CBAM Is Now a Product-Level Compliance Challenge

The EU Carbon Border Adjustment Mechanism, known as CBAM, is no longer only a reporting topic. It is becoming a product-level, supplier-level, and cost-planning requirement for companies importing carbon-intensive goods into the EU.

CBAM is the EU’s mechanism for putting a carbon price on emissions embedded in certain imported goods, with the purpose of reducing carbon leakage and encouraging cleaner industrial production outside the EU. The definitive CBAM regime started in 2026, following the transitional phase that ran from 2023 to 2025.

For companies, this means CBAM compliance must now connect several business functions: customs classification, supplier data collection, embedded emissions calculation, verification readiness, financial planning, and regulatory reporting.

The current CBAM scope focuses on six product families:

1- Cement

2- Iron and steel

3- Aluminium

4- Fertilisers

5- Electricity

6- Hydrogen

The European Commission provides sector-specific guidance for these six CBAM sectors, including cement, aluminium, fertilisers, iron and steel, hydrogen, and electricity.

Why CBAM Product Families Matter

A company cannot manage CBAM correctly by looking only at product names. CBAM scope is linked to goods listed under the relevant Combined Nomenclature codes in the CBAM Regulation. This means a product may be in scope even if the commercial description used by sales or procurement teams does not clearly mention “steel,” “aluminium,” or “fertiliser.” Regulation (EU) 2023/956 establishes CBAM for greenhouse gas emissions embedded in goods listed in Annex I when imported into the EU customs territory.

This creates a practical challenge: customs teams may classify the goods, procurement teams may own supplier relationships, sustainability teams may manage emissions data, and finance teams may need to forecast certificate costs. If those teams are not aligned, CBAM exposure can be missed or underestimated.

A practical CBAM workflow should therefore start with three questions:

The Six CBAM Product Families and Their Compliance Rules

CBAM applies to product families that are carbon-intensive and exposed to carbon leakage risk. The current product families are cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen.

The compliance rules are not identical for every family. Some sectors require attention to both direct and indirect emissions, while others focus mainly on direct emissions. This is why companies should avoid using one generic CBAM checklist for all products.

1. Cement Under CBAM

Cement is one of the most important CBAM product families because production can involve significant process emissions and energy-related emissions. Cement importers must understand whether the goods they import fall within the CBAM scope and whether the supplier can provide the required emissions information.

For cement, CBAM compliance should focus on:

Indirect emissions are especially important for cement because the European Commission states that indirect emissions are covered after the transitional period for some sectors, specifically cement and fertilisers.

Practical guidance for cement importers:
Do not wait until the declaration deadline to ask suppliers for emissions data. Cement suppliers may need time to collect installation-level production data, electricity consumption data, production route details, and supporting evidence.

2. Iron and Steel Under CBAM

Iron and steel is one of the most complex CBAM product families because it can involve many product forms, production routes, and downstream supply chain steps. Importers should pay close attention to customs classification and supplier data quality.

For iron and steel, companies should focus on:

The European Commission has dedicated sector information for iron and steel, including rules, implications, and reporting requirements for importers, exporters, and producers.

Practical guidance for iron and steel importers:
Map the supply chain beyond the direct supplier. A distributor may not be the producer. If the importer cannot connect the imported goods to the installation where production occurred, it may be difficult to obtain actual emissions data that can support CBAM calculations.

3. Aluminium Under CBAM

Aluminium is another major CBAM product family where emissions exposure can vary significantly depending on production route, electricity mix, and whether the material is primary or recycled.

For aluminium, companies should focus on:

Aluminium can create a major data challenge because the carbon intensity of production may differ significantly between suppliers and countries. Where actual data is not available, default values may become important for emissions calculation and cost planning.

Practical guidance for aluminium importers:
Supplier selection and data quality can directly affect CBAM planning. Importers should ask suppliers not only for product certificates and invoices, but also for CBAM-specific emissions data connected to the relevant installation and production process.

4. Fertilisers Under CBAM

Fertilisers are a CBAM product family where the emissions calculation can be complex because chemical supply chains may involve multiple production stages, inputs, and precursors.

For fertilisers, companies should focus on:

The CO2 IQ article highlights that CBAM distinguishes between direct emissions released during production and indirect emissions from electricity consumed during production. It also notes that indirect emissions are currently required for cement and fertiliser goods.

Practical guidance for fertiliser importers:
Because fertiliser supply chains can be complex, procurement teams should start supplier engagement early. The goal should be to understand whether suppliers can provide CBAM-compliant actual data or whether the importer may need to rely on default values.

5. Hydrogen Under CBAM

Hydrogen is included as a CBAM product family because production pathways can have very different carbon profiles. Hydrogen produced from fossil-based processes may have a very different emissions profile from lower-carbon production routes.

For hydrogen, companies should focus on:

The European Commission lists hydrogen as one of the six CBAM sectors and provides sector-specific materials for importers, exporters, and producers.

Practical guidance for hydrogen importers:
Hydrogen importers should not treat all hydrogen as the same from a CBAM perspective. The key compliance question is not only “what product was imported?” but also “how was it produced, where, and with what emissions evidence?”

6. Electricity Under CBAM

Electricity is different from the other CBAM product families because the emissions calculation is based on electricity emission factors rather than a conventional physical product manufacturing process.

For imported electricity, CBAM compliance should focus on:

According to the CO2 IQ article, emissions of imported electricity are generally determined using default CO2 emission factors, with actual emission factors possible only under certain conditions, such as qualifying power purchase arrangements and technical connection criteria.

Practical guidance for electricity importers:
Electricity importers need strong documentation around the source of electricity, contractual arrangements, and the conditions required to use actual emission factors instead of default values.

