CBAM
The EU's carbon border adjustment mechanism: importers of certain goods must declare — and eventually pay for — the emissions embedded in them.
CBAM puts a carbon price on goods entering the EU, so that production which moved abroad to avoid the EU’s own carbon cost does not arrive back cheaper for that reason.
It covers a fixed list of sectors set out in Annex I of the Regulation: iron and steel, aluminium, cement, fertilisers, hydrogen and electricity. If a good is not in that list, CBAM does not attach to it.
The obligation sits with the EU importer, not the producer. That is why, if you manufacture outside the EU, CBAM usually reaches you as a questionnaire from your customer rather than as a letter from a regulator. The importer has to declare the embedded emissions of what they bring in, and to hold evidence for the figure.
The scheme has two phases. In the transitional period the duty is to report. In the definitive regime the importer must also surrender certificates for the emissions declared. That is the point at which the number stops being paperwork and starts being cost.