CBAM: the carbon price at the EU border

In brief

The Carbon Border Adjustment Mechanism (CBAM) is meant to stop production from moving to countries with weaker climate rules. Anyone importing certain carbon-intensive goods into the EU has to buy and surrender CBAM certificates for the emissions released in making them. The price is based on the EU Emissions Trading System. A carbon price actually paid in the country of origin is deducted (Art. 9).

Annex I covers these groups of goods:

• Iron and steel, including certain downstream products such as pipes, screws and structural parts.
• Aluminum and certain aluminum products.
• Cement.
• Fertilizers, such as ammonia and nitrates.
• Hydrogen.
• Electricity.

Embedded emissions are the greenhouse gases released in producing a good. Direct emissions come from your own installation, for example from the blast furnace or electrolysis. Indirect emissions come from the electricity the installation consumes. For complex goods, the emissions of the precursors also count. For a steel screw, this means the manufacturer needs data on the wire it buys, and the wire supplier needs data on its pig iron.

The regulation was simplified in October 2025 by Regulation (EU) 2025/2083. Since then, a volume threshold has replaced the earlier value limit, and many small importers are exempt altogether.

Who it affects in South America

The obligation to buy and surrender certificates falls on the importer in the EU. Only an authorized CBAM declarant may import the goods (Art. 5 and 17). It has to file a CBAM declaration every year (Art. 6) stating the embedded emissions of the goods it imported.

Only the manufacturer knows those emissions. If it does not supply actual values for each installation, the importer has to use the Commission's default values, and those include mark-ups. That makes the goods more expensive and the manufacturer less attractive than a competitor with good data. This is why CBAM is a data obligation for manufacturers in South America, even though the law does not name them directly.

Those most affected include:

• Steel and pig iron producers in Brazil, a major supplier to the EU.
• Aluminum smelters in Brazil and Argentina.
• Fertilizer producers and green hydrogen and ammonia projects in Chile, Uruguay and Brazil.
• Manufacturers of steel components, screws or pipes that fall under the covered downstream products.

Copper is not covered. An exporter of copper cathodes from Antofagasta has nothing to do with CBAM, unless the Commission extends the scope.

Chile, Colombia and Argentina levy carbon taxes, and Brazil is building an emissions trading system. Whether such a price can be deducted depends on whether it was actually paid on the emissions of the goods in question and not refunded. This has to be checked and documented case by case.

Operators of installations outside the EU can register in the CBAM Registry for third-country operators and store their verified emissions data there. Their customers in the EU can then access it instead of asking for new spreadsheets every time.

Deadlines

The threshold is 50 tonnes per importer per year, counted across all CBAM goods except hydrogen and electricity. Importers below it have no obligations. Once it is exceeded, the obligation applies to the entire annual volume. A trader that occasionally imports a few tonnes of screws is therefore exempt. A steel trader with regular shipments from Brazil is not, and it will ask you for data.

What EU customers actually ask for

• Emissions data per installation and per product, direct and, where required, indirect, calculated using the methods in Annex IV and the implementing acts.
• The Commission's template for passing data from operator to importer.
• For actual values, a verification report from an accredited verifier.
• Information on precursors, such as the pig iron or primary aluminum you buy in.
• Proof of any carbon price paid in the country of origin, if it is to be deducted.
• Production route, installation name and location, so the data can be assigned without ambiguity.

Many buyers now write into their contracts the date by which verified data must be available and who bears the extra cost if default values have to be used.

If you supply several EU customers, collect and verify the data properly once and give every customer the same values. Inconsistent figures for the same installation will come to light at the latest when the authorities check. An aluminum smelter in Puerto Madryn with customers in Germany, Italy and Spain saves itself three times the work this way.

Keeping track of which customer has asked for what, and by when, is a task of its own. A general GRC platform such as Sightadel can hold the customer requests, deadlines and the documents prepared for the verifier in one place. The emissions calculation itself follows the Commission's method and is done outside it.

First steps

1. Use the tariff codes to check which of your products fall under Annex I.
2. Ask your EU customers whether they are above the 50-tonne threshold and which data they need in which format.
3. Set up an emissions calculation for each installation using the Commission's method. Metered data on energy and raw material consumption is the basis.
4. Hire an accredited verifier in good time, so the 2026 data is verified before the first surrender.
5. Register your installations in the CBAM Registry for third-country operators.
6. Find out whether a carbon price is paid in your country that can be deducted, and how you will document it.

The free EU Readiness Check gives you an initial overview of all EU requirements.

How it relates to certifications

CBAM requires verification of emissions data, not a management system. Environmental management under ISO 14001, often supplemented by ISO 50001 for energy and a greenhouse gas inventory under ISO 14064, does create the data and processes a verifier can build on. Quality management under ISO 9001 helps keep the documentation clean. Customers ask for the same data for their sustainability reports under the CSRD.

The EU-Mercosur Agreement lowers tariffs but does not exempt anyone from CBAM. The border adjustment applies to goods from all third countries, regardless of trade agreements and preferential tariffs.

FAQ