CBAM enters the definitive period: key regulatory updates and scope extension

Following two years of a transitional reporting-only phase that began in October 2023, the EU Carbon Border Adjustment Mechanisms (CBAM) will move into its definitive period on 1 January 2026, when financial obligations will start to apply. In December 2025, the European Commission released a comprehensive package of implementing and delegated acts to operationalise this shift, alongside a legislative proposal to significantly expand CBAM’s scope and strengthen its anti-circumvention framework. Together, these developments confirm CBAM’s as a central pillar of the EU’s climate and industrial policy.

Stay informed and join us during the carboneer webinar “Digesting the latest CBAM updates – Implications for stakeholders” on 8 January 2026.

Current status and the start of the definitive period in 2026

During the transitional phase, importers of covered goods had to report embedded emissions on a quarterly basis without purchasing CBAM certificates. This phase ends on 31 December 2025. From 1 January 2026, CBAM enters its definitive period, triggering the obligation for authorised CBAM declarants (imports above the mass threshold of currently 50 tonnes of CBAM goods per year) to surrender CBAM certificates corresponding to the embedded emissions of imported goods, adjusted for free allocation under the EU Emissions Trading System (EU ETS). The first surrender deadline will be the 30 September 2027 for imports during the year 2026.

The financial application of CBAM will be phased in gradually, mirroring the progressive phase-out of free allocation under the EU ETS through 2034. This alignment is intended to ensure a level playing field between EU producers and third-country suppliers, while maintaining the environmental integrity of the EU’s climate framework.

Publication of final legislation for the definitive CBAM period

On 17 December 2025 – just two weeks before the start of the definitive period – the European Commission published a package of adopted draft implementing and delegated acts designed to make CBAM fully operational. These documents provide long-awaited legal and technical clarity for importers, producers, verifiers, and national authorities for the start of the definitive CBAM period. While first provided on a provisional basis, most of the documents are already officially adopted through publication in the Official Journal of the European Union (compare Table 1).

Table 1: Published legal acts for the CBAM definitive phase and proposals for further amendments of the CBAM

Legislation	Content	Status
IR	Calculation rules for embedded emissions	in force
IR	Calculation of the free allocation adjustment to the number of CBAM certificates to be surrendered	in force
IR	Information communicated by customs authorities	in force
IR	Establishment of default values	in force
IR	Calculation and publication of the price of CBAM certificates	in force
IR	Principles for verification of declared embedded emissions	in force
DA	Specifying the conditions for granting accreditation to verifiers	in force
Regulation	Extension of its scope to downstream goods and anti-circumvention measures	Proposal
Regulation	Establishing the Temporary Decarbonisation Fund	Proposal
IR	Amending and correcting: authorised CBAM declarant	Amendment
IR	Amending and correcting: CBAM registry	Amendment
IR: Implementing Regulation, DA: Delegated Act

In parallel, the Commission proposed an amendment to the CBAM regulation to extend CBAM to downstream products and to introduce additional anti-circumvention measures. Unlike the implementing framework, this proposal for scope extension must still go through the ordinary legislative procedure involving the European Council and the European Parliament.

Delegated and implementing acts: overview and main topics

The CBAM implementing framework consists of eight implementing acts and one delegated act, addressing most of the core operational elements of the mechanism.

The implementing act on emissions calculation methodology establishes harmonised rules for monitoring and calculating embedded emissions at installation level in non-EU countries. It aligns CBAM system boundaries with those of the EU ETS and allows a combination of actual and default values for different precursors.

The implementing act on free allocation adjustment defines how CBAM obligations are reduced to reflect the free allocation of allowances in the EU ETS. It introduces CBAM benchmarks per CN code under the scope of CBAM, with a differentiation between using actual verified and default emissions values (compare our analysis here). CBAM benchmarks per CBAM product can also differ based on the production route such as for natural gas-based direct-reduced iron (DRI), as well as electric arc furnace (EAF) produced steel. This aims to avoid zero-obligation outcomes that would undermine CBAM’s environmental objectives.

