CBAM is the EU's carbon tax at the border. Since 1 January 2026, importers of steel, aluminium, cement and other carbon-intensive goods pay for the emissions released during production. For steel from China, the bill runs high, because its carbon intensity is steep.
What is CBAM and when did it start?
CBAM stands for Carbon Border Adjustment Mechanism. It puts the same carbon price on imported goods as the EU Emissions Trading System (EU ETS) applies at home. The aim is to stop production from moving to countries with looser climate rules.
The CBAM regulation (Regulation (EU) 2023/956) ran as a reporting-only phase from October 2023 to the end of 2025. Since 1 January 2026 it has been in its definitive phase, with real financial obligations. It covers six sectors: iron and steel, aluminium, cement, fertilisers, electricity and hydrogen.
What does the CBAM regulation require importers to do?
It is not the product name that counts, but the CN code on your import declaration. In the steel and aluminium chains, more products fall under the rules than most importers expect. So your first step is to check your commodity codes against the CBAM list.
Scrap sits outside the scheme. Ferrous waste and scrap (CN heading 7204) carries a zero emissions value, so steel from a scrap route stays out of scope. That makes electric-arc-furnace steel from recycled material more attractive.
What does the 50-tonne threshold mean for your imports?
Since the Omnibus simplification of October 2025, a threshold of 50 tonnes per importer per year applies. Stay below it and you are exempt from the reporting and payment obligations. That exemption does not cover electricity or hydrogen.
For steel, 50 tonnes is reached fast. Below the threshold, you flag it with document code Y137 on your import declaration. Above it, you must be an authorised CBAM declarant, or use an indirect customs representative who holds that status.
Without authorisation, customs will not release your goods. Processing an application can take up to 120 days, so waiting until your first shipment is stuck is not an option.
What does CBAM cost on a tonne of Chinese steel?
The price tracks the EU ETS. For the first quarter of 2026 the CBAM certificate stood at €75.36 per tonne of CO2, and at €75.28 for the second. The number of certificates depends on the embedded emissions of your steel.
The sting is in the emissions data. For Chinese steel the default value is 3.167 tonnes of CO2 per tonne, well above the benchmark of 1.370. On that basis, at €75, you reach roughly €237 gross per tonne.
In 2026 the bill stays small, because the CBAM factor sits at 2.5%. It rises to 48.5% in 2030 and 100% in 2034, as the free allocation in the EU ETS phases out. The cost is low today but grows every year.
You also only buy the certificates from 1 February 2027. The first annual declaration, covering 2026, is due by 30 September 2027. So the bill is already building, even though you pay later.
Why verified emissions data saves you money
Work with default values and you pay the most. Ask your Chinese supplier for the actual, verified emissions data and the bill often drops. EU buyers therefore favour suppliers who can hand over reliable figures.
Are importers switching to European steel because of CBAM?
In part. CBAM makes European steel relatively more attractive, because its carbon disadvantage against imports disappears. EU buyers now weigh the carbon intensity of their steel and rethink their sourcing.
The shift does not run to European mills alone. Non-EU suppliers with low, verified emissions, such as Korean or Japanese producers with electric-arc furnaces, also gain ground. Some buyers instead import more finished steel products from outside the EU, because CBAM currently covers only raw materials.
What changes after 2026?
The scheme widens. From 1 January 2028, around 180 downstream products join, such as machinery, vehicle parts and appliances. That brings an estimated 7,500 extra importers into scope. The European Parliament votes on the proposal in September 2026.