It is 2 January 2026. A compliance officer at a mid-sized Dutch steel importer is reading a customs bulletin over her first coffee of the year. A shipment from Mumbai is stuck at Rotterdam. The cargo cleared EU inspection. The paperwork is fine. But the Registry is returning a single red flag.
Not authorised.
She checks the clock. She has three pages of instructions in front of her, none of which existed in this form four months ago. The clock keeps moving. The shipment does not.
This is what the definitive phase of CBAM feels like on day one.
Let me walk you through how we got here, what has actually changed, and what any importer of steel, aluminium, cement, fertilisers, hydrogen, or electricity now has to do every year, forever. I will share the technical detail from the regulation. But I will also share what it actually means when a shipment lands. Because those two things have only recently become the same thing.
What is CBAM, really?
CBAM stands for Carbon Border Adjustment Mechanism. Most explainers stop there. I think that definition hides more than it reveals.
Here is the cleaner way to see it. The EU has been putting a carbon price on its own industries for twenty years through the EU Emissions Trading System. That means a steel mill in Germany pays for every tonne of CO2 it emits. A steel mill in Turkey does not. For a long time, the EU covered this gap by giving its own producers free allowances, so they would not lose business to cheaper imports.
But free allowances defeated the point. If the domestic producer does not really pay for carbon, there is no reason for them to decarbonise. And the atmosphere does not care which side of the border the emissions came from.
CBAM is the EU's attempt to close this hole. Instead of continuing to subsidise its own producers, it puts a carbon price on the imports. A Turkish steel mill selling into the EU now pays the same carbon price as a German one. In theory.
Why does that matter? Because once imports and domestic production pay the same carbon price, free allowances can be phased out without collapsing EU industry. CBAM and the end of free allowances are two ends of the same rope.
Go deeper
Why CBAM Exists: Carbon Leakage and Border Adjustments
The deeper theory behind why the EU built a carbon border tariff, and what WTO-compatible designs had to look like
The transitional phase: October 2023 to December 2025
Before the definitive regime could begin, the EU ran a two-year rehearsal.
From 1 October 2023 to 31 December 2025, every importer of CBAM goods had to file quarterly reports. They had to disclose the quantity of goods, the country of origin, and the embedded emissions per tonne. They were not asked to pay anything. No certificates were purchased. No carbon liability was settled.
Why a rehearsal? Because nobody had ever done this at scale. Not importers, not customs authorities, not the national bodies that would eventually issue CBAM certificates. Asking a Dutch trading company to obtain verified emissions data from an Indonesian nickel smelter was genuinely new. The transitional phase gave everyone time to build the supply chain conversations, the reporting templates, and the internal processes that would be needed once money was on the line.
The first quarterly report was due 31 January 2024, covering October through December 2023. Reports were filed through the CBAM Transitional Registry, a simpler version of what would later become the full CBAM Registry.
During this rehearsal, importers could choose between three calculation pathways. They could use the EU Method, which relied on actual installation-level data from the foreign producer. They could use an equivalent method recognised by the Commission. Or, until 31 July 2024, they could use default reference values published by the Commission. These defaults were deliberately conservative, meaning higher than most real-world emissions, so importers had a reason to push their suppliers for real data instead of hiding behind the defaults.
The penalties during the transitional phase were small by definitive-phase standards. Between €10 and €50 per tonne of unreported or incorrectly reported CO2 equivalent. Not nothing. But not the kind of number that would reshape a business.
What was the EU really doing during this window? It was collecting a dataset. Every quarterly report added to a picture of the actual carbon intensity of goods flowing into EU markets from each country and sector. That dataset is what the Commission is now using to refine the default values for the definitive regime and to decide which countries' carbon prices are recognised as deductible.
Go deeper
The Transitional Period in Depth
The full mechanics of quarterly reporting, the three calculation pathways, and what the EU was really collecting during the rehearsal
January 2026: when reporting became payment
On 1 January 2026, CBAM flipped from a reporting exercise into a full financial mechanism.
From that date, only authorised CBAM declarants may import CBAM goods above the threshold into the EU. The Registry is no longer a static reporting system. It is now wired in real time into national customs systems, TARIC, and the EU Customs Single Window. That is why the shipment from Mumbai in the opening scene was flagged at Rotterdam. The customs declaration triggered an automated check. The Registry answered. The answer was no.