The implementing act on default values sets country- and CN-code-specific default emission values for the definitive period (compare our analysis here). For non-electricity goods, these include mark-ups to reflect potential underestimation of emissions. These mark-ups are phased in with highest values of +30% for most CBAM products from 2028 onwards. The default values will be reviewed regularly, with a first reassessment expected by December 2027.

The implementing act on CBAM certificate pricing specifies how CBAM certificate prices will be determined. From 2027 onwards, prices will mirror the weekly average EU ETS allowance price, while for 2026 imports, quarterly averages will apply. Prices will be published directly in the CBAM Registry.

Two acts address verification and accreditation (compare our analysis here). Verifiers must perform on-site inspections in the first year of reporting, i.e. 2026. There is limited flexibility for virtual visits thereafter, following a risk-based approach. Accreditation for verifiers is open to entities established both inside and outside the EU, provided they are accredited by EU accreditation bodies.

Additional implementing acts cover the authorised CBAM declarant status, the definitive CBAM Registry, and information exchange with customs authorities, collectively streamlining procedures, enhancing transparency, and strengthening enforcement.

The legal acts regarding the conditions for sales and repurchase of CBAM certificates and the rules regarding CO2-prices paid in the supply chain are still under development and expected in Q1 2026.

Low CBAM benchmarks and high default values: cost implications

A key practical implication of the new framework is the cost impact of relying on default values. CBAM benchmarks for free allocation adjustments are generally low, while default emission values – increased by the mark-ups – are relatively high. As a result, importers unable to provide verified actual emissions data may face significantly higher CBAM costs (compare example in Figure 1).

This design incentivises third-country producers to establish robust monitoring, reporting, and verification systems and discourages the use of default values. Over time, companies that fail to transition to verified actual data risk sustained competitive disadvantages in the EU market.

CBAM scope extension: timing, products and CN codes

Beyond operational rules, the Commission has proposed a major expansion of CBAM’s scope to downstream goods, reflecting concerns that carbon leakage could shift further along the value chain. From 1 January 2028, CBAM would cover around 180 additional products – adding roughly 7500 new importers and transforming CBAM into a full-value-chain carbon instrument.

The proposed expansion targets steel- and aluminium-intensive goods, including iron and steel articles, fabricated metals, machinery and industrial equipment, vehicles and components, medical instruments, and metal furniture and buildings (compare Table 2). These products typically contain a high share of steel or aluminium and are at a high risk of carbon leakage. In value terms, they already account for over half of CBAM-relevant imports.

Table 2: Potential CBAM product scope extension according to EU Commission’s proposal

Indicative CN Codes	Product Category	Examples of Products
8407–8409	Engines and Parts	Diesel engines, engine components
8413–8419	Pumps, Burners, Refrigeration, Heat Exchange	Pumps, burners, furnaces, refrigeration and freezing equipment, heat exchangers, cooling towers
8420–8431	Lifting, Conveying, Construction Machinery	Cranes, hoists, winches, conveyors, elevators, lifting systems, construction machinery components
8479	Industrial Machinery & Automation	Industrial robots, automated handling equipment, specialised industrial machines
8501–8504	Electrical Machinery	Electric motors, generators, transformers containing steel or aluminium
8544	Electrical Conductors	Electrical cables and conductors containing steel or aluminium
8701–8708	Vehicles and Vehicle Parts	Trucks (all drivetrains), vehicle chassis, bodies, gearboxes, wheels, axles, selected vehicle parts
Chapter 90	Medical Instruments	Tube needles and gas analysis instruments
Chapter 94	Metal Furniture & Structures	Seats with metal frames, office furniture, shelving, prefabricated buildings containing steel or aluminium

The proposal also strengthens anti-circumvention rules by including pre-consumer steel and aluminium scrap as CBAM precursors, tightening controls on misdeclaration, and allowing the Commission to restrict the use of actual emissions values in high-risk scenarios.

Together, these updates confirm CBAM’s role as a cornerstone of the EU’s climate policy. The coming months, as well as the first reporting deadline on 30 September 2027 for imports during 2026, will show if and how the implementation of CBAM turns embedded emissions and emission intensity of materials and products into procurement-relevant factors. With obligations starting in 2026 and a significant scope extension on the horizon, CBAM is rapidly becoming a central compliance and cost factor for global industrial supply chains.