EU CBAM: what UK exporters and EU importers need to know in 2026 and 2027

What is the EU CBAM?

The EU CBAM puts a carbon price on the emissions embedded in certain goods imported into the EU. It is set up by Regulation (EU) 2023/956, and its price is linked to the EU Emissions Trading System (EU ETS).

It covers six sectors: cement, iron and steel, aluminium, fertilisers, electricity and hydrogen. From 1 October 2023 to 31 December 2025, importers only had to report emissions. Since 1 January 2026 the definitive regime applies, with a real financial obligation.

For most iron and steel goods, and for aluminium, hydrogen and electricity, only direct emissions count. For cement, fertilisers and agglomerated iron ore (CN 2601 12 00), indirect emissions from electricity used in production are counted too.

Annex III of the regulation places goods originating in Iceland, Liechtenstein, Norway and Switzerland outside its scope. The UK is not on that list.

Who must comply: the 50-tonne threshold and authorised declarants

Regulation (EU) 2025/2083, adopted on 8 October 2025 and published on 17 October 2025, added a single mass-based threshold. An importer is exempt if the net mass of its CBAM goods in a calendar year does not exceed 50 tonnes.

• The 50 tonnes is a combined total across all CBAM commodity codes, per importer, per calendar year.
• If you go over it during the year, CBAM applies to all embedded emissions in everything you imported that year.
• The threshold does not apply to hydrogen or electricity. Importers of those always need authorisation.
• The Commission's assessment for 1 April 2025 to 31 March 2026 found that the threshold would exempt 0.87% of embedded emissions, below the 1% limit.

Anyone importing above the threshold must be an authorised CBAM declarant before importing. Importers that applied by 31 March 2026 can keep importing while their application is decided.

An importer not established in an EU member state must use an indirect customs representative, who must hold authorised declarant status. Applications go through the CBAM Registry run by the Commission.

CBAM certificate prices

One CBAM certificate covers one tonne of CO2 equivalent. For 2026 imports the Commission publishes a quarterly price, calculated as the weighted average of EU ETS auction clearing prices in that quarter.

Each 2026 price applies to goods imported in that same quarter. It is calculated in the first calendar week after the quarter ends, which is why it appears a few days later.

From 2027 the Commission switches to a weekly price. It is the average closing price of EU ETS allowances on the auction platform in each calendar week.

Buying, declaring and surrendering certificates

• From 1 February 2027, member states sell certificates on a common central platform run by the Commission.
• By 30 September each year, authorised declarants submit a CBAM declaration for the previous year and surrender matching certificates. The first deadline is 30 September 2027, for 2026 imports.
• From 2027, at the end of each quarter, declarants must hold certificates covering at least 50% of the embedded emissions imported since 1 January.
• Excess certificates can be sold back at the purchase price if requested by 31 October. Certificates bought for 2026 can only be repurchased in 2027.
• Unused 2026 certificates are cancelled without compensation on 1 November 2027.

The free allocation adjustment and phase-in

EU producers of CBAM goods still receive some free EU ETS allowances. To keep things fair, the number of certificates an importer surrenders is reduced to reflect that free allocation.

As free allocation shrinks, the reduction shrinks and the CBAM cost rises. The ETS Directive sets a CBAM factor that cuts free allocation for these sectors each year.

Actual emissions, default values and carbon price deductions

Embedded emissions are worked out either from actual installation data or from default values. Actual data must be verified by a verifier accredited under the CBAM rules.

Default values are set by country of origin in Implementing Regulation (EU) 2025/2621, as corrected by Implementing Regulation (EU) 2026/1740. Where a country is not listed, the value for other countries and territories applies.

Defaults carry a mark-up to encourage real data. For cement, iron and steel, aluminium and hydrogen it is 10% for 2026, 20% for 2027 and 30% from 2028. For fertilisers it is 1% from 2026.

Where actual emissions are used, the importer can claim a reduction for a carbon price effectively paid in the country of production. Any rebate or compensation must be netted off, and the evidence must be certified by an independent person.

What UK exporters need to give EU customers

The EU importer carries the legal duty, but it depends on data only the producer has. A UK steel, aluminium, cement, fertiliser or hydrogen producer selling into the EU should expect requests for:

• Specific embedded emissions per tonne of each product, calculated using the EU CBAM methods.
• Verification of that data by an accredited verifier, if the customer wants to avoid marked-up default values.
• Evidence of any carbon price effectively paid, such as UK ETS costs, net of any rebate or other compensation, certified by an independent person.
• Installation details, such as name, address and location, which also appear in the CBAM Registry if the operator registers.

Non-EU operators can ask to register their installations in the CBAM Registry. Registration is valid for five years and lets them share verified data with importers. Verifiers could access the Registry from 1 September 2026.

UK goods are not exempt today. The UK and EU are negotiating a link between their emissions trading systems. The Commission's negotiating recommendation says that once a linking agreement is in force, EU CBAM would not apply to UK-origin goods, and vice versa.

EU CBAM key dates

Sources

1. European Commission: Price of CBAM certificates (checked 10 October 2026)
2. European Commission: CBAM definitive regime (checked 10 October 2026)
3. EUR-Lex: Regulation (EU) 2023/956 establishing CBAM, consolidated text of 20 October 2025 (checked 10 October 2026)
4. EUR-Lex: Regulation (EU) 2025/2083 simplifying and strengthening CBAM (checked 10 October 2026)
5. EUR-Lex: Implementing Regulation (EU) 2026/1740 correcting the CBAM default values regulation (checked 10 October 2026)
6. EUR-Lex: Directive 2003/87/EC (EU ETS Directive), consolidated text including Article 10a(1a) (checked 10 October 2026)
7. European Commission: CBAM communication and news (checked 10 October 2026)
8. European Commission: CBAM Registry (checked 10 October 2026)
9. European Commission: COM(2026) 616 proposal amending the ETS Directive, 17 July 2026 (checked 10 October 2026)
10. Council of the EU: ST 11663/25, Commission recommendation COM(2025) 408 on UK linking negotiations (checked 10 October 2026)