From Policy to Practice: CBAM Enters Its First Operational Year
As of January 2026, the EU’s Carbon Border Adjustment Mechanism (CBAM) has moved beyond planning and into execution.
After two years of transitional reporting, the system now has real financial consequences. Importers are no longer just collecting data—they are starting to price carbon into their supply chains.
The mechanism, developed by the European Commission, is designed to ensure that imports into the EU are subject to a carbon cost equivalent to that faced by EU producers under the Emissions Trading System.
What Has Actually Changed in 2026
The shift this year is straightforward but significant.
Until the end of 2025, companies were focused on reporting emissions. From 2026, that reporting begins to translate into cost.
Importers of CBAM goods must now:
- Register as authorised CBAM declarants
- Purchase CBAM certificates
- Declare embedded emissions annually
- Surrender certificates corresponding to those emissions
The price of these certificates is linked to the EU ETS, meaning that carbon pricing is now directly connected to import activity.
For many businesses, this is the first time carbon has become a visible and measurable cost of doing trade with the EU.
Recent Developments: CBAM Moves Into Operation
Over the past weeks, several developments have made it clear that CBAM is no longer theoretical.
The publication of the first CBAM certificate price for 2026 is one of the most important milestones so far. It gives companies a first concrete reference point for cost exposure and forces carbon pricing into financial planning.
At the same time, the EU has released detailed operational guidance covering how the system works in practice—authorisation, emissions calculation, verification and reporting. These documents are already becoming essential reading for compliance teams.
There has also been a noticeable increase in practical guidance aimed at non-EU producers. This reflects the reality that CBAM is not just an EU compliance exercise. It requires coordination across the supply chain, particularly when it comes to accessing and validating emissions data.
Training sessions, webinars and technical materials have also been rolled out at pace, suggesting that the focus has shifted to getting businesses operationally ready rather than explaining the concept.
Where Businesses Are Feeling the Pressure
For most companies, the challenge is not understanding CBAM. It is making it work in practice.
The first issue is cost. Carbon is starting to appear as a line item that needs to be monitored, forecast and managed. That has implications for pricing, sourcing and margins.
The second issue is data. Many businesses are finding that reliable emissions data from suppliers is not readily available or not aligned with EU methodologies. In some cases, default values may have to be used, which can increase the cost exposure.
The third issue is organisational. CBAM does not sit neatly within a single function. It touches tax, customs, procurement, sustainability and IT. In many organisations, those functions are still working out how to coordinate.
Scope: Who Is Affected
CBAM currently applies to a limited number of carbon-intensive sectors:
- Cement
- Iron and steel
- Aluminium
- Fertilisers
- Electricity
- Hydrogen
These sectors were chosen because they are most exposed to carbon leakage risk and represent a significant share of emissions covered by the EU ETS.
A System Still Taking Shape
Although CBAM is now live, it is still evolving.
Pricing will become more dynamic, moving from quarterly averages in 2026 to weekly calculations from 2027. At the same time, the gradual phase-out of free allowances under the EU ETS will increase the cost pressure on both EU producers and importers.
There is also a broader international dimension. CBAM is already influencing discussions in other jurisdictions and may accelerate the adoption of carbon pricing or similar mechanisms elsewhere.
What Companies Should Be Doing Now
At this stage, the priority is not theory but execution.
Businesses importing CBAM goods should be:
- Securing authorised declarant status
- Assessing their exposure to carbon costs
- Engaging suppliers on emissions data
- Reviewing internal systems and processes
Perhaps most importantly, they should be treating CBAM as an ongoing operational requirement rather than a one-off compliance exercise.
CBAM has moved quickly from policy ambition to operational reality.
In 2026, the key shift is that carbon is no longer abstract. It is quantified, priced and increasingly visible in cross-border trade.
For companies trading with the EU, the question is no longer whether CBAM matters, but how quickly they can adapt to it.