Your Complete Guide to CBAM Compliance
Everything exporters and MSMEs need to know about the EU's Carbon Border Adjustment Mechanism (CBAM) — simplified, structured, and backed by official EU and ISO sources.
Built for MSMEs. Explained by EnCarbonSys.
CBAM (Carbon Border Adjustment Mechanism) is the European Union's system to put a price on carbon emissions embedded in imported goods.
It ensures fair competition between EU industries (already paying carbon costs) and exporters from outside the EU.
It covers carbon-intensive goods such as: iron & steel, aluminum, fertilizers, cement, electricity, hydrogen (with more products to be added later).
Reporting started in October 2023, full compliance (certificate buying) begins January 2026.
⚠️ For MSMEs: Even if you're exporting a single container to the EU, CBAM applies.
Exporters must file quarterly emissions reports. No payments yet.
Importers will buy CBAM certificates to match reported emissions.
Scope may expand to more products.
CBAM is the EU's "carbon tax" on imports. If your product creates emissions during production, you'll need to declare those emissions when exporting to the EU.
To prevent "carbon leakage" — when industries move production to countries with weaker climate rules to avoid costs. CBAM ensures all goods entering the EU face the same carbon price.
More products may be added after 2030.
Yes. CBAM is product-based, not company-size based. A small exporter shipping just one container of aluminum still has to comply.
CBAM entered into force in October 2023 with the transitional reporting phase. The full payment phase starts January 2026.
Between 2023 and 2025, exporters only submit quarterly reports of emissions. No payments are due yet. This phase helps companies prepare.
Importers must purchase and surrender CBAM certificates matching the embedded emissions of their imports.
A CBAM certificate is an allowance purchased from the EU at a price linked to the EU ETS (Emissions Trading System). Each certificate represents one tonne of CO₂ emissions.
Using GHG Protocol and ISO 14064/14067 methods:
Reports must be filed via the EU CBAM Transitional Registry (TRACES) in XML format, validated against EU's schema.
During the transitional period: importers in the EU must file, but they require data from exporters (like MSMEs in India) to do so.
Quarterly during the transitional period. Annual declarations (plus certificate surrender) after 2026.
You can use default values provided by the EU (usually higher and less favorable). This increases your CBAM cost, so actual data is better.
Yes, in theory. But EU buyers may prefer suppliers with lower emissions. That's why accurate reporting matters for MSMEs.
When companies relocate production to countries with weaker climate rules. CBAM prevents this by leveling the playing field.
Official information about CBAM from the European Commission.
EU CBAM WebsiteThe official regulation establishing the Carbon Border Adjustment Mechanism.
EUR-Lex RegulationImplementing regulation for the transitional phase of CBAM.
EUR-Lex Implementing RegulationInternational standards for greenhouse gas quantification and reporting.
MSMEs across India and Asia are already preparing for 2026. Don't risk losing your EU clients.
EncarbonSys makes compliance simple, accurate, and cost-effective.