CBAM Is Live: What Manufacturers Must Do Today

CBAM is not coming. It's here.

Since January 2026, importers of covered goods into the EU must purchase CBAM certificates for the carbon embedded in their imports. The transitional reporting phase (October 2023 through December 2025) is over. The definitive regime is in effect.

If your company imports iron, steel, aluminium, cement, fertilizers, electricity, or hydrogen into the EU, CBAM is affecting your bottom line right now. Not next year.

How CBAM works

The principle is straightforward: EU manufacturers pay a carbon price through the Emissions Trading System (ETS). That cost is in their product prices. Non-EU manufacturers producing the same goods without paying for emissions have an artificial cost advantage. CBAM eliminates that advantage by charging importers for the embedded carbon — matching the price that would have been paid under EU ETS.

Who's affected:

• Iron and steel (including pipes, tubes, wire, finished products)
• Aluminium (bars, rods, profiles, plates, foil)
• Cement (Portland, aluminous, hydraulic)
• Fertilizers (nitrogen-based and compound)
• Electricity
• Hydrogen

The scope is broader than many companies realize. Not just raw materials. If you import finished steel components or aluminium enclosures, CBAM likely applies.

The mechanics:

1. Report volume and embedded emissions of covered imports quarterly
2. Purchase CBAM certificates at the weekly average EU ETS price
3. Deduct any carbon price already paid in the country of origin (if documented and verified)
4. Surrender certificates annually covering the previous year's total emissions

The critical element: you need actual Scope 1 and Scope 2 emissions data from your suppliers. Without it, you pay more. Significantly more.

Bad data costs real money

If you can't provide verified supplier emissions data, the EU requires default values — deliberately set high, based on the worst 10% of installations in the country of origin.

Here's what that looks like for a mid-size Italian manufacturer importing 800 tonnes of steel from Turkey and 200 tonnes of aluminium from India:

Steel:

	Emissions factor	Annual CBAM cost (at EUR 80/tonne CO2)
With verified supplier data	1.6 t CO2/t steel	EUR 102,400
With default values	2.3 t CO2/t steel	EUR 147,200
Data quality gap		EUR 44,800/year

Aluminium:

	Emissions factor	Annual CBAM cost (at EUR 80/tonne CO2)
With verified supplier data (40% renewable)	8.0 t CO2/t aluminium	EUR 128,000
With default values (coal-heavy grid)	14.0 t CO2/t aluminium	EUR 224,000
Data quality gap		EUR 96,000/year

Combined data quality gap: EUR 141,000 per year.

For a company with EUR 25M revenue and 8% operating margins, that EUR 141,000 represents 7% of operating profit. Lost not because of the regulation — because of inadequate data. Preventable. Every year.

Five things to do right now

1. Audit your import categories

Determine exactly which imports fall under CBAM. Check CN (Combined Nomenclature) codes against the CBAM product list (Annex I of Regulation 2023/956). Some manufacturers discover products they didn't initially consider "covered" actually fall within scope. If you're unsure about a classification, ask your customs broker — CBAM compliance is now part of their standard advisory.

2. Assess your supplier emissions data

For each supplier of covered materials, determine whether they can provide actual Scope 1 emissions, actual Scope 2 emissions, and verification by an accredited body. If they can't, you have two options: help them develop the capability (which strengthens the relationship) or accept default values (which costs you money).

The financial incentive to help your supplier is often substantial. If the gap is EUR 50,000/year, spending EUR 10,000 to support their emissions measurement pays for itself five times over in year one.

3. Calculate your real vs. default cost

Run the numbers with actual data where you have it, default values where you don't. The gap between those two figures is your business case for investing in supplier emissions data.

4. Have the conversation with your suppliers

This is the step most SMEs skip — and the most important one. The message should be direct:

"We need your actual Scope 1 and Scope 2 emissions data, verified by an accredited body. Without it, we pay default rates EUR X higher per year. We're willing to support you in implementing measurement. But we need this data on a regular schedule."

For many non-EU suppliers, CBAM data requests from European customers will be the first time they've been asked to measure emissions. The earlier you engage, the sooner you benefit from actual data instead of punitive defaults.

5. Build a repeatable process

CBAM isn't a one-time exercise. Quarterly reporting. Annual certificate surrender. Continuously updated emissions data. A manual process — spreadsheets for import tracking, emails for emissions data requests, manual certificate calculations — creates a burden that grows every cycle.

The companies managing CBAM efficiently have integrated the data flow: import data from customs records flows into CBAM calculations automatically, supplier emissions data is tracked systematically, certificate obligations reconcile without manual intervention.

The strategic picture

CBAM is the leading edge of carbon-priced trade. The EU will expand its scope — more products, more upstream materials, potentially stricter defaults.

Four implications for manufacturing SMEs:

Supplier selection has permanently changed. Carbon intensity is now a procurement cost factor. Lower-emission suppliers are cheaper to import from. This will increasingly drive sourcing decisions.

EU-sourced materials gain a relative advantage. EU production is covered by ETS, not CBAM. When the CBAM cost differential is significant, EU sourcing may become economically preferable even if base prices are slightly higher.

Data capability compounds. Companies that track and optimize CBAM obligations have lower import costs than competitors relying on defaults. The gap widens every year.

Your customers will ask you next. If they import products containing your covered materials, they need your verified emissions data. Your ability to provide it becomes a contract retention factor.

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