Procurement Glossary
CBAM: Understanding the Carbon Border Adjustment Mechanism in Procurement
November 19, 2025
The Carbon Border Adjustment Mechanism (CBAM) is an EU regulation that will levy carbon border adjustment charges on imported carbon-intensive goods from 2026. This regulation directly affects purchasing departments as it brings additional costs and compliance requirements for imports from third countries. Find out below what CBAM is, what the implementation obligations are and how current developments affect Procurement .
Key Facts
- CBAM applies from 2026 for cement, iron/steel, aluminium, fertilizers, hydrogen and electricity
- Importers must purchase CBAM certificates according to the CO₂ emissions of the goods
- Transition phase 2023-2025 already requires reporting without financial obligations
- The aim is to protect against carbon leakage and ensure a level playing field
- Direct impact on procurement costs and supplier selection for affected Categories
Contents
What is CBAM? Definition, aim and area of application
The Carbon Border Adjustment Mechanism represents a milestone in EU climate policy that will permanently change trade flows and procurement strategies.
Basics and functionality
CBAM is a CO₂ border adjustment mechanism that ensures that imported goods pay the same CO₂ price as goods produced in the EU. The system works via CBAM certificates, the price of which is based on EU emissions trading. Importers must purchase these certificates according to the direct emissions of their goods.
CBAM vs. EU emissions trading
While the EU Emissions Trading Scheme (EU ETS) obliges European producers to pay CO₂ prices, CBAM closes this gap for imports. This prevents carbon leakage - the relocation of production to countries with less stringent climate regulations. Both systems complement each other to create a level playing field.
Importance of CBAM in Procurement
For purchasing departments, CBAM means a fundamental change in the cost calculation for imports. The decarbonization of the supply chain is becoming an economic factor, as low-carbon suppliers offer cost advantages. At the same time, new compliance requirements are emerging for the documentation and reporting of emissions data.
Implementation, obligations and evidence
The practical implementation of CBAM requires systematic processes for recording emissions and managing certificates in procurement.
Reporting obligations and documentation
Importers must submit quarterly CBAM reports on imported quantities of goods and their CO₂ emissions. These reports require detailed information on direct and indirect emissions from production. Data quality must be ensured through verification procedures using standardized calculation methods.
Supplier integration and data collection
Successful CBAM compliance requires close collaboration with suppliers to provide emissions data. Purchasing departments must establish contractual clauses for data delivery and support suppliers in implementing product carbon footprint calculations. Regular audits and training ensure data quality.
Certificate procurement and management
CBAM certificates must be purchased via the national CBAM registration office. The certificate price is based on the average EU ETS price of the previous week. Companies should develop procurement strategies for certificates that take price fluctuations into account and ensure sufficient stocks for the annual surrender.
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Key compliance figures and ratios for CBAM
Effective CBAM management requires systematic measurement and monitoring of relevant performance indicators to ensure compliance.
Key emissions figures and reporting
Central KPIs include the CO₂ intensity per tonne of imported goods, broken down by product category and country of origin. The completeness of the emissions data is measured by the proportion of verified versus estimated values. In addition, companies monitor the development of the average emissions intensity of their imports over time.
Cost efficiency and certificate management
The CBAM costs per euro of purchasing volume show the financial burden. The share of CBAM costs in total procurement costs illustrates the relevance for various Categories. The efficiency of certificate procurement is assessed using key figures such as average certificate prices and timing of purchases.
Supplier performance and compliance rate
The percentage of suppliers with complete emissions documentation measures the quality of the supplier base. The compliance rate shows the percentage of CBAM reports submitted on time. In addition, suppliers are rated according to their CO₂ performance in order to create incentives for decarbonization measures.
Risks, dependencies and countermeasures
CBAM entails various operational and strategic risks that require proactive risk management strategies.
