After a two-year transition period, full implementation of the European Union’s Carbon Border Adjustment Mechanism (CBAM) is set to begin on Jan. 1, 2026.
Designed to support the EU’s decarbonization goals, CBAM functions as a tariff placed on carbon emitted during the production of specific carbon intensive goods entering the EU single market, including aluminum, iron, and steel. This carbon tax requires companies to gather detailed supply chain information to determine the direct and indirect emissions associated with their products.
“CBAM charges a tariff on the embedded carbon content of certain imports from non-EU countries,” explained Amy Ryu, head of product at Tracera, an AI-powered sustainability data collection platform. This tariff is designed to counter the risk of “carbon leakage” that results from EU companies importing carbon intensive raw materials from abroad, as opposed to buying them from companies in the EU that must pay a carbon price. To that end, CBAM seeks to equalize the charge imposed on the same goods that are produced in the EU.
With respect to emissions data collecting, companies exporting products to the EU will no longer be able to rely on “default values” to meet their compliance requirements. In fact, default values will be limited to just 20% of a product’s total carbon footprint.
“That means emissions data must now be collected directly from suppliers,” said Ryu, who was a featured presenter during an AEM Member Education Webinar on Sept. 18. “Additionally, starting in January 2026, there is a chance that a company’s data could be audited to ensure that accurate numbers are being reported. Obtaining accurate, verifiable information from your suppliers, and ensuring that you’re reporting on the correct figures aligned with your customs declarations, is becoming more important as 2026 fast approaches.”
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