Definitive Period: From January 2026
The shift from reporting to payment
On 1 January 2026, CBAM moved from a reporting-only obligation to a full financial mechanism. Authorised declarants must now purchase CBAM certificates, declare embedded emissions in their annual CBAM declaration, and surrender the correct number of certificates by 31 May each year. Understanding this annual compliance cycle is essential for importers, customs representatives, and compliance teams.
Entry into the Definitive Regime
CBAM successfully entered its definitive phase on 1 January 2026, following coordinated deployment across all EU Member States. The CBAM Registry was fully integrated with national customs import systems, TARIC, and the EU Customs Single Window, enabling real-time data exchange and validation of declarants at EU external borders.
From this date, only authorised CBAM declarants may import CBAM goods into the EU customs territory. The status of authorised declarant must be obtained in advance from the national competent authority (NCA) in the country where the importer is established. Importers who had not secured this status by 1 January 2026 faced significant operational disruption.
The 50-Tonne De Minimis Threshold
Not every importer of CBAM goods is subject to the full definitive regime. Under the simplifications adopted in 2025, a single mass-based threshold of 50 tonnes applies across all CBAM sectors. Importers whose total annual imports of CBAM goods remain below this threshold are not required to become authorised declarants or surrender certificates.
This threshold replaced the earlier sector-by-sector de minimis rules proposed during the transitional phase, creating a simpler, more predictable entry point for smaller importers and customs representatives.
Analogy: A toll road with a weight limit
Think of the CBAM definitive regime like a toll road for heavy vehicles. Light vehicles (small importers below 50 tonnes) pass through freely. But once your shipment exceeds that weight threshold for the year, you need the right authorisation and must pay the toll in the form of CBAM certificates. The toll price adjusts weekly from 2027 onwards, reflecting the live EU ETS auction price for carbon allowances.
The Annual Compliance Cycle
The definitive regime follows a structured annual cycle. Each element has a fixed deadline that authorised declarants must plan around:
| Step | Action | Deadline |
|---|---|---|
| 1. Purchase certificates | Buy CBAM certificates from the NCA at the prevailing quarterly (2026) or weekly (2027+) average EU ETS auction price | Throughout the year as imports occur |
| 2. Declare embedded emissions | Submit the annual CBAM declaration via the CBAM Registry, stating total embedded emissions per commodity for the preceding calendar year | 31 May following the import year |
| 3. Surrender certificates | Surrender the number of CBAM certificates corresponding to the declared embedded emissions, adjusted for any deductible carbon price paid in the country of origin | 31 May following the import year |
| 4. Repurchase adjustment | Certificates held in the registry account may be repurchased by the NCA (up to one-third of the annual holding), providing liquidity flexibility | During the year |
CBAM Certificate Pricing
The price of CBAM certificates is directly linked to the EU ETS, ensuring that the carbon price paid by importers mirrors that paid by EU domestic producers. During 2026, the certificate price is set as the quarterly average of the EU ETS auction price (expressed in euro per tonne of CO₂). From 2027 onwards, pricing becomes a weekly average, making it more responsive to live market conditions.
The first quarterly CBAM certificate price was announced for publication on 7 April 2026, covering the first quarter of imports. Certificates are purchased in euro and are non-transferable between declarants, preventing the emergence of a secondary CBAM certificate market.
Example: Calculating a CBAM liability in 2026
Suppose a German manufacturer imports 10,000 tonnes of electrolytic aluminium from a Bahraini smelter during 2026. The verified embedded direct emissions are 3.2 tCO₂e per tonne of aluminium. The Q1 2026 CBAM certificate price is €62 per tonne CO₂e. The Bahraini smelter operates under no carbon pricing scheme, so no deduction applies.
Total embedded emissions: 10,000 × 3.2 = 32,000 tCO₂e
CBAM certificate cost: 32,000 × €62 = €1,984,000 to be surrendered by 31 May 2027
Phase-Out of EU ETS Free Allowances
The definitive CBAM regime is explicitly designed to run in parallel with the phase-out of free EU ETS allowances granted to domestic producers in CBAM sectors. Article 31 of the CBAM Regulation requires that CBAM certificates cover only that proportion of embedded emissions not already covered by EU ETS free allowances.
Free allowances in CBAM sectors are being progressively reduced from 2026, reaching zero by 2034. The Commission publishes an annual adjustment factor specifying the percentage of embedded emissions that must be covered by CBAM certificates in each year. This prevents a situation where EU producers receive free allowances (a competitive subsidy) while importers also face no CBAM charge, which would undermine the mechanism's environmental effectiveness.
Under Article 26 of the CBAM Regulation, a declarant who fails to surrender sufficient certificates by 31 May is subject to an excess emissions penalty. This penalty is set at the same rate as that applied under the EU ETS for excess emissions: €100 per tonne of CO₂ equivalent (adjusted for inflation from 2013 onwards under EU ETS rules). This creates a strong financial incentive to ensure accurate declaration and timely certificate surrender.
Importantly, payment of the penalty does not discharge the obligation to surrender the missing certificates. The declarant must still purchase and surrender the outstanding certificates in addition to paying the fine. This dual obligation mirrors the EU ETS design and ensures that CBAM cannot be treated as a price to pay for non-compliance rather than a genuine compliance instrument.
Key Takeaways
- 1The definitive CBAM period began 1 January 2026, requiring authorised declarants to purchase and surrender CBAM certificates, not just report emissions
- 2A 50-tonne de minimis threshold exempts the smallest importers from full declarant obligations
- 3The annual compliance cycle runs from import throughout the year, with the CBAM declaration and certificate surrender due by 31 May of the following year
- 4Certificate prices equal the quarterly (2026) or weekly (2027+) average EU ETS auction price, directly linking import costs to domestic carbon prices
- 5EU ETS free allowances in CBAM sectors are being phased out from 2026 to 2034, with CBAM coverage growing proportionally