The Carbon Border Adjustment Mechanism (CBAM) aims to tax carbon emissions from the production of carbon-intensive goods entering the European Union (EU).
It aims to ensure that EU producers taxed on their carbon emissions within the EU are not disadvantaged compared with importers.
CBAM requires importers of carbon-intensive goods from non-EU countries to declare the embedded emissions. If emissions exceed EU standards, importers will have to purchase CBAM certificates (from February 2027) and surrender them to cover the carbon cost of the embedded emissions of their goods.
CBAM enters definitive phase
On 1 January 2026, CBAM entered its final phase, signalling a major shift for global supply chains and importers into the EU.
This phase now requires importers of CBAM goods— currently including iron and steel, aluminium, cement, fertilisers, electricity, and hydrogen—to purchase and surrender CBAM certificates equivalent to the embedded emissions of their imports.
Key requirements for importers
1 Authorised CBAM Declarant Status
All importers of CBAM-covered goods must register as Authorised CBAM Declarants via the EU CBAM Portal. These applications will then be reviewed by the Environmental Protection Agency (EPA).
This applies to importers of in-scope products where a company’s annual imports are:
• > 50 tonnes/calendar year of steel, aluminium, cement, fertilisers.
• any hydrogen and electricity.
The application for the status of authorised CBAM declarant must be submitted before the date of import on which the 50-tonne threshold is exceeded.
The final registration date was 3 March 2026, to account for imports from 1 January 2026.
2 Annual CBAM reports
By 30 September of each year, importers will be required to submit an annual CBAM declaration for the previous calendar year, detailing actual embedded emissions by product and installation.
This requires accurate, verifiable emissions data from across the supply chain.
When actual verified emissions are unavailable, default emission values must be used.
3 Purchase and surrender of CBAM certificates
Importers must purchase CBAM certificates from the EU, priced based on the weekly average price of EU Emissions Trading System (ETS) allowances. However, 2026 will be based upon a quarterly price, and certificates can be purchased in February 2027.
The number of certificates surrendered must match the total verified emissions or default emissions of imported goods, less any carbon price already paid in the country of origin.
4 Use of Verified Data
Importers have two choices in making returns to the authorities:
1. Importers can use default values. However, as stated above, these are intended to be punitive over the long term.
2. Alternatively, importers can use actual values. These are subject to independent verification.
Measuring and reporting embedded greenhouse gas emissions
Embedded emissions of in-scope products are calculated at the installation level. This uses the method for reporting of emissions under the EU ETS for production of the same goods within the EU, as defined in Annex IV Regulation (EU) 2023/956 and supporting regulations, and covers the specific emissions, greenhouse gas (GHG) emissions and how direct and indirect emissions are determined for each sector.
Emissions are attributed only to a production process and the products covered by that process.
Importers may rely on published default values where appropriate, rather than being strictly required to obtain actual, installation-level emissions data from every supplier in all cases.
However, if reporting actual emissions data, the data must:
• Identify the specific manufacturing installation where goods were produced.
• Include measured direct and indirect emissions at the installation level.
• Be based on a verified monitoring plan and disaggregated per production unit.
• Be independently verified by a practitioner certified to ISO14064:3.
The importer is also required to submit to the competent authority an Operators Emissions Report which documents the embedded GHG emissions, supporting data, calculations, method and monitoring.
Preparing for compliance
As you prepare for CBAM compliance, there are a number of focus areas to consider:
Identify applicability: who is impacted?
Start by pinpointing which of your organisation’s products and supply chains fall under CBAM. Since CBAM applies to imports into the EU, mapping the flow of imports of these goods is essential.
Collect and organise data
Companies must quantify the embedded carbon emissions in their imports of in-scope goods. Verified supplier emissions data is critical, as is a robust document retention system to support accurate reporting and audit readiness.
Compliance, risk management and training
Be sure to stay abreast of evolving CBAM regulations. Organisations should establish internal controls and regular reviews to ensure ongoing compliance, and ensure relevant staff are trained on CBAM obligations and reporting requirements.
Financial planning: special focus on 2026 provisioning
As mentioned earlier, 2026 CBAM certificates cannot be purchased until February 2027 and verified emissions data will only be available once the 2026 production year is complete. This means:
• Companies must create financial provisions for 2026 using the best available estimates of embedded emissions and certificate pricing.
• Once verified data is available, these provisions can be adjusted. Early and transparent provisioning is essential for accurate financial reporting and audit preparedness.
Accountants play a key role in scenario planning, forecasting and ensuring appropriate disclosures around these provisional estimates.
Optimise technology and processes
Given the complexity, manual tracking of emissions is no longer viable. Where organisations are importing at scale and with numerous suppliers, we recommend using digital tools for emissions tracking and reporting to ensure accuracy and efficiency.
You should also consider integrating CBAM data collection within your organisation’s broader environmental, social and governance initiatives.
CBAM challenges
CBAM places strong emphasis on obtaining verified actual emissions data from the third-country installations supplying an importer (i.e. your suppliers’ manufacturing sites).
Importers must therefore work with suppliers to obtain verified emissions data for their imports of in-scope goods to enable accurate CBAM reporting.
We would advise that this process start immediately, if it is not already in place.
Another challenge is the lack of emissions data provided. If this is the case, importers must use the default values set by the European Commission.
Default values are ultimately intended to be punitive, significantly raising costs for those unable to obtain verified supplier data. Default values carry a 10 percent mark up in 2026, rising to 30 percent by 2028.
Future-proofing CBAM compliance
While this process might seem onerous, there are several steps organisations can take to ensure they are in compliance with CBAM.
Proactive supplier engagement
Importers and procurement teams must update supplier contracts and require the provision of verified CO₂ emissions data as a condition of doing business.
Suppliers may need education, support or incentives to implement emissions measurement and verification systems.
Integrate emissions data into procurement
Emissions data collection should be embedded in supplier onboarding, tendering and performance reviews.
Supplier selection must now weigh emissions data quality alongside cost, quality and delivery performance.
Mitigate supply chain risk
Suppliers unable to provide emissions data risk making their products uncompetitive due to higher CBAM costs.
Proactive mapping and risk assessment are essential— consider dual sourcing or supplier development to mitigate disruptions.
Establish Internal CBAM systems
Establish internal systems for tracking, reporting and purchasing CBAM certificates. Monitor regulatory updates as the EU continues to refine CBAM implementation
CBAM scope expansion
The EU is set to significantly expand the scope of CBAM to downstream products.
In addition to the initial basic materials, the EU is set to include around 180 steel and aluminium-intensive downstream products.
This expansion will cover:
• Car parts;
• Household appliances (washing machines, refrigerators);
• Metal furniture; and
• A broad array of other manufactured goods.
This wider scope is proposed to take effect from 1 January 2028, meaning even companies not previously impacted by CBAM must prepare for compliance.
Supply chains that extend from raw materials to finished and semi-finished goods will need to ensure traceability and capture emissions data.
Proactive approach
The definitive phase of CBAM fundamentally changes the rules governing the import of carbon-intensive goods into the EU.
Proactive supply chain management, robust supplier engagement, accurate emissions data and prudent financial provisioning, especially for 2026, are now essential for compliance and competitiveness.
By acting now, importers can manage costs, minimise risks, and demonstrate leadership in sustainable supply chain practices.
Resources
Key resources for Irish organisations include:
• EU Customs CBAM overview and regulations.
• Environmental Protection Agency / (Competent Authority, regulations, toolkits and templates for reporting).