Compliance and penalty risks
Incomplete or incorrect CBAM reporting can lead to substantial fines. Missing certificates for imports result in back payments with penalties. Purchasing departments must implement robust control systems and conduct regular compliance audits to minimize these financial risks.
Supply chain dependencies and data availability
Dependence on suppliers for the provision of emissions data represents a critical risk. Insufficient data quality or availability can lead to estimates with higher costs. Diversifying the supplier base and establishing alternative procurement sources in countries with lower CO₂ emissions reduce these dependencies.
Cost volatility and budget planning
Fluctuating CO₂ prices make long-term budget planning and cost calculation more difficult. Unforeseen price increases can place a considerable burden on procurement budgets. Hedging strategies for CBAM certificates and flexible contract design with suppliers help to manage this volatility and create planning security.
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Practical example
A German automotive supplier imports 5,000 tons of sheet steel from Turkey every year. With the introduction of CBAM in 2026, the company must purchase CBAM certificates for the CO₂ emissions from steel production. With an emissions intensity of 2.1 tons of CO₂ per ton of steel and a certificate price of 80 euros, this will result in additional costs of 840,000 euros per year. The company responds by switching suppliers to a Turkish producer with more modern, lower-CO₂ technology, which reduces the emissions intensity to 1.6 tons of CO₂ and saves 200,000 euros per year.
- Analysis of the current supplier base with regard to CO₂ intensity
- Negotiation of contractual clauses for the provision of emissions data
- Implementation of a monitoring system for CBAM compliance
Current developments and interpretation of CBAM
CBAM implementation is evolving dynamically, with new design aids and technological innovations shaping implementation.
Extension of the scope of application
The EU Commission is examining the extension of CBAM to other sectors such as chemicals, plastics and organic chemicals by 2030. This extension would have a significant impact on global supply chains and requires early preparation of procurement strategies. Purchasing departments should analyze potential impacts today.
Digitalization and AI support
Artificial intelligence is revolutionizing CBAM compliance through automated emissions calculations and data validation. AI systems can analyze complex supply chains, forecast emissions data and identify compliance risks at an early stage. These technologies reduce manual effort and significantly improve data quality.
International harmonization
Various countries are developing similar CO₂ border adjustment mechanisms, leading to a global harmonization of climate protection measures. The USA, Canada and Japan are examining comparable systems. This development requires international coordination of CO₂-equivalent calculations and recognition procedures between the systems.
Conclusion
CBAM represents a paradigm shift in global procurement that makes CO₂ emissions a direct cost factor. Procurement departments need to fundamentally rethink their strategies and implement compliance systems at an early stage. Successful adaptation to CBAM requires close supplier cooperation, robust data management processes and strategic realignment of procurement portfolios. Companies that act proactively can realize competitive advantages through sustainable supply chains.
FAQ
What exactly is CBAM and when does it come into force?
CBAM (Carbon Border Adjustment Mechanism) is an EU CO₂ border adjustment mechanism that will be fully effective from 2026. A transition phase with reporting obligations without financial obligations has been running since October 2023. From 2026, importers will have to purchase CBAM certificates for the CO₂ emissions of their imported goods.
Which goods are affected by CBAM?
CBAM initially comprises six sectors: cement, iron and steel, aluminium, fertilizers, hydrogen and electricity. This selection is based on high CO₂ emissions and carbon leakage risks. The EU Commission is examining an extension to other sectors such as chemicals and plastics by 2030.
How are CBAM costs calculated?
The costs are calculated by multiplying the CO₂ emissions of the imported goods by the CBAM certificate price. This is based on the average EU ETS price. CO₂ prices already paid in the country of origin are taken into account in order to avoid double charges.
What are the advantages of CBAM for Procurement?
CBAM creates incentives for sustainable procurement and can lead to long-term cost savings through low-carbon suppliers. It promotes innovation in the supply chain and strengthens the competitive position of European producers. At the same time, it supports companies in achieving their climate targets and improves transparency regarding emissions in the supply chain.
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