# CBAM: what it is and who the EU mechanism affects

> CBAM is an EU mechanism that charges for the emissions embedded in imported goods. Who it affects, which goods it covers and what exporters need to know.

Source: https://7g.carbonplatform.asia/en/kb/what-is-cbam

CBAM (Carbon Border Adjustment Mechanism) is the European Union's mechanism under which an EU importer pays for the greenhouse gas emissions embedded in imported goods, much as European producers pay for theirs under the EU Emissions Trading System (EU ETS). It was established by Regulation (EU) 2023/956 and applies directly to EU importers and indirectly to their suppliers in other countries.

## Why the EU introduced CBAM

European producers of cement, steel, aluminum and other carbon-intensive goods pay for their emissions under the EU ETS. Without CBAM, production could shift to countries with no carbon price, and the emissions would simply “move” along with it. This is known as carbon leakage. CBAM levels the playing field: imported goods also carry a carbon component in their price.

Meanwhile, free EU ETS allowances for these sectors are being phased out gradually, while the CBAM obligation grows.

## Which goods are covered

CBAM applies to goods from six sectors:

- cement;
- iron and steel;
- aluminum;
- fertilizers;
- hydrogen;
- electricity.

The specific products are defined by their commodity codes. For more on the goods and how their emissions are calculated, see [CBAM goods and embedded emissions](https://7g.carbonplatform.asia/en/kb/cbam-goods-embedded-emissions).

## Who is affected

**EU importers.** The CBAM obligation lies with the importer. Since January 1, 2026, CBAM goods above the threshold may be imported only by an authorized CBAM declarant. The simplification Regulation (EU) 2025/2083 set a single threshold of 50 tonnes of goods per importer per year, by mass: importers below the threshold are exempt.

**Producers and exporters outside the EU.** Formally, they do not pay CBAM, but their EU customers ask them for embedded emissions data. If there is no data, the importer has to use default values, which are usually less favorable. That makes the quality of a supplier's data a commercial factor; see [CBAM for exporters](https://7g.carbonplatform.asia/en/kb/cbam-exporter-data).

## How the mechanism works

1. The producer determines the embedded emissions of the goods for each installation.
2. The importer receives this data and reports it in its annual CBAM declaration.
3. The importer buys and surrenders CBAM certificates corresponding to the embedded emissions.
4. The number of certificates to surrender is reduced to account for the carbon price actually paid in the country of production and for free allocation under the EU ETS.

Sales of CBAM certificates for 2026 imports start on February 1, 2027, and the first annual declaration and certificate surrender are due by September 30, 2027. For the stages, see [CBAM: transitional and definitive periods](https://7g.carbonplatform.asia/en/kb/cbam-periods).

## How it works in the platform

- The CBAM contour is still in development and marked “Soon”: the platform does not yet prepare declarations or calculate embedded emissions per tonne of product.
- You can already lay the groundwork for answering an EU customer: set up the installation as a facility under [Facilities](https://7g.carbonplatform.asia/objects), then in [Data entry](https://7g.carbonplatform.asia/data-entry) enter its fuel, process data, purchased electricity and heat month by month; the platform calculates Scope 1 and 2 emissions.
- Supporting documents are attached to the records: invoices, certificates of completion, photos of meter readings.

## Frequently asked questions

### Is CBAM a tax?
In essence, it is a charge for embedded emissions, paid by buying CBAM certificates. It is paid by the EU importer, not the foreign producer, but the economic impact is felt along the entire supply chain.

### Does CBAM affect companies that do not export to the EU?
Not directly. However, if your products reach the EU as CBAM goods somewhere along the supply chain, the buyer may ask you for emissions data.

### Does a producer from a third country need to register in the EU?
Declarant obligations lie with the importer. For the ways producers and installation operators can take part in the CBAM system, see [regulatory documents](https://7g.carbonplatform.asia/en/kb/documents).