Beginning in 2026, EU importers will have to pay for importing CBAM goods with embedded emissions higher than thresholds set by the EC. These payments will only cover 2.5% of excess emissions in 2026 gradually increasing to 100% coverage in 2034.

Starting in 2026, there will be a gradual phase-out of ETS free allowances in CBAM sectors, continuing until 2034. As these free allowances decrease, the CBAM obligation for importers will proportionally increase. This transition underscores the EU's commitment to fair competition and environmental sustainability.

For example, if the embedded emissions of a good amount to 1.2 t CO2 eq/t good and the corresponding CBAM benchmark is 1 t CO2 eq/t good, then the emissions subject to CBAM in 2026 (with a CBAM factor of 97.5%) would amount to: 1.2 – (1 × 0.975) = 0.225 t CO2 eq/t good, equivalent to around 19% of the embedded emissions.

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