January 1, 2026, marked the beginning of the Carbon Border Adjustment Mechanism’s (CBAM’s) “definitive period.” This phase in date saw fee provisions enter into force. These provisions require importers to purchase certificates covering the embedded carbon in their imports. However, calculating embedded emissions and navigating CBAM’s concepts and methodologies can be difficult. For this reason, the EU Commission recently published a suite of five CBAM guidance documents. They describe each in a press release:
- “Guidance No. 1: Introduction to CBAM concepts: an introduction to the CBAM and its compliance cycle, roles and responsibilities, milestones, deadlines and exemptions for operators of installations outside the EU during the definitive period.
- Guidance No. 2: Quick guide for non-EU operators: a roadmap through the key concepts of CBAM emissions monitoring for operators of installations producing CBAM goods, pointing to where more detail can be found across the series.
- Guidance No. 3: Calculation of embedded emissions: the monitoring and reporting obligations and recommendations that may apply to any affected producer of CBAM goods.
- Guidance No. 4: Calculation of the free allocation adjustment: how the adjustment to the number of CBAM certificates to be surrendered for free allocation under the EU ETS is determined, and what information is needed.
- Guidance documents No. 5a–5f: Sector-specific guidance: dedicated overviews of production processes, value chains and monitoring and reporting considerations for each CBAM sector (cement, hydrogen, fertilisers, iron and steel, aluminium, electricity), each supplemented with worked examples.”
These documents are helpful for both EU importers and non-EU operators in those importers’ supply chains. CBAM only applies to goods from certain industries. The law is designed to put imported goods on an even playing field with EU-produced goods. Since EU industries are subject to the EU ETS, European industry risks operating at a competitive disadvantage compared to economies that have no form of emissions tax. CBAM is almost fully implemented. Next year will mark the final phase in date, when certificates will be priced weekly rather than quarterly.
Our members can learn more about CBAM here.
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