The EU’s Carbon Border Adjustment Mechanism is no longer a future concern. CBAM entered its definitive compliance phase on January 1, 2026. If your organization imports steel, aluminium, cement, fertilisers, electricity, or hydrogen into the EU, you are now subject to reporting obligations, and certificate purchase requirements are coming next.
For procurement teams, CBAM changes the math on supplier selection. The carbon intensity of your suppliers directly affects your import costs. This guide breaks down what CBAM means for procurement in plain language: what is required, what it costs, and what you should be doing now.
What Is CBAM?
CBAM is an EU regulation designed to prevent carbon leakage, which is when companies move production to countries with weaker climate regulations to avoid carbon costs. It works by putting a carbon price on certain imported goods, matching the price that EU producers already pay through the EU Emissions Trading System (ETS).
According to the European Commission, CBAM ensures a level playing field between EU manufacturers who pay for their carbon emissions and non-EU manufacturers who may not face equivalent carbon costs at home. The mechanism creates a financial incentive for non-EU producers to reduce emissions and for EU importers to source from lower-carbon suppliers.
What Goods Are Covered?
CBAM currently applies to six categories of goods: cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen. These were selected because their production is carbon-intensive and faces significant risk of carbon leakage.
The scope covers not just the raw materials but also selected precursors and downstream products. For example, steel coverage extends beyond raw steel to include steel tubes, pipes, and certain fabricated products. Procurement teams need to check whether their specific product codes (CN codes) fall within the CBAM scope. The CarbonChain CBAM guide provides detailed product code mappings.
It is worth noting that the EU has signaled potential expansion of CBAM to additional product categories in future phases, so teams importing other carbon-intensive goods should be preparing even if they are not yet covered.
The Compliance Timeline
Understanding the timeline is critical for planning. Here is what has happened and what is coming.
The transitional reporting phase ran from October 2023 through December 2025. During this period, importers reported embedded emissions but did not need to purchase certificates. This was the learning phase.
The definitive phase began on January 1, 2026. Since this date, only authorized CBAM declarants can import covered goods into the EU. Importers must report embedded emissions for each import, verified by an accredited third party. According to ICAP’s analysis, the EU adopted simplifications to CBAM rules ahead of this phase to ease the compliance burden.
CBAM certificate sales begin on February 1, 2027. Declarants will acquire certificates in 2027 to cover embedded emissions from their 2026 imports. The first full CBAM declaration and certificate surrender, covering 2026 imports, must be completed by September 30, 2027.
From 2027 onward, authorized declarants must ensure that by the end of each quarter, they hold CBAM certificates covering at least 50% of their embedded emissions to date for that compliance year.
Who Needs to Comply?
EU importers or their indirect customs representatives importing more than 50 tonnes of CBAM-covered goods annually must apply for authorized CBAM declarant status. This threshold replaced the former 150 euro consignment value exemption. According to IntegrityNext’s CBAM analysis, importers below the 50-tonne threshold are fully exempt from all CBAM obligations, including reporting, authorization, and certificate purchases.
If you are a procurement team at a company that imports any of the covered goods into the EU, you need to determine whether your volumes exceed the threshold and ensure your organization has or is applying for authorized declarant status.
What It Costs
CBAM certificate prices are based on the EU ETS allowance auction price, expressed in euros per tonne of CO2 emitted. During 2026, the price is calculated as a quarterly average. From 2027 onward, it shifts to a weekly average.
To estimate your CBAM cost exposure, multiply the embedded emissions per tonne of each imported product by the number of tonnes imported, then multiply by the EU ETS price. For example, if you import steel with embedded emissions of 1.8 tonnes CO2 per tonne of steel, and the ETS price is 70 euros per tonne of CO2, each tonne of imported steel carries an additional CBAM cost of approximately 126 euros.
If a non-EU supplier’s home country already charges a carbon price on the production of those goods, that amount can be deducted from the CBAM certificate obligation. This incentivizes sourcing from countries with their own carbon pricing mechanisms.
What Procurement Teams Need to Do
CBAM creates several practical tasks for procurement. Here is what to prioritize.
Map Your CBAM Exposure
Identify every import line that falls under CBAM product codes. Map the volumes, origins, and current supplier base for each. Calculate your total embedded emissions exposure using available data, even if it is based on default values initially. This gives you a baseline to work from.
Engage Suppliers on Emissions Data
This is the biggest practical challenge. CBAM requires actual embedded emissions data from your suppliers, verified by accredited third parties. Getting this data from non-EU manufacturers, especially smaller ones, requires clear communication about what is needed and why.
Start the conversation early. Provide suppliers with the specific data formats and methodologies required. Consider the emissions data collection as part of your supplier onboarding and management process going forward. The SAP CBAM resource provides useful templates for supplier engagement.