This integration is the operational heart of the definitive regime. A shipment of CBAM goods arriving at any EU border now goes through a live query against the Registry. If the declarant is authorised, it clears. If not, it does not enter free circulation. There is no grace period for a missing authorisation, and no way to catch up on one after the shipment has arrived.
The first quarterly CBAM certificate price for 2026 was published on 7 April 2026, covering the first quarter's imports. It came in at €75.36 per tonne of CO2 equivalent. That is the number that starts the clock on the first ever CBAM financial liability. The Q2, Q3, and Q4 2026 prices are scheduled for publication on 6 July 2026, 5 October 2026, and 4 January 2027 respectively.
Who has to comply?
Not every importer is caught by the definitive regime. The EU built in one important simplification in 2025.
A single mass-based de minimis threshold of 50 tonnes per year applies across all CBAM sectors. If your total annual imports of CBAM goods stay below 50 tonnes, you are not required to become an authorised declarant and you do not have to surrender certificates.
This replaced the earlier proposal of sector-by-sector thresholds, which would have meant tracking multiple different rules. The 50-tonne number is simple and predictable. It still catches the vast majority of industrial imports by volume, because CBAM sectors are dominated by heavy commodity flows.
Everyone else needs authorisation. And the authorisation has to be obtained in advance from the national competent authority, or NCA, of the Member State where the importer is established. You cannot apply at the border. You cannot apply retroactively.
The application needs company registration details, a VAT number, a declaration of no serious criminal or tax offences in the preceding five years, evidence of financial capacity to meet CBAM obligations, and acceptance of the Registry's terms of use. The NCA can grant or refuse the authorisation, and can revoke it later if the declarant stops meeting the conditions or commits fraud.
The Commission publishes a live list of authorised declarants. It is public. Anyone can verify whether a counterparty holds valid authorisation.
Go deeper
Who Must Comply: Importers and Declarants
The full authorisation process, indirect customs representatives, and the chain of responsibility when goods change hands at the border
The annual compliance cycle
Once you are authorised, the definitive regime becomes an annual rhythm. Four beats.
One. Purchase certificates throughout the year. As imports happen, the declarant buys CBAM certificates from the NCA at the prevailing price. Certificates do not have to be bought at the moment of import. You can buy them earlier, buy them later, buy them in batches. You have flexibility on timing, but there is a floor.
By the end of each calendar quarter, the declarant must hold at least 80 per cent of the certificates corresponding to the embedded emissions in the goods imported during that quarter. So if a declarant brings in 200 tonnes of CO2 equivalent of embedded emissions in Q1, by 31 March they must already hold at least 160 CBAM certificates. This rule stops the temptation to defer everything to the last day of the year.
Two. Submit the annual CBAM declaration. By 31 May of the year following import, the declarant files a declaration through the Registry. This is the formal statement of the total embedded emissions for the previous calendar year, broken down by commodity. For imports during 2026, the declaration is due 31 May 2027.
Three. Surrender certificates to match the declared emissions. On or before the same 31 May deadline, the declarant surrenders certificates equal to the declared embedded emissions, adjusted for any carbon price already paid in the country of origin. Surrendered certificates are cancelled. They cannot be recovered or reused.
Four. Buy back surplus certificates if needed. If a declarant ends the year holding more certificates than they needed, Article 25 of the CBAM Regulation lets them sell back up to one-third of the certificates purchased during the prior year. The buyback happens at the current EU ETS price, not the price originally paid. So a declarant who overbought and then sees the EU ETS price fall will recover less than they paid. That price risk is the cost of flexibility.
This four-step cycle then repeats. Every year. Forever.
Go deeper
The Definitive Regime: Step-by-Step Compliance Cycle
The full annual cycle with deadlines, adjustment factors, and how free allowance phase-out ties into the CBAM coverage percentage
The 31 May deadline, in plain terms
If you only remember one date, remember this one.
31 May is the single annual deadline by which the CBAM declaration must be filed and certificates surrendered. It applies every year. For emissions embedded in 2026 imports, the deadline is 31 May 2027. For 2027 imports, it is 31 May 2028. And so on.
Miss it, and Article 26 of the CBAM Regulation kicks in. The excess emissions penalty is €100 per tonne of CO2 equivalent, adjusted for inflation from the 2013 base year under EU ETS rules. This is not a small fee. It mirrors the penalty that EU ETS installations face when they fail to surrender allowances. And here is the bite: paying the penalty does not discharge the obligation. You still have to go back, buy the missing certificates, and surrender them. The penalty is in addition to the carbon liability, not instead of it.