Direct Emissions, Indirect Emissions, and Embedded Emissions

A core CBAM concept is embedded emissions. These are the greenhouse gas emissions associated with producing the imported goods.

CBAM distinguishes between:

CO2 IQ explains that specific embedded emissions are measured in tonnes of CO2 equivalent per unit of CBAM goods and that CBAM differentiates between direct emissions and indirect emissions.

For businesses, this means CBAM is not only a sustainability reporting exercise. It requires product-level data that connects customs records, quantities, suppliers, production installations, emissions values, and supporting documentation.

Actual Values vs Default Values: What Importers Need to Know

One of the most important practical questions under CBAM is whether the importer can use actual emissions data or must rely on default values.

Actual emissions data is generally the preferred approach when reliable, CBAM-compliant supplier data is available. However, many importers may face gaps because suppliers do not yet have the monitoring systems, verification processes, or data structures needed to provide complete CBAM information.

Default values become important when actual data is not available. The CO2 IQ article explains that, for the definitive period, there are three sets of CBAM default values:

1- Default values for direct emissions of non-electricity goods

2- Default values for indirect emissions of non-electricity goods

3- Default values for imported electricity

Why Default Values Can Affect CBAM Cost Exposure

Default values are useful when supplier data is missing, but they are not simply an administrative shortcut. They can affect financial planning because CBAM certificates are linked to the embedded emissions declared for imported goods.

CO2 IQ explains that default values can play a role where non-EU producers face challenges providing CBAM-compliant emissions data, but it also notes that default values may result in higher emissions and therefore higher costs, especially where actual production is cleaner than the default assumption.

This matters for importers because CBAM is moving from a reporting exercise into a financial obligation. EU importers or indirect customs representatives importing more than the 50-tonne mass-based threshold for CBAM goods must apply for authorised CBAM declarant status, buy CBAM certificates, declare embedded emissions, and surrender the corresponding number of certificates each year.

The first CBAM declaration for 2026 imports must be submitted by 30 September 2027, together with the surrender of the corresponding CBAM certificates.

CBAM Product Family Compliance Matrix

The table below summarises the practical compliance focus for each CBAM product family.

Practical CBAM Readiness Checklist for Importers

Companies importing CBAM goods should build a structured readiness process rather than waiting until the annual declaration deadline.

1. Map all imported goods against CBAM scope

Start with customs data, not product names. Review CN codes, product descriptions, supplier details, country of origin, import quantities, and business units responsible for the goods.

2. Identify the relevant CBAM product family

Classify each in-scope item under the relevant CBAM family: cement, iron and steel, aluminium, fertilisers, electricity, or hydrogen.

3. Confirm whether the 50-tonne threshold is relevant

The European Commission states that the simplification package introduced a 50-tonne exemption threshold for CBAM goods, with companies importing less than 50 tonnes annually exempt from CBAM obligations.

4. Request supplier emissions data early

Supplier requests should be specific. Ask for product-level and installation-level data, production route information, emissions values, electricity consumption data where relevant, and supporting documentation.

5. Separate actual values from default values

For each supplier and product family, identify whether actual emissions data is available, incomplete, not verified, or unavailable. This helps determine whether default values may be needed.

6. Build a CBAM evidence file

A CBAM evidence file should include customs records, supplier declarations, calculation records, emission factors, default value assumptions, verification evidence where available, and internal approval records.

7. Connect compliance with finance

CBAM affects cost forecasting because certificate obligations are linked to declared embedded emissions. The European Commission states that certificate prices are calculated based on the auction price of EU ETS allowances, with quarterly averages in 2026 and weekly averages from 2027.

8. Monitor regulatory updates

CBAM is still evolving. On 12 June 2026, the European Commission welcomed Council agreement to extend CBAM to specific downstream goods and strengthen anti-circumvention safeguards, with further legislative discussions still to follow.

Common CBAM Mistakes Companies Should Avoid

Mistake 1: Treating CBAM as only a sustainability task

CBAM requires sustainability input, but it also depends on customs classification, supplier data, procurement processes, financial planning, and documentation control.

Mistake 2: Relying only on supplier promises

A supplier statement may not be enough. Companies need structured data, clear calculation logic, and supporting evidence.

Mistake 3: Using one process for every product family

Cement, fertilisers, electricity, aluminium, hydrogen, and steel do not create the same data challenges. Each product family needs a tailored approach.

Mistake 4: Waiting for the annual declaration deadline

Supplier data collection can take months, especially when suppliers are outside the EU and are still building emissions monitoring systems.

Mistake 5: Ignoring default value cost exposure

Default values may provide a fallback, but they can affect cost estimates and commercial decisions. Importers should compare actual supplier data availability against possible default-value exposure.

What Companies Should Do Now

CBAM readiness should be treated as a structured compliance project with clear ownership.

A practical action plan should include:

This approach helps companies move from reactive reporting to controlled CBAM compliance management.

How ComplyMarket Can Support CBAM Product Family Compliance

CBAM requires reliable data across products, suppliers, countries, emissions calculations, and regulatory evidence. For many companies, the biggest challenge is not understanding the regulation in theory. It is turning scattered supplier data into a structured, auditable compliance process.

ComplyMarket can support companies by helping teams:

• Map imported products against CBAM-relevant product families
• Organise supplier emissions data and supporting documentation
• Track actual values, missing data, and default value assumptions
• Manage supplier evidence requests in a structured workflow
• Connect product compliance, sustainability, procurement, and finance teams
• Maintain a clear compliance record for CBAM declarations and future audits
• Improve visibility across product data, supplier data, and regulatory obligations

With ComplyMarket, companies can move from fragmented spreadsheets and email-based supplier requests to a more controlled compliance system that supports CBAM readiness, supplier transparency, and business decision-making.