CBAM / ETS Compliance
Carbon-pricing and embedded-emissions obligations affecting EU importers and Indian exporters of steel, aluminium and carbon-intensive inputs.
Carbon Border Adjustment and EU Emissions Trading
The Carbon Border Adjustment Mechanism (CBAM), Regulation (EU) 2023/956, prevents EU carbon pricing from being undercut by imports from countries with lower carbon costs. Since 1 January 2026, EU importers of covered goods must account for embedded emissions and surrender CBAM certificates linked to EU ETS allowance prices. Certificates go on sale in February 2027, and the first annual declaration, covering 2026 imports, is due on 30 September 2027.
For Indian automotive suppliers, exposure often sits in steel and aluminium content rather than finished vehicles alone. Stampings, forgings, castings, tubes and aluminium parts can become commercially sensitive when EU customers calculate carbon cost.
The commercial risk is indirect but real: if suppliers cannot provide verified emissions data, EU buyers may rely on conservative default values and push the resulting cost or risk back through contracts.
Importers bringing in less than 50 tonnes a year of in-scope goods (cement, iron and steel, aluminium and fertilisers, combined) are exempt. Electricity and hydrogen are not covered by this exemption. Above the threshold, importers must hold authorised CBAM declarant status.
Where This Reaches the Supply Chain
Steel stampings, forgings, machined parts and pressings suppliers
Aluminium casting, die-casting and structural component suppliers
Exporters whose EU customers ask for embedded-emissions data
Finance, procurement, operations and sustainability teams managing carbon clauses
Suppliers of steel-intensive and aluminium-intensive components that may be brought into scope by the proposed CBAM downstream extension (proposed start: 1 January 2028, not yet adopted)
Regulatory Timing to Watch
Oct 2023 – Dec 2025
Transitional phase. Quarterly reporting of embedded emissions only, with no financial obligation.
1 January 2026
Definitive phase begins. Cost liability applies to all imports from this date. Importers above 50 tonnes a year need authorised CBAM declarant status; those who applied by 31 March 2026 could keep importing while approval was pending.
February 2027
CBAM certificates go on sale for 2026 imports.
30 September 2027
First annual CBAM declaration and certificate surrender, covering 2026 imports.
2028
EU ETS 2 starts for road transport and buildings fuels. CBAM may also extend to around 180 downstream steel and aluminium products from 1 January 2028, if the proposal is adopted.
What Manufacturers Need to Prepare
Embedded-emissions calculation (direct and relevant indirect emissions) for covered goods. If verified data is not available, EU default values apply, and these are typically much higher than real plant values.
MRV systems, installation-level data and third-party verification
EU importer coordination for CBAM reporting and certificate exposure
A Practical Route to Readiness
Assess
Map your EU-bound products against CBAM HS codes and steel or aluminium inputs. Quantify your financial exposure at current ETS prices.
Measure
Build an ISO 14064-aligned GHG inventory at installation level and set up MRV systems for production data.
Verify
Engage an accredited verifier for your embedded-emissions data, to avoid high default values.
Engage EU Importers
Review supply contracts, agree who bears CBAM cost, add transparency clauses and share verified data proactively.
Decarbonise
Develop a credible plan for fuel switching, efficiency and renewable energy to lower future CBAM cost exposure.
How We Support This Framework
- GHG inventory and MRV setup: ISO 14064-aligned monitoring plans and emission inventories
- CBAM dry-run verification: verification of embedded-emissions data before the definitive regime bites
- CBAM exposure assessment: financial exposure at facility and product level, with sensitivity analysis
- Regulatory advisory: guidance on ETS 1, ETS 2 and CBAM obligations, penalties and reporting timelines
- Training and capacity building: workshops for finance, procurement, operations and sustainability teams
- Ongoing compliance monitoring: annual recalculations, regulatory update alerts and importer liaison support
Discuss CBAM / ETS Compliance
Tell us your product category, buyer relationship, target market and current documentation. We will map which obligations apply and what evidence should be prepared first.
Begin