Why such a harsh design? Because if the penalty were cheaper than buying certificates, non-compliance would simply become a business decision. Making the penalty a multiple of the underlying carbon cost, plus a requirement to still deliver the certificates, removes that escape route.
CBAM certificates, explained
A CBAM certificate is not a share, not a carbon credit in the voluntary sense, and not an EU ETS allowance.
It is a compliance instrument. One certificate represents one tonne of CO2 equivalent of embedded emissions in imported goods. You buy it from the NCA. You hold it in your CBAM account in the Registry. You surrender it against your annual declaration. You cannot trade it with another declarant. There is no secondary market. There is no futures contract on CBAM certificates. There are no options.
The cleanest way to think about it is this. An EU ETS allowance behaves like a share. It trades on exchanges, has a futures market, and can be held as a financial investment. A CBAM certificate behaves like a postage stamp. You buy it from the post office at the posted rate, you use it to "post" your carbon liability, and you cannot sell it to anyone else.
Why is it designed this way? To prevent speculation. The Commission wanted CBAM certificates to track the EU ETS carbon price cleanly, not develop their own market dynamics. Restricting supply to NCA purchase and preventing secondary trading keeps that link intact.
The price of a certificate is set by reference to the EU ETS auction price on the European Energy Exchange. In 2026, the reference is the quarterly average. From 2027 onwards, it becomes a weekly average, making the certificate price much more responsive to the live ETS market.
Here is what that looks like in practice. A German manufacturer imports 10,000 tonnes of electrolytic aluminium from a Bahraini smelter during Q1 2026. The verified embedded direct emissions are 3.2 tonnes of CO2 per tonne of aluminium. The Q1 2026 CBAM certificate price, as published by the Commission on 7 April 2026, is €75.36 per tonne. Bahrain has no carbon pricing scheme, so no deduction applies.
Total embedded emissions: 10,000 × 3.2 = 32,000 tonnes CO2 equivalent. CBAM certificate cost: 32,000 × €75.36 = €2,411,520.
That is the bill that has to be surrendered by 31 May 2027.
Go deeper
CBAM Certificates: Pricing and Surrender in Full
The full mechanics of certificate pricing, quarterly minimum holdings, the buyback facility, and the design choices that separate CBAM certificates from EU ETS allowances
The CBAM Registry: registration, login, and what it actually does
The Registry is the digital spine of CBAM. Without it, none of the rest of this works.
It is a centralised EU-level database operated by the Commission. It is separate from the EU ETS Registry and separate from national customs systems, but fully integrated with both. It has been live in transitional form since October 2023 for report submission. Its full definitive functionality, including certificate purchase and surrender, went live on 1 January 2026.
The Registry is organised into functional modules. The Authorisation Management Module, or AMM, handles declarant applications, NCA reviews, status updates, and revocations. The Certificate Management module is where certificates are purchased, held, tracked, and bought back. The Declaration and Surrender module is where the annual CBAM declaration is submitted and where the corresponding certificates are cancelled. The Data Reconciliation for Monitoring and Control module, DRMC, is the auditor in the background. It cross-references customs import data against CBAM declarations to catch discrepancies, circumvention, and data-quality issues.
Think of a declarant's Registry account as a passport and a bank account combined. The passport part, AMM, establishes your identity and authorisation to operate. The bank account part, Certificate Management, holds your carbon compliance balance. When you file the annual declaration, you are telling the bank how much to debit.
How do you actually log in? You register through the NCA of your Member State as part of the authorisation application. Once authorisation is granted, you are issued credentials to access the Registry. There is no separate standalone CBAM login account in the way there might be for a commercial web service. Your access is tied to your authorised declarant status. If that status is revoked, so is your Registry access.
The Commission was developing a Common Central Platform in early 2026 to consolidate user experience across all Member States. A Call for Tenders was issued and its submission deadline was extended into April 2026. When it is in place, the CCP will give declarants a single interface for everything rather than slightly different flows depending on which NCA they belong to.
Go deeper
The CBAM Registry and IT Systems: A Full Tour
All five Registry modules, how the integration with TARIC and national customs works in real time, and what the CCP will change
What about the carbon price already paid in the country of origin?
If the foreign producer has already paid a carbon price at home, should the EU charge them again?
