The Strategic Impact of CBAM on EU Supply Chains

The EU Carbon Border Adjustment Mechanism (CBAM) represents a paradigm shift in global trade policy. Effectively putting a price on carbon for imports, it aims to prevent carbon leakage and encourage global decarbonization.

Executive Summary

Currently in its Transitional Phase (Oct 1, 2023 – Dec 31, 2025), CBAM requires importers to report embedded emissions on a quarterly basis without financial adjustment. From 2026, the purchase of CBAM certificates will become mandatory. Companies failing to map their supply chain emissions now face significant business disruption and penalties.

Technical Scope: Affected Sectors

The regulation currently targets carbon-intensive sectors deemed at high risk of leakage:

• Cement
• Iron and Steel (including downstream products like screws and bolts)
• Aluminium
• Fertilizers
• Electricity and Hydrogen

Calculation Methodology

Importers must calculate Embedded Emissions per ton of goods imported. This includes:

• Direct Emissions: Released during the production process.
• Indirect Emissions: Released from the generation of electricity consumed during production.

Action Plan for 2026

To prepare for the Definitive Regime, CSA Advisory recommends a 3-step approach:

1. Map HS Codes: Verify if your imports fall under Annex I of the Regulation.
2. Supplier Engagement: Update purchase contracts to mandate emission data sharing.
3. Digital Integration: Automated calculation of CBAM liability via ERP integration.