The EU now taxes the carbon embedded in your product.

The Carbon Border Adjustment Mechanism is the EU's tool to put a carbon price on imported goods equivalent to the price EU producers already pay under the EU Emissions Trading System (EU ETS). It targets the greenhouse-gas emissions embedded in goods when they cross into the EU customs territory.

The goal is to stop "carbon leakage" — the risk that production simply shifts to countries with weaker climate rules, undermining the EU's own emission cuts.

The Paris Agreement (adopted December 2015, in force November 2016) commits its parties to hold global warming well below 2 °C above pre-industrial levels and to pursue efforts to limit it to 1.5 °C.

CBAM is one of the EU's instruments for delivering on that commitment: by pricing imported carbon, it protects the integrity of the EU's domestic emission cuts while nudging producers worldwide toward cleaner methods. The Regulation explicitly frames CBAM as supporting the goals of the Paris Agreement.

Fit for 55 is the EU's legislative package designed to deliver its 2030 climate target — a net reduction of at least 55% in greenhouse-gas emissions compared with 1990 levels. The name refers to that 55% figure.

CBAM is a core piece of this package. As free EU ETS allowances for covered sectors are phased out, CBAM is phased in to keep imports and domestic goods on an equal carbon footing.

Two milestones anchor the whole framework, both enshrined in the European Climate Law (Regulation (EU) 2021/1119):

• By 2030 — cut net greenhouse-gas emissions by at least 55% versus 1990 levels. This is the target Fit for 55 (and CBAM) is built to protect.
• By 2050 — reach economy-wide climate neutrality (net-zero): no net emissions after deducting removals.

Carbon leakage happens when, because of the cost of climate policy, businesses shift carbon-intensive production to countries with looser rules — or imports from such countries displace cleaner EU goods. The result is that global emissions don't fall; they just move.

CBAM neutralises the incentive to relocate by charging imports for their embedded carbon, so a tonne of steel faces a comparable carbon cost whether it's made in Bhilai or in Bremen.

Six sectors are in scope from the definitive period:

• Iron & steel and Aluminium — the focus of this portal
• Aluminium
• Cement
• Fertilisers
• Hydrogen
• Electricity

EEPC India is the designated Nodal Body for the iron & steel and aluminium sectors.

Scope is defined by Combined Nomenclature (CN) codes. For iron & steel and aluminium it covers Chapter 72 (iron and steel and aluminium) plus a set of downstream articles:

• 72 — iron and steel, except most ferro-alloys (7202…) and ferrous waste & scrap (7204)
• 2601 12 00 — agglomerated iron ores & concentrates
• 7301–7311 — sheet piling, rails, tubes, pipes, tanks, gas containers
• 7318 — screws, bolts, nuts & similar fasteners
• 7326 — other articles of iron or steel

Exclusions:

• Ferro alloys under selected 7202 sub-headings
• Ferrous waste and scrap (7204)

Iron and steel Except:

• 7202 2 — Ferro-silicon
• 7202 30 00 — Ferro-silico-manganese
• 7202 50 00 — Ferro-silico-chromium
• 7202 70 00 — Ferro-molybdenum
• 7202 80 00 — Ferro-tungsten and ferro-silico-tungsten
• 7202 91 00 — Ferro-titanium and ferro-silico-titanium
• 7202 92 00 — Ferro-vanadium
• 7202 93 00 — Ferro-niobium
• 7202 99 — Other
• 7202 99 10 — Ferro-phosphorus
• 7202 99 30 — Ferro-silico-magnesium
• 7202 99 80 — Other
• 7204 — Ferrous waste and scrap; remelting scrap ingots and steel

Chapter 73 – Articles of Iron & Steel

Major covered categories:

• 7301 — Sheet piling and steel sections
• 7302 — Railway track materials
• 7303-7306 — Pipes and tubes
• 7307 — Pipe fittings
• 7308 — Structural products
• 7309-7311 — Tanks and containers
• 7318 — Fasteners (bolts, nuts, screws, rivets, washers)
• 7326 — Other articles of iron & steel

Chapter 76 – Aluminium Products

Major covered categories:

• 7601 — Unwrought aluminium
• 7603-7607 — Powders, rods, wires, sheets and foil
• 7608-7609 — Tubes and fittings
• 7610 — Structures and structural components
• 7611-7613 — Tanks and containers
• 7614 — Cables and stranded wire
• 7616 — Other articles of aluminium

• CBAM applicability is determined by CN classification rather than general product descriptions.
• Exporters should verify the exact CN code of their products before assessing CBAM obligations.
• Annex I of Regulation (EU) 2023/956 remains the primary legal reference for determining product coverage.

