CBAM Post-2026: Expansion and Future Directions

CBAM Post-2026: Expansion and Future Directions

CBAM after 2026

The permanent CBAM system will become operational on January 1st, 2026. Importers will need to annually declare the quantity of products imported into the EU and their associated greenhouse gas emissions from the previous year.

Subsequently, importers must surrender CBAM certificates equal to the emissions in their imported goods, effectively applying a carbon price. The cost of these certificates will match the weekly average auction price in the EU carbon market. This ensures that importers pay the same per tonne of CO2 as if the goods were produced in the EU, in line with EU ETS carbon prices.

Failure to submit the required CBAM certificates will lead to fines for each tonne of CO2 equivalent. For goods imported by non-declarants, fines will increase 3 to 5 times depending on the duration, severity, intent, and frequency of the non-compliance.

CBAM expansion

Before the transitional period ends, the European Commission will review the CBAM to consider expanding its scope to include more products like organic chemicals and downstream products. A schedule will outline when other goods covered by the EU ETS will be integrated.

By 2030, the aspiration is to incorporate all goods covered by the EU Emission Trading Scheme into the CBAM framework.

Additionally, the European Commission will consider expanding the CBAM to cover both direct and indirect emissions. Currently, it only addresses direct emissions from the production of covered products and indirect emissions for some of those products.

What importers need to know

Importers of goods produced outside the EU, falling under the CBAM's purview, should acquaint themselves with their responsibilities. They must ensure to:

• Register with national authorities before importing goods.

• Annually declare the quantity of imported goods and their embedded greenhouse gas (GHG) emissions, necessitating the collection of emissions data, including those from their supply chain.

• Starting from January 2026, obtain the requisite number of CBAM certificates to offset embedded emissions.

• Maintain documentation to demonstrate compliance.

The CBAM Transitional Registry

The European Commission has established a transitional registry for CBAM to aid EU importers in meeting their CBAM-related obligations and reporting. Importers are advised to seek access to this registry through the National Competent Authority (NCA) in the pertinent EU Member States.