The Carbon Border Adjustment Mechanism (CBAM) is the EU’s flagship policy to level the playing field between European manufacturers and foreign producers in carbonintensive sectors—like steel. It aims to prevent “carbon leakage”, where production shifts outside the EU to countries with looser environmental regulations.
What Is CBAM?
CBAM is essentially a carbon tariff. It ensures that the carbon price paid by EU manufacturers under the EU Emissions Trading System (ETS) is also reflected in the cost of imported goods.
From 2026 onwards, importers will be required to purchase CBAM certificates, which correspond to the embedded carbon emissions in their products. The cost of these certificates will be aligned with the EU ETS carbon price.
When Does CBAM Come Into Force?
CBAM is being phased in gradually:
- October 2023 – December 2025: Transitional phase. Importers of steel, aluminium, cement, hydrogen, fertilizers, and electricity must report embedded emissions quarterly but no payments are required yet.
- January 2026 onward: Full implementation. Importers must begin purchasing and surrendering CBAM certificates.
Who Does It Affect?
Steel traders, importers, and manufacturers that bring certain iron and steel products into the EU—whether from Turkey, China, Ukraine, or elsewhere—must comply.
Product types include:
- Hot rolled, cold rolled, and coated flat products
- Rebar and merchant bar
- Tubes and hollow sections
You can check if a product is covered by referencing the CN codes listed in Annex I of the CBAM regulation.
Why It Matters
CBAM will reshape global trade in steel. The key impacts include:
- Higher import costs for material from regions with high embedded emissions and low environmental controls
- Competitive advantage for low-emission mills
- Administrative burden: Importers will need accurate emissions data or risk default values being used (which are likely conservative and punitive)
How M7 Metals Is Preparing
At M7, we’re already helping clients navigate CBAM compliance. We’re working with mills to obtain emissions data and ensuring that our supply chain is low-emission, traceable, and future-proof.
As this regulation develops, we’ll continue to adapt—so that you don’t have to choose between compliance and competitiveness.