Legally, the obligation sits with the EU importer, who must hold the status of authorised CBAM declarant before importing. CBAM applies to the importer, not the exporter.

But in practice the pressure flows straight back down the chain: the importer needs accurate, verified emissions data for the steel you shipped. If you can't supply it, they fall back on default values — which are deliberately set high. So the commercial reality is that Indian producers must produce and share credible emissions data to stay competitive.

• 50-tonne de minimis — importers whose total annual imports of CBAM goods stay at or below 50 tonnes (net mass) are exempt. This replaced the old €150-per-consignment rule (see the Omnibus changes).
• Origin exemptions — goods from Iceland, Liechtenstein, Norway and Switzerland (and a few small territories) are outside scope, as their production is already covered by, or linked to, the EU ETS.

From 1 October 2023 to 31 December 2025, CBAM ran as a reporting-only trial:

• Importers filed a quarterly CBAM report on the embedded emissions of goods imported that quarter — direct and indirect emissions, plus any carbon price paid abroad.
• No financial adjustment — no certificates to buy or surrender.
• The final transitional report, covering Q4 2025, was due by 31 January 2026.

The purpose was to build data and let everyone learn the system before money changed hands.

The definitive regime began. From 1 January 2026:

• Only an authorised CBAM declarant may import CBAM goods above the 50-tonne threshold.
• A financial adjustment applies — declarants must buy and surrender CBAM certificates for embedded emissions.
• The CBAM Registry is fully integrated with EU customs systems in real time.

• 31 Mar 2026 — deadline for the grace period: importers who applied for declarant status by this date can keep importing while their application is processed.
• 1 Feb 2027 — sale of CBAM certificates begins.
• 30 Sep 2027 — first annual CBAM declaration and certificate surrender for 2026 imports (extended from the original 31 May by the Omnibus).
• 30 Sep each following year — annual declaration & surrender for the prior calendar year.

The annual declaration, filed through the CBAM Registry, must state:

• The total quantity of each type of goods imported in the year (tonnes for steel; MWh for electricity).
• The total embedded emissions, in tonnes of CO₂e per tonne of goods, calculated and verified.
• The number of CBAM certificates to surrender, after deducting any carbon price already paid in the country of origin.
• Copies of verification reports from accredited verifiers.

It's the status an EU importer (or their indirect customs representative) must hold to bring CBAM goods into the EU. Application is made to the competent authority of the member state where the importer is established, via the CBAM Registry, and requires an EORI number, evidence of financial and operational capacity, and a clean compliance record.

The status is recognised across all member states once granted.

Yes. A declarant may claim a reduction in certificates to reflect a carbon price effectively paid in the country of origin for the declared embedded emissions — provided it can be evidenced and independently certified, net of any rebate.

This is why India's emerging domestic carbon market matters for exporters: a credible, paid Indian carbon price could offset part of the CBAM bill. This is an active topic in the India–EU trade discussions.

Failing to surrender enough certificates triggers a penalty identical to the EU ETS excess-emissions penalty — around €100 per tonne of CO₂e — for each certificate not surrendered, and paying it does not remove the surrender obligation.

Where a party imports CBAM goods without authorisation, the penalty is three to five times higher.

Embedded emissions are the greenhouse gases released in producing the goods, made up of:

• Direct emissions — combustion and process emissions at the installation, including heat consumed in production.
• Indirect emissions — from the electricity consumed in production.

• Actual values — calculated from your installation's monitored data and verified by an accredited verifier. This is the preferred route and usually the cheaper one.
• Default values — country- and product-specific fallbacks used when actual emissions can't be adequately determined. They are set at a level designed to incentivise the use of actual values — i.e. deliberately conservative (high).

The practical message for steelmakers: invest in robust measurement, because default values will typically cost you more.

