Commercial considerations for producers of CBAM goods

Importers of high-carbon commodities such as steel, aluminum, iron, fertilisers, and cement are the primary focus of the EU’s Carbon Border Adjustment Mechanism (CBAM). Because of its EU location and its focus on the purchasing/importing step of the value chain, many international manufacturers are not prepared for the impact that CBAM will have on their business.

We believe the majority of non-EU manufacturers are not aware of the full extent of the impending cost CBAM will have on their goods going to the EU — nor what control they have.

Here, we explore the full impact of CBAM on manufacturers.

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What will happen to high-carbon commodities when CBAM comes into play?

From 1 Jan 2026, CBAM Certificates will come into force. From this point on, importers of high-carbon commodities regulated by CBAM (aluminm, steel, iron, fertilizers, electrical energy, hydrogen, and cement) will have to purchase CBAM Certificates to cover the cost of embedded carbon emissions on imports. In essence, CBAM is a carbon tax on EU imports. Though the tax is levied on importers, its effects will be felt throughout supply chains.

What will CBAM cost?

For importers, the cost of a CBAM Certificate will rise over time as they are gradually phased-in alongside the phase-out of free EU emission allowances in the ETS (Emissions Trading Scheme).

The cost of a CBAM Certificate is dynamic and is calculated based on:

• The difference between the embedded emissions in the imported product and the EU CBAM benchmark for that product
• Adjusted by the phase-in rate, and then
• Multiplied by the weekly average EU ETS price.

This doesn’t mean businesses have to produce zero-carbon products. They simply need to make sure that they are optimising their decarbonisation trajectory against the CBAM Benchmark (a low-carbon “ideal”) for the products they produce. A product with an emissions intensity below the EU CBAM Benchmark won’t have a CBAM Certificate cost on import into the EU.

What will CBAM cost manufacturers (installations)?

But CBAM may also cost manufacturers, and this could play out in different ways.

For example, if manufacturers can’t share CBAM-compliant data, their customers may not be able to import these goods into the EU. Safe to say that the customer relationship is unlikely to last long in this scenario.

If a manufacturer shares inaccurate data that provides a misleading picture of their CBAM intensities, this could also have significant implications on their customers’ costs. Without accurate carbon data, EU importers can’t expect to make reasonable commercial decisions on the products they are purchasing for import. If manufacturers can’t supply the data their customers need, their customers will be forced to resort to using default values, which may drastically overestimate their carbon emissions and therefore significantly reduce the commercial viability of their products entering the EU.

Verification will play a critical role in ensuring accurate data is prepared and reported by installations. For importers to use actual data in their declarations in 2026, the data will have to be verified. Ensuring verification is undertaken swiftly will ensure that importers can have confidence in their ability to forecast the expected CBAM Certificate cost.

How can manufacturers take control of future CBAM costs and price deals properly for their EU customers?

If you are a manufacturer with any exposure to the EU, having access to reliable CBAM data is a commercial imperative. Although CBAM Certificates are still a year away, you need data now in order to forecast and plan for the impact that CBAM taxes will have on your business.

Here are a few steps manufacturers can take:

• Ensure you have prepared your EU CBAM installation data with a share of default values below 20%
• Review the emissions intensities of your precursor suppliers and assess the validity of this data, as well as the actual carbon intensity of these products
• Consider amending your procurement mix in advance of 2026 to optimise for low-carbon products, in order to reduce CBAM exposure for these products
• Make sure any carbon price paid on-site or on the precursors is accurately accounted for in the report
• Consider verifying carbon data in advance of 2026 to build confidence with customers
• Get started on decarbonisation strategies to reduce direct embedded emissions from production operations on site (e.g. combusting low-carbon fuels, or switching to electricity-based processes)

How can CarbonChain help manufacturers with CBAM challenges?

CarbonChain is carbon accounting software for manufacturers. We can help you measure your carbon emissions and intensity, producing highly accurate data for complying with customer CBAM reporting requests.

CarbonChain works with manufacturers through every stage of the carbon data generation and reporting process, including:

Preparing, updating, and validating CBAM data

This is quite a demanding task, requiring input from many stakeholders. Our platform can help to streamline and coordinate this process, eliminating the need to contact and follow-up with a number of suppliers, enter data manually into spreadsheets, seek external assurance, and so on.

Identifying low-carbon suppliers

CarbonChain gives you an unparalleled, data-driven view of the metals market. You’ll be able to quickly understand the carbon intensity of various products and suppliers, allowing you to source low-carbon alternative products to lower the overall footprint of your offerings.

Optimize for cost and carbon

Before the net-zero transition, cost and quality may have been the key considerations for commodity purchasers. Today, carbon is the third element in that list. With accurate, up-to-date data at your fingertips, your team can easily optimize for material cost and CBAM exposure, ensuring your prices are still attractive to EU buyers.

Facilitate verification

CarbonChain can help to facilitate the carbon data verification process which, though not currently mandatory, will be required very soon. We recommend customers start verifying their carbon data from the outset to ensure this step becomes a seamless part of the carbon data collection and reporting workflow.

Comply with regulations

CBAM may be on our doorstep, but more regulations are coming. CSRD, for example, is on its way, and will require full product carbon footprints (PCFs) from manufacturers. A UK CBAM is also on its way. Getting ahead now will enable businesses to gain a compliance and competitive edge over their competition.

Further resources for manufacturers dealing with CBAM

Webinars

• Preparing your CBAM installation data for complex aluminium and steel products
• EU CBAM: Costs and practical implications for impacted businesses

Articles

• What is CBAM?
• Demystifying EU CBAM: Six pains and predictions
• How commercial opportunity is driving carbon transparency journeys
• [Series] Understand your emissions
  
  • Understand your aluminum emissions
  • Understand your steel emissions
  • Understand your synthetic fertilizer emissions

Tools

• CBAM supplier platform
• Free end-to-end CBAM tool
• Free CBAM certificate estimator

Downloads

• CBAM 101 Factsheet

Experts

Speak to a (human) CBAM expert today.