CBAM: What Buyers of Steel, Aluminium and Cement Must Do

CBAM stands for Carbon Border Adjustment Mechanism. The idea behind it is simple enough.

European producers pay for the carbon they emit. Producers outside Europe often do not. That gives imported goods a price advantage. It also encourages companies to move production somewhere with looser rules. CBAM puts a matching carbon cost on certain imports, so the two are treated the same.

For a procurement team, it stops being a climate policy and becomes two practical problems. A cost on some of what you buy, and a data collection job your suppliers may not be ready for.

#What it covers

Six sectors. The European Commission lists them as cement, iron and steel, aluminium, fertilisers, electricity and hydrogen.

These were chosen because they are carbon-intensive and traded in large volumes. If you buy none of these, CBAM does not apply to you today. It is worth watching, because the scope has always been described as a starting set rather than a final one.

#When it started, and what changed

CBAM ran in a transitional phase from 2023 to 2025. During that period importers reported data but paid nothing. That was the practice run.

The Commission's position is that CBAM applies in its definitive regime from 1 January 2026. That is when the obligations become real: authorisation, reporting, and buying and surrendering CBAM certificates.

Then, before the definitive regime started, the rules were softened considerably. Regulation (EU) 2025/2083 was published on 17 October 2025 and took effect on 20 October 2025.

#The exemption that probably covers you

The single most important change was a new exemption based on weight.

This replaced an older rule based on consignment value. The effect is dramatic. The European Parliament said the threshold would exempt 90% of importers, mainly smaller companies bringing in small quantities. Yet it still covers 99% of the carbon emissions from imports of iron, steel, aluminium, cement and fertilisers.

Parliament adopted the text with 564 votes in favour, 20 against and 12 abstentions. There was very little argument about it.

Three details decide whether the exemption actually protects you:

It is cumulative across the year

Not per shipment. Forty tonnes in March and twenty in September is sixty tonnes, which is over the line. Somebody has to keep a running total.

It is per importer, per legal entity

Each entity with its own EORI number counts separately. A group with several importing entities needs to look at each one rather than at the group total.

It does not apply to hydrogen or electricity

For those two, obligations apply from the first import. The threshold covers cement, iron and steel, fertilisers and aluminium only.

#What you must do if you are in scope

1. Become an authorised declarant

This is the part with a deadline attached, and it is the one most likely to catch people out.

Under the CBAM Regulation, only an authorised CBAM declarant may import covered goods into the EU. The regulation defines that as a person authorised by a competent national authority. It is a status you apply for. It is not something you declare yourself to be.

Importers who expect to exceed the threshold need to apply before they cross it. Apply early. This is an application to a national authority, and those take time.

2. Collect embedded emissions data from suppliers

This is the real work, and it is procurement's job rather than finance's.

The regulation defines embedded emissions as the direct emissions released during production. It adds the indirect emissions from the electricity used to make the goods. They are calculated using methods set out in Annex IV of the regulation.

The default is actual emissions from the actual producer. Default values are a fallback, used where actual emissions cannot be adequately determined, and for indirect emissions.

Which means you need your supplier to tell you how much carbon went into making your specific goods. Many suppliers outside Europe have never been asked this and do not have the measurement systems to answer it.

That is a supplier engagement problem, and it takes months rather than weeks.

3. Submit an annual declaration

The original regulation set the deadline at 31 May each year, covering the previous calendar year. The 2025 simplification pushed it back.

So the first declaration covering 2026 imports falls due in 2027, and certificate purchasing starts in February 2027 rather than at the beginning of 2026.

That postponement is a genuine piece of breathing room. It is not a reason to do nothing, because the data you will have to declare is being generated by purchases you are making now.

4. Buy and surrender certificates

Certificates are the mechanism that turns the reported emissions into a cost. You buy them and surrender them against your declared emissions. This is the part that actually hits the budget, and it starts in February 2027.

#What procurement should do in the next quarter

Four steps, in order, whether or not you think you are in scope.

1. Work out your tonnage. Pull last year's imports of cement, iron and steel, aluminium and fertilisers by weight, per importing legal entity. If you cannot answer this quickly, that is the first finding.
2. Check for hydrogen and electricity separately, because no threshold protects you there.
3. If you are over 50 tonnes, or close enough that growth could take you over, start the authorised declarant application. Do not wait for the certificate deadline.
4. Ask your affected suppliers now whether they can provide verified emissions data for the goods you buy. The answer tells you how much work the next year holds, and gives you time to find alternatives if the answer is no.

That fourth step is the one worth doing even if you turn out to be exempt. A supplier who cannot say what its emissions are is a supplier that will struggle with every customer's reporting requirements, not just yours.

#Three things people get wrong

"We are too small for this"

Probably true now, and worth confirming with an actual number rather than assuming. Fifty tonnes of steel is less than many construction and manufacturing firms imagine. And thresholds get reviewed — this one is subject to annual review and may be recalculated if trade patterns or emission intensities change.

"Our freight forwarder handles it"

Be careful here. The obligation sits with the importer as defined in the regulation. Reporting on your behalf is a service someone can provide; being the responsible party is not something you can hand over by assuming it has been handled. Confirm in writing who is the declarant of record.

"It is an environmental matter, so it sits with the sustainability team"

The sustainability team does not know what you imported, from whom, in what quantity. Procurement does, or should. The data CBAM needs is purchasing data with an emissions figure attached, which makes it a shared job at best and a procurement job in practice.

#The wider point

CBAM is the first serious example of something procurement will see more of: a rule that turns a supplier's operating practices into your cost and your reporting obligation.

The companies that will find this manageable already know what they buy, from which legal entity, and in what quantity. They can also get a straight answer out of a supplier within a fortnight.

If that describes you, CBAM is an administrative task. If it does not, CBAM is the thing that exposes it.