CBAM

EU Policy · Regulatory

EU Carbon Border Adjustment Mechanism (Regulation 2023/956) — carbon tariff on imports of cement, iron-steel, aluminium, fertilisers, electricity, hydrogen. Definitive period began 1 January 2026.

Sources

1. EUR-Lex (Official Journal of the European Union) eur-lex.europa.eu accessed 20 August 2026
2. European Commission, Taxation and Customs Union DG taxation-customs.ec.europa.eu accessed 20 August 2026

Also defined as

Carbon Border Adjustment Mechanism — EU carbon price on imports of steel, aluminium, cement, fertilisers, electricity, hydrogen.

Common questions

How does CBAM affect Indian steel and aluminium exporters?

CBAM (Carbon Border Adjustment Mechanism) impact on Indian steel/aluminium: (1) CBAM entered its definitive regime on 1 January 2026 and is now fully in effect, (2) EU importers of Indian steel, aluminium, cement, fertilisers, electricity, hydrogen must purchase CBAM certificates equal to embedded carbon cost, (3) If India steel producer has paid carbon price domestically, EU importer can deduct this from CBAM liability, (4) India currently has no national carbon price (carbon trading being developed), (5) Indian steel/aluminium producers should: calculate their specific CO2 emission intensity, invest in energy efficiency and renewable energy to reduce embedded carbon, engage with the EU CBAM portal reporting requirements.

What is CBAM and how does it affect Indian exports to EU?

Carbon Border Adjustment Mechanism (CBAM) is an EU carbon price on imports of carbon-intensive goods: steel, aluminium, cement, fertilisers, electricity, and hydrogen. Importers must purchase CBAM certificates equivalent to the embedded carbon cost in the imported goods. CBAM's transitional period ran 2023-2025 (reporting only); its definitive regime took full effect on 1 January 2026 and is now in force. Indian steel and aluminium exporters to EU face a significant cost unless they can demonstrate low-carbon production.

Related terms

From the AJG lexicon archive (July 2026); fact-checked against primary sources 20 August 2026.