked to the weekly average EU ETS carbon price (currently trading at €50–70 per tonne CO2). The calculation is straightforward:
If the exporting country has its own carbon pricing mechanism (e.g., Turkey's ETS, which launched in 2024), that amount is deducted from the CBAM liability. Countries with no carbon pricing pay the full EU ETS price.
Transitional Phase vs Full Implementation
2023–2025 (Transitional): Importers were required to report embedded emissions quarterly but did not pay. This phase was for data collection and system testing.
From January 2026 (Full): Importers must purchase and surrender CBAM certificates annually. Non-compliance results in penalties of €100 per tonne of unreported CO2.
Impact on Key Commodity Flows
Steel (Rebar, Billets): Turkish steel exports to the EU — one of the largest trade flows — face significant CBAM costs. Turkish electric arc furnace (EAF) steel has lower embedded emissions than blast furnace steel, but still carries approximately 0.8–1.2 tonnes CO2 per tonne of steel. At €60/tonne ETS, this adds €48–72/MT to the cost of Turkish rebar entering the EU.
Fertilizers (Urea, DAP): Ammonia-based fertilizers are highly carbon-intensive. Urea production emits approximately 2.5 tonnes CO2 per tonne of product. Russian and Middle Eastern urea exporters face the highest CBAM exposure due to their gas-intensive production processes.
Aluminum: Primary aluminum from coal-powered smelters (China, India) carries 10–20 tonnes CO2 per tonne of metal. Hydropower-based aluminum (Norway, Iceland) carries less than 1 tonne CO2/tonne — a massive competitive advantage under CBAM.
What Exporters Should Do Now
- Calculate your embedded emissions using the GHG Protocol methodology or EU Implementing Regulation 2023/1773.
- Document your production process — energy sources, fuel types, process emissions — for each product category.
- Engage with EU importers early — they need your emissions data to file CBAM declarations.
- Explore decarbonization options — switching to renewable energy, improving energy efficiency, or obtaining verified carbon credits in your home country (deductible from CBAM).
- Monitor Turkey's ETS — if Turkey's carbon price reaches EU ETS levels, Turkish exporters may be fully exempt from CBAM.
WorldwideTradeX CBAM Advisory
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