CBAM Launches Jan 1, 2026: What Businesses Must Prepare

Published on Jan 9, 2026

On December 17, 2025, the European Commission ("the Commission”) published several documents on strengthening the Carbon Border Adjustment Mechanism for Imports ("CBAM”). In particular, it was proposed to extend the scope of CBAM to several other processed products and to take circumvention measures[1]. The Commission published clarifications on the methodology for calculating emissions, standard values, CBAM certificates, verification principles, etc.[2]. In our previous publication The EU’s environmental "weapons”: how the world will be encouraged to reduce carbon emissions, we have already analysed the main provisions of CBAM and its potential impact. What has changed now, and what businesses should pay attention to, read below.

New "victims”: who will be additionally affected by CBAM?

Currently, CBAM applies only to some basic product groups, namely aluminium, cement, electricity, fertilisers, hydrogen, and iron and steel. In March 2025, the European Steel and Metals Action Plan[3] recognised the need to include several downstream products containing large amounts of steel and aluminium in this list. In total, the draft consists of almost 180 items of products, of which the vast majority (94%) are products used in heavy machinery and specialised equipment, and the rest (6%) include household products.[4]

The Commission will only consider emissions from the source materials. Emissions from further processing processes will not be considered. In practice, this will work as follows: car doors made in a third country will only be subject to CBAM for emissions associated with the production of the steel plates in question, and not for assembling them into a separate product.[5]

The extension of the scope of CBAM should come into force on January 1, 2028.

How is the EU going to deal with CBAM circumvention?

Recognising the significant risk of providing inaccurate data on actual emissions, the Commission decided to resort to several ways to discourage such unfair practices. First, additional reporting requirements will be introduced in certain cases, to better reflect the composition of products and enhance overall supply chain traceability. Secondly, if there is a risk of abuse, the company must provide additional supporting documents. Without them, the default country-specific values will apply. Thirdly, scrap metal that did not reach consumers (i.e. materials discarded before reaching consumers) will also be affected by CBAM.

New detailed rules for the implementation of the mechanism

In addition to the above-mentioned changes, the Commission has published several implementing acts that should streamline the calculation and collection of CBAM fees. Below we analyse the key aspects:

  1. Methodology for calculating emissions

The procedure for calculating carbon emissions is now entirely subject to the principles of the EU Emissions Trading Scheme ("EU ETS”). In other words, foreign exporters will have to calculate carbon emissions, as businesses within the EU have been doing since 2005, when the EU ETS was first introduced.  The Commission defines the procedure for using standard emission values obtained from installation operators and standard values determined for specific countries. In particular, the latter are used when the foreign exporter did not follow the EU ETS, as well as for complex products with individual components[6].

  1. Free allocations

The Commission also proposed a separate mechanism to "equalise” the positions of producers in the EU and foreign producers. Some EU industries use the so-called free quotas, meaning they can have higher carbon emissions but pay less. The new implementing act introduces a formula to reduce the number of carbon certificates that an exporter must purchase, considering how much free aid the relevant companies in the EU receive.

  1. Default values

If the company does not provide actual emissions data, default values apply. They are determined by the product code and country of origin – countries with a higher share of renewable energy will have lower indicators. However, a penalty percentage is added to the default values as a measure against abuse. This encourages companies to submit real data, which usually gives a more accurate and lower rate.[7]

For iron and steel, default emission values range from 0.29 to 1.53 tons of CO2 per ton of products, depending on the production method. With a certificate price of 80 euros, additional costs can range from 23 to 122 euros per ton.[8]

  1. CBAM Certificate Price

In general, the price of a CBAM certificate is not fixed. It is directly related to the EU ETS. Back in 2026, the price will be calculated based on the average price for the corresponding quarter, and in 2027 – based on the average weekly price of ETS quotas. The Commission will publish information about prices in the CBAM Register, so the information will be pulled directly to the accounts of exporters.[9]

  • Emission verification

If the exporter submits actual emissions data, authorised persons verify its validity. The first verification of the enterprise must be conducted on-site. During verification, all data submitted by the enterprise, such as production lines, energy sources, etc., are analysed. Next year, if there have been no significant changes, authorised persons can conduct virtual verification. However, physical visits should take place at least once every two years. Only accredited organisations have the right to carry out verification. In their activities, they must adhere to a risk-based approach, that is, the focus is on "significant” errors that affect the calculation of emissions.[10]

  • Status of an authorised CBAM declarant

Under the primary CBAM regulations, businesses could not import the products in question without prior authorisation, which created a risk of delays. After the "simplification package” (Omnibus, February 2025), exporters who apply by March 31, 2026, can continue importing while waiting for approval.

The procedure for international consultations has also been simplified – they are now voluntary. Small companies (importing less than 50 tons) are generally exempt from the need to obtain declarant status.[11]

  • Definitive CBAM Registry

The transitional CBAM register is replaced by the final one. Four categories of users will have access to it:

  • Exporters/manufacturers – to submit emission data and purchase certificates
  • Authorised persons – to verify data
  • Customs authorities – to check the status of the exporter in real time
  • The Commission

In addition, exporters/producers will be able to provide access to third parties (legal, tax consultants) acting on their behalf.[12]

  • Interaction of national customs authorities

Separately, the Commission defined the obligations of the national customs authorities of the EU member states regarding the procedure and specifics of information exchange, considering, in particular, the rules on personal data protection and confidentiality.[13]

How will the new changes to CBAM affect Ukraine?

CBAM will not bypass Ukraine this time, as the Commission has not provided for any exceptions for Ukraine. This is especially critical given that Ukraine is the EU’s largest exporter of products covered by CBAM by volume. Such products, in particular iron, steel, cement, and aluminium, account for approximately 2% of Ukraine’s GDP[14].

Experts’ assessments of how this will affect Ukraine’s economic situation differ.

The Commission’s forecasts for the consequences of CBAM for Ukraine are quite optimistic. According to the Commission’s calculations, exports of iron and steel could increase by 1% by 2035, and cement by 24%. This is due to Ukraine’s relatively low emission intensity compared to competitors such as China or India, and because CBAM does not currently charge for "indirect emissions” (emissions from electricity used during production) for iron and steel. The total impact on Ukraine’s GDP is projected at − 0.01% compared to the baseline level until 2035.[15]

In particular, the above estimates may be greatly underestimated, given that the metallurgical sector accounts for approximately 7% of Ukraine’s GDP, and revenues from iron and steel exports amount to USD 2.5 billion.[16] If we add to all this the war, rising electricity prices, and the potential inclusion of Ukraine in the EU’s steel safeguard measures[17], then the forecasts become less optimistic.

Article 30(7) provides for a protection mechanism for countries in crisis situations. Application conditions:

  • The event is unpredictable, exceptional, and uncontrollable
  • It has devastating consequences for the economic and industrial infrastructure
  • The country is subject to CBAM

In such cases, temporary measures are established to mitigate the consequences. As far as is known from public sources[18], Ukraine has asked the Commission to postpone the application of CBAM to Ukrainian manufacturers, but no decision has been made so far.

Next steps for the domestic industry

Considering the objective circumstances highlighted above, Ukrainian producers/exporters should already be ready for the requirements of CBAM. Starting in 2027, companies must report and pay annually for emissions made during the previous year. The following obligations follow from this:

  1. Importers must apply for an authorisation by March 31, 2026, to proceed with importing products subject to CBAM.
  2. Companies must prepare to submit a CBAM declaration for the previous year by 30 September, including information on the volume of exports of products and the total amount of emissions. The first filing should take place in 2027, as 2026 is the first year that not only is the number of emissions reported, but there is also a real payment obligation once it is completed.
  3. Importers must have the required number of CBAM certificates in their account by September 30.
  4. Exporters-manufacturers must prepare for data verification by an authorised person.