What Is CBAM?
The Carbon Border Adjustment Mechanism (Regulation (EU) 2023/956, known as CBAM) is an EU regulation that requires importers of certain carbon-intensive goods to report the embedded emissions in those goods and, from 2026, to purchase CBAM certificates equivalent to the carbon price that would have been paid had the goods been produced in the EU under the EU Emissions Trading System (EU ETS).
CBAM prevents “carbon leakage” — the risk that EU production moves to countries with weaker climate policies, undermining the EU’s emission reduction targets.
Which Goods Are Covered?
CBAM applies to imports in six sectors listed in Annex I of Regulation (EU) 2023/956:
| Sector | Examples |
|---|---|
| Cement | Clinker, Portland cement, aluminous cement |
| Iron and steel | Pig iron, ferro-alloys, crude steel, flat/long products, tubes, wire |
| Aluminium | Unwrought aluminium, aluminium bars/rods/profiles, wire, foil |
| Fertilisers | Nitric acid, ammonia, potassium nitrate, compound fertilisers with nitrogen |
| Electricity | Electrical energy imported from third countries |
| Hydrogen | Hydrogen gas |
The covered goods are identified by their CN (Combined Nomenclature) codes. If you are unsure whether your imports fall under CBAM, check the CN code of each product against Annex I.
Timeline
| Phase | Period | Obligation |
|---|---|---|
| Transitional period | 1 Oct 2023 – 31 Dec 2025 | Quarterly reporting only (CBAM reports). No financial obligation. |
| Definitive period | 1 Jan 2026 onwards | Full CBAM declarations + certificate purchase. EU ETS free allocation phase-out begins in parallel (2026–2034). |
What Must You Declare?
Under CBAM Art. 6, authorised declarants must submit an annual CBAM declaration containing:
- Total quantity of each type of goods imported during the preceding calendar year
- Total embedded emissions in those goods (direct and, where applicable, indirect emissions)
- Total number of CBAM certificates surrendered, after deducting any carbon price already paid in the country of origin
Embedded emissions must be determined using either actual emissions data from the installation of production or, where not available, default values published by the European Commission.
CBAM Certificates
From 2026, importers must purchase CBAM certificates from their national competent authority. The certificate price is linked to the weekly average EU ETS allowance price. One certificate corresponds to one tonne of CO2e. If the producer has already paid a carbon price in the country of origin, this can be deducted.
How BARGO applies this
BARGO’s tooling supports CBAM compliance in several ways:
- CBAM goods classification — our AI classifier matches your procurement data against CBAM-covered goods using CN codes and product keywords.
- Embedded emissions estimation — for goods where actual production data is not available, BARGO’s tooling applies default emission factors (e.g. cement: 0.73 tCO2/t clinker from EU production benchmarks 2021–2025).
- Carbon cost exposure — the CarbonCostExposure dashboard widget alerts you when CBAM-affected sectors appear in your import data and estimates your certificate cost (tonnes imported × emission factor × EUA price).
- ESRS E1-6 integration — emissions from imported goods are captured in your Scope 3 Category 1 (Purchased Goods & Services) calculations, keeping your CBAM and ESRS reporting aligned.
What Is Not Yet Covered
BARGO’s tooling does not yet support:
- Structured quarterly CBAM declaration format for submission to the CBAM Transitional Registry
- Third-country producer data collection (supplier engagement portal)
- CBAM certificate inventory management
These features are on the roadmap. In the meantime, BARGO’s tooling provides the emissions data you need to populate your declarations.
Legal References
- Regulation (EU) 2023/956 (CBAM) —
CELEX 32023R0956 - CBAM Art. 6 — CBAM declaration obligation
- CBAM Annex I — list of covered goods and CN codes
- EU ETS (Directive 2003/87/EC) — carbon pricing and free allocation