The regulation says no, within limits. Article 9 of the CBAM Regulation allows a deduction from the CBAM liability for any explicit carbon price effectively paid in the country of origin, provided that the price is not already subject to any rebate or compensation upon export. The declarant has to provide evidence verified by an independent verifier accredited under the CBAM regime.
The challenge is that many carbon pricing systems around the world are partial, cover different sectors, or offer rebates at the border. The Commission has been working through the transitional-period data to decide which systems qualify. Declarants importing from countries with recognised carbon prices, for instance certain installations in the UK, Switzerland, or parts of China and India, may be able to claim a deduction. The mechanics are strict, and the burden of proof sits firmly with the declarant.
FAQ
When did the CBAM definitive regime start?
The CBAM definitive regime started on 1 January 2026. That is the date on which only authorised declarants could import CBAM goods above the 50-tonne threshold, when certificate purchase and surrender became mandatory, and when the Registry was fully integrated with customs systems in real time.
When are CBAM certificates surrendered?
CBAM certificates are surrendered annually, by 31 May of the year following the calendar year in which the imports occurred. For embedded emissions in goods imported during 2026, the surrender deadline is 31 May 2027. For 2027 imports, it is 31 May 2028. The declaration of embedded emissions is submitted at the same time, through the CBAM Registry.
What is the EU CBAM annual declaration deadline in the definitive regime?
31 May of the year following each import year. The annual CBAM declaration is submitted through the Registry and states the total verified embedded emissions for each commodity imported in the prior calendar year.
What were the EU CBAM transitional phase dates?
1 October 2023 to 31 December 2025. During this window, importers had to file quarterly CBAM reports but were not required to purchase or surrender certificates. The first report covered Q4 2023 and was due 31 January 2024.
How does the EU CBAM registry integrate with customs systems?
The Registry is integrated in real time with national customs import systems, TARIC, and the EU Customs Single Window. When a shipment of CBAM goods arrives at any EU external border, the customs declaration automatically queries the Registry to verify that the declarant holds a valid authorisation. If the declarant is not authorised, the goods cannot be released into free circulation.
How do I register as a CBAM declarant?
You apply to the national competent authority (NCA) in the Member State where your company is established. The application requires company registration details, VAT number, a declaration of no serious criminal or tax offences in the preceding five years, evidence of financial capacity to meet CBAM obligations, and acceptance of the Registry's terms of use. Once the NCA approves the application, you are issued access credentials to the Registry.
How do I log in to the CBAM Registry?
You log in through the credentials issued by your NCA as part of your authorisation. There is no standalone public-facing CBAM login. Your Registry access is tied to your authorised declarant status.
Do I have to surrender CBAM certificates every year?
Yes, if you are an authorised declarant importing CBAM goods above the 50-tonne annual threshold. The surrender is an annual obligation settled by 31 May each year, covering the embedded emissions of goods imported during the previous calendar year.
What happens if I do not surrender enough certificates?
Article 26 of the CBAM Regulation sets the excess emissions penalty at €100 per tonne of CO2 equivalent, adjusted for inflation from 2013 under EU ETS rules. The penalty does not discharge the obligation. You still have to purchase and surrender the missing certificates on top of paying the penalty.
What to do this week if you are caught by CBAM
If your company imports steel, aluminium, cement, fertilisers, hydrogen, or electricity, and you have not yet mapped your 2026 exposure, the honest answer is that you are already late. But late is not the same as lost.
Start with three things.
Quantify your annual import volume by commodity. If it is over 50 tonnes in any CBAM sector, you need authorisation. Apply now, not next quarter.
Open a supplier conversation. The EU Method requires verified installation-level emissions data. That conversation is slow. Starting it in April gives you time. Starting it in October does not.
Model the cash flow. A German importer bringing in 32,000 tonnes of embedded emissions at €75.36 per tonne is staring at a €2.4 million certificate bill due by 31 May 2027. That is a treasury problem, not just a compliance problem. The 80 per cent quarterly minimum holding rule means the cash starts flowing well before the annual surrender date.
CBAM is not a future thing any more. It is the operating environment. The question is not whether to comply. The question is how quickly you can make compliance routine.
The shipment at Rotterdam eventually cleared. The authorisation had been applied for in December but not granted until 4 January. Three days of demurrage charges. A phone call to legal. A very long morning.
That was the easy version.