Environmental - CBAM

CBAM certificates, are units that importers must purchase to cover embedded emissions of goods brought into the EU. Their price is tied to the EU ETS carbon allowance price (EU Allowances or EUAs), and calculated from average auction prices over a quarter (for 2026) or weekly from 2027). Companies must calculate and report embedded emissions, then buy CBAM certificates via the CBAM registry from Feb 2027 to meet compliance. Knowing how CBAM certificates are calculated can allow importers to use the EUA carbon market as a "hedge" to lock in product margin and integrate carbon pricing into global supply chain strategies.

The Carbon Border Adjustment Mechanism (CBAM) is the EU’s new climate policy tool designed to prevent carbon leakage by applying a carbon price to imports of carbon-intensive goods like steel, cement, aluminium, fertilisers, electricity and hydrogen. CBAM aligns with the EU Emissions Trading System (EU ETS), requiring importers to purchase CBAM certificates that reflect embedded emissions. CBAM meaning is crucial for businesses trading with Europe, as compliance ensures fair competition and drives global decarbonisation.

CBAM started with a transitional reporting phase in October 2023, requiring quarterly CBAM reporting of embedded emissions for covered products. From January 2026, full CBAM compliance obligations begin, meaning importers must buy and surrender CBAM allowances. This timeline mirrors the EU ETS framework. Understanding when CBAM starts is essential for global exporters, manufacturers, and importers supplying into Europe, as compliance will directly impact trade costs, procurement strategies, and carbon risk management in international supply chains.

CBAM is directly linked to the EU Emissions Trading System (EU ETS), Europe’s primary carbon pricing mechanism. While the EU ETS applies to domestic producers, CBAM ensures foreign imports face the same carbon costs, creating a level playing field. Importers must purchase CBAM allowances based on the average ETS carbon price. For companies, knowing how CBAM and ETS connect is critical for carbon cost forecasting, compliance planning, and ensuring competitiveness in European industrial supply chains.

CBAM covers carbon-intensive imports most at risk of carbon leakage, including iron and steel, aluminium, cement, electricity, fertilisers and hydrogen. These sectors were chosen for their high emissions profiles and trade exposure. Businesses importing covered goods into the EU must report emissions data and, from 2026, surrender CBAM certificates. Understanding which products CBAM covers is essential for manufacturers, exporters, and traders adapting procurement strategies, aligning with sustainability requirements, and ensuring future EU market access under CBAM rules.

Tim Atkinson

Head of Carbon

"From 2026 importers must purchase EU CBAM Certificates to cover embedded emissions of goods brought into the EU. The certificate price is tied to the EU ETS carbon allowance price (EU Allowances or EUAs), and calculated from average EUA auction prices over a quarter (for 2026) or weekly from 2027.

Companies must calculate and report embedded emissions in eligible imported goods, then buy CBAM certificates to meet compliance.

Knowing how CBAM certificates are calculated and forecasting expected requirements, can allow importers to use the EUA carbon market as a "hedge" to lock in product margin and integrate carbon pricing into global supply chain strategies.

Get a clear pathway to ensure your continued commercial success as CBAM comes into effect, with CFP Energy."

The solution CFP Energy provides

Industries will face significant cost pressures from CBAM, compounded by rising production costs in Europe driven by other policies and the global economic climate.

An Award-winning team 

Market-leaders as recognised in the Environmental Finance Awards

Flexible financial solutions

Bespoke and commercially-balanced strategies to manage your CBAM exposure

Supply chain support

Decarbonise your supply chain with biofuels or carbon credits to reduce emissions elsewhere.

CBAM timeline

Jan 2026

EC report due by the end of 2025 to assess whether additional sectors will be included, as well as potential product scope expansions.

Full CBAM compliance obligation begins.

Importers must obtain CBAM authorisation before goods can enter the EU.

Feb 2027

CBAM certificate sale launches on the EU CBAM registry.

Sep 2027

Due date to submit the first annual CBAM declaration and surrender the first CBAM certificates for 2026 emissions.

Nov 2027

Final chance to request refund on excess CBAM

certificates bought for the current year.

Why CFP Energy for CBAM support?

Regulated, experienced counterparty

Risk-managed delivery backed by a licensed, financially robust firm.

Industry-specific expertise

Our team operates across the manufacturing, aviation and maritime sectors, providing specialist support across each industry.

Track record in carbon delivery

15+ years structuring and settling EUA trades across compliance schemes, now applied to CBAM.

First-mover advantage

First-mover access to attractive prices while competition is limited.

CBAM

CBAM compliance fees are rapidly approaching

What are CBAM certificates and how do they work?

What does CBAM mean in the EU carbon market?

When does CBAM start and what are the compliance phases?

How is CBAM linked to the EU ETS?

Which products are covered under CBAM?