Insight
CBAM's Definitive Phase Has Begun: What It Means for Steel and Its Carbon Inputs
For three years, the EU Carbon Border Adjustment Mechanism (CBAM) asked importers of steel, aluminium, cement and other carbon-intensive goods to report the emissions embedded in what they brought into Europe. On January 1, 2026, the transitional period ended and the definitive regime began. Reporting is now the first step toward paying.
What changed on January 1
- Authorization. Only authorized CBAM declarants may import covered goods above the annual 50-tonne threshold. Importers that applied by March 31, 2026 can keep importing while their application is decided.
- Verification. Embedded emissions must be verified by an accredited verifier. Default values remain available, but they are set conservatively, so actual data from the producer usually pays for itself.
- Certificates. Emissions embedded in 2026 imports will be paid for with CBAM certificates. Certificate sales open on February 1, 2027, and the first annual declaration and surrender for 2026 imports is due by September 30, 2027.
Why this matters for carbon inputs
CBAM prices the emissions embedded in a tonne of steel. A large share of a steel plant's direct emissions comes from the carbon it uses: coke and coal in the blast furnace, and charge and injection carbon in the electric arc furnace. Every tonne of fossil carbon that goes into the process eventually leaves as carbon dioxide, and under CBAM that carbon dioxide now has a price attached at the EU border.
EU emissions accounting treats biomass differently. Under the EU ETS monitoring rules, emissions from biomass that meets the EU sustainability criteria can be rated at zero. That is why certified, sustainably sourced biocarbon is not just a sustainability story. It is a line item. Replacing a portion of fossil carbon with qualifying biocarbon lowers the reported direct emissions of the steel it helps produce.
What steel buyers and producers should do now
- Know your embedded emissions. Producers exporting to the EU should be able to show verified, installation-level data rather than rely on default values.
- Look at the carbon you buy. Carbon inputs are one of the few emission sources a plant can change without new capital equipment. Drop-in renewable carbon can be qualified within existing operations.
- Ask for documentation. Sustainability certification and chain-of-custody records are what turn a renewable input into a recognized emissions reduction.
The bigger picture
CBAM exists so that European steel paying for its emissions under the EU ETS is not undercut by imports that do not. As free allocation phases down for European producers, the two systems move together. For anyone selling steel into Europe, the carbon content of that steel is becoming as commercially relevant as its grade.