To calculate emissions consistently, an operator sets system boundaries around a production process, then attributes the installation's emissions to the goods that process produces.

The functional unit is the basis of measurement. For iron & steel and aluminium it follows the general rule — tonnes of goods under the same CN code — because the CN codes already allow the calculation to differentiate products. (Cement and fertilisers use special units — clinker and nitrogen content respectively.)

Steel articles are often complex goods — made from precursors (e.g. crude steel, hot-rolled coil) that carry their own embedded emissions. The rule: the emissions of each relevant precursor are added to the emissions of the final good, and where precursors are themselves complex, the calculation repeats recursively.

• By default, a precursor's reporting period is the year the complex good was produced.
• Where precursors of the same CN code come from multiple installations or periods, a weighted average of their embedded emissions is used.
• Actual precursor data from a third-country supplier can be used only if backed by a valid verification report covering the right period; otherwise default values apply.

A monitoring plan is the installation's "rule book" — it documents the methodology, data sources, metering instruments and control procedures used to collect emissions data across the year. It is essential background for the verifier and for reproducible reporting.

Good practice per the CBAM guidance: keep the methodology simple but robust (reliable data sources, sound metering), ensure full transparency and traceability of every calculation and assumption, and include a process description that visualises system boundaries so there is no double-counting or gap.

Verification must be done by a verifier accredited by a national accreditation body (NAB). Accreditation is open to any legal person — in an EU member state or a third country — that can demonstrate:

• Knowledge of ISO 14065 (bodies verifying environmental information) and ISO 17029 (validation & verification bodies).
• Knowledge of CBAM rules — monitoring, calculation, free allocation, verification.
• Data & information auditing competence, plus core independence and impartiality.

The verifier provides reasonable assurance that the emissions report is free of material misstatements and non-conformities with the Annex IV calculation rules. Installation visits are, in principle, mandatory unless specific waiver criteria are met.

The verification report identifies the installation, the reporting period, the quantities and specific embedded emissions of each good, and — for complex goods — the precursors used and their emissions.

A standardised EU electronic database holding data on authorised declarants and their certificates, available in real time to customs and competent authorities. It also carries a separate section where third-country operators and installations can register and make their verified emissions available to declarants — a useful route for Indian producers to share credible data directly.

Government of India, has designated EEPC India as the Nodal Body for CBAM for the iron & steel and aluminium sectors. As the trade-and-investment promotion council for engineering exports (set up in 1955, 12,000+ members, ~60% SMEs), EEPC India is the interface between exporters and the Government on CBAM readiness — awareness, data-preparedness across the supply chain, and access to verification pathways.

On 18–19 August 2026, with NABCB and EEPC India, ran a national awareness session at Vanijya Bhawan, New Delhi, using iron & steel and aluminium as worked case studies.

Regulation (EU) 2025/2083 — the Omnibus simplification — entered into force on 20 October 2025 and eased several pressure points before the definitive period began:

• A single 50-tonne annual mass threshold replaces the old €150-per-consignment exemption (electricity and hydrogen excluded).
• Quarterly certificate-holding cut from 80% to 50% of accumulated emissions — freeing working capital.
• Annual declaration and surrender moved from 31 May to 30 September of the following year.
• A grace period for importers who applied for declarant status by 31 March 2026.

The Commission estimates this exempts roughly 90% of importers while still covering about 99% of embedded emissions.

• India–EU FTA CBAM annexure — the trade agreement includes a dedicated roadmap on CBAM, with a built-in flexibility obligation toward India.
• India's domestic carbon market — under development; the open question is whether carbon costs paid in India can be credited against CBAM.
• Scope expansion — the Commission is mandated to work toward covering, by 2030, all sectors under the EU ETS, and to review indirect emissions and downstream products.
• Sector reviews — ongoing EU Parliament (ENVI) review of thresholds, with industry pressing on the mass-based rule for high-value products.

Start with EEPC India as your Nodal Body for iron & steel and aluminium. For the definitive legal text, always refer to the primary source — Regulation (EU) 2023/956 and its amending Regulation (EU) 2025/2083 — and the European Commission's CBAM guidance and implementing acts. For accreditation and verification in India, engage with NABCB.