Model Cost Scenarios
Build total landed cost models that include CBAM certificate costs under different ETS price scenarios. This lets you compare suppliers not just on unit price and freight, but on their carbon cost impact. A supplier with a lower unit price but higher carbon intensity may actually be more expensive once CBAM costs are factored in.
Evaluate Lower-Carbon Alternatives
CBAM creates a direct financial incentive to source from suppliers with lower carbon intensity. This might mean shifting volume to suppliers using cleaner production technologies, sourcing from countries with carbon pricing that offsets CBAM costs, or considering EU-based suppliers who do not trigger CBAM at all.
Speya’s Source tool helps procurement teams identify suppliers globally, including those with lower carbon intensity and verified environmental certifications. By searching across millions of suppliers and filtering for environmental criteria, teams can find alternatives that reduce both their carbon footprint and their CBAM cost exposure.
Integrate CBAM into Sourcing Decisions
CBAM costs should not be an afterthought in sourcing. Build carbon intensity into your supplier evaluation criteria alongside price, quality, delivery, and other standard metrics. When CBAM costs are visible in every sourcing decision, your team naturally gravitates toward suppliers that reduce exposure.
The Broader Procurement Impact
CBAM is part of a larger shift toward carbon-adjusted trade. It changes the competitive dynamics between suppliers in different regions and creates new criteria for supplier selection.
For procurement teams already focused on ESG in procurement, CBAM provides a concrete financial mechanism that reinforces environmental goals. Suppliers with lower emissions are not just better for sustainability reporting; they are cheaper to import from.
CBAM also increases the importance of supplier data quality. Procurement teams need reliable, verified emissions data from their supply base. This is the same type of intelligence layer that supports broader supplier risk management and compliance programs.
Speya’s Enrich capability supports this by autonomously verifying environmental certifications and gathering emissions-related data across your supplier base. When your AI agents monitor suppliers continuously, emissions data stays current rather than relying on annual self-assessments.
Common Mistakes to Avoid
Waiting for perfect data before acting is the most common mistake. Default emission values exist for a reason: they let you start modelling CBAM costs now, even before all suppliers provide verified actuals. Use defaults as a starting point, then improve data quality over time.
Treating CBAM as a compliance-only exercise is another error. The organizations that will benefit most are those that use CBAM as a trigger to review their sourcing strategy, evaluate lower-carbon suppliers, and build carbon into their total cost models.
Ignoring Scope 3 implications is risky. Even if your direct imports are below the 50-tonne threshold, your customers may be factoring CBAM into their own supply chain decisions. Understanding your carbon position helps you remain competitive as a supplier to EU-based customers.
Frequently Asked Questions
What is CBAM and when did it take effect?
The Carbon Border Adjustment Mechanism is an EU regulation that puts a carbon price on imported goods to prevent carbon leakage. It entered its definitive compliance phase on January 1, 2026. EU importers of covered goods must now report embedded emissions and will need to purchase CBAM certificates starting in 2027.
Which goods are covered by CBAM?
CBAM currently covers cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen. These were selected because their production is carbon-intensive and at significant risk of carbon leakage. The scope includes selected precursors and downstream products within these categories.
Who needs to comply with CBAM?
EU importers bringing in more than 50 tonnes of CBAM-covered goods annually must register as authorized CBAM declarants. Importers below this threshold are fully exempt from CBAM obligations including reporting, authorization, and certificate purchases.
What are CBAM certificates and how are they priced?
CBAM certificates represent the carbon cost of imported goods. Their price is based on the EU Emissions Trading System allowance auction price, calculated quarterly in 2026 and weekly from 2027. Certificate sales begin February 2027, with the first surrender covering 2026 imports due by September 30, 2027.
What emissions data do importers need from suppliers?
Importers need actual embedded emissions data for each import, verified by an accredited third party. This means supplier-specific production emissions, not industry averages. Collecting this data from non-EU suppliers is one of the biggest practical challenges of CBAM compliance.
How can procurement teams prepare for CBAM?
Map which imports fall under CBAM product codes. Engage suppliers on emissions data collection early. Model cost impacts using EU ETS price scenarios. Evaluate suppliers in lower-carbon regions or with cleaner production methods. Build carbon intensity into your standard supplier evaluation criteria. Use platforms like Speya (formerly Find My Factory) to discover lower-carbon alternatives.
Sources
Where Speya fits
Compliance starts with the suppliers you consider. Speya screens suppliers for ESG, certifications, and financial health at the point of discovery, so every shortlist already clears your compliance bar, and the data your CBAM obligations depend on is captured up front rather than chased after the fact. Related: CBAM.