EU CBAM explained for manufacturers

CBAM in a nutshell

CBAM is the EU’s carbon equalizer at the border. It covers cement, iron and steel, aluminium, fertilisers, hydrogen, and electricity. The transitional phase ran from 1 October 2023 to 31 December 2025 with quarterly reporting only, then the financial phase begins with 2026 imports (European Commission, 2023) (European Commission, 2023).

Think of it like calorie labels showing up on a menu. The EU is not banning the burger, it is pricing the carbon so two meals compete fairly.

How the charge is set

Importers purchase CBAM certificates that mirror the EU ETS carbon price. In 2026, the certificate price is calculated by the Commission as a quarterly average of EU ETS auction clearing prices, then from 2027 it is calculated weekly, weighted by auction volumes (EUR‑Lex, 2025) (EUR-Lex, 2025). The number of certificates equals embedded emissions for the imported goods, adjusted for any verified carbon price already paid in the country of origin (EUR‑Lex, 2025).

Why this matters to manufacturers outside the EU

Even when a distributor or EU customer acts as the declarant, they will demand installation‑level emissions data from the producer. Missing or generic data can force default values that overshoot reality. That means a higher apparent carbon cost at the border, and a weaker commercial story in specs.

The tight fit with EPD and LCA data

CBAM focuses on embedded emissions up to the factory gate, which maps closely to EPD modules A1 to A3 under EN 15804. High‑quality LCAs and third‑party verified EPDs give you the activity data, allocation logic, and electricity mixes CBAM reviewers expect. The same evidence trail that underpins a trustworthy EPD makes CBAM verification faster and less painful.

Deadlines, penalties, and relief valves

During the transition, reports were due quarterly, with limited windows to amend and a formal correction process. In the financial phase, penalties for missing or incorrect reports sit at €10 to €50 per tonne of unreported emissions, with higher penalties for repeated issues (EUR‑Lex, 2024) (EUR-Lex, 2024). Manufacturers can also reduce the certificates owed if a verified carbon price was effectively paid in the origin country, subject to documentary proof and Commission rules for conversion (EUR‑Lex, 2025).

A quick note on the UK

A separate UK CBAM starts on 1 January 2027 for aluminium, cement, fertiliser, hydrogen, and iron and steel. The government plans to set sector rates quarterly, with indirect emissions excluded at launch and considered later (GOV.UK, 2025) (GOV.UK, 2025). If you ship to both markets, build one data backbone that can feed EU and UK requirements.

What “good” looks like inside the factory fence

Data needs to be primary where possible, period averages must match production, and suppliers of precursors should provide their own energy and process data. Align electricity with time‑weighted grid factors, document fuels, scrap, and yield, and keep meter‑to‑mass balance reconciliations so a verifier can retrace every step without spelunking.

Commercial upside, not just compliance

With credible A1 to A3 numbers, bids stop carrying a carbon uncertainty surcharge. Product‑specific EPDs win trust with specifiers, and the same dataset lowers CBAM exposure. Teams stop arguing about spreadsheets and start improving mix designs, scrap rates, and energy contracts that actually move the GWP needle. That is where margin shows up.

A 90‑day playbook to be CBAM‑ready

• Map SKUs to HS or CN codes for CBAM scope, then list the EU customers that import them.
• Lock a reference year, gather plant energy, fuels, and material flows, then tie them to production volumes.
• Request supplier data for precursors, and log provenance for recycled inputs.
• Align your LCA model to EN 15804 with clear A1 to A3 boundaries, then prep evidence for verification.
• Set a change‑control routine so product or process tweaks reflow into your EPD and CBAM dataset.

Choosing help without losing time

Pick an LCA and EPD partner that does the heavy lifting on data collection and project management, not one that leaves your engineers to hunt invoices. The right team will turn plant data into verified EPDs quickly, publish with your preferred program operator, and keep the evidence pack CBAM‑ready. Do this once, acheive leverage in specs and at the border.

Bottom line for manufacturers

CBAM is now a gate fee linked to your real emissions profile. Treat carbon like a cost of goods sold, and build a repeatable, verifier‑ready dataset that powers both EPDs and CBAM filings. Moving first beats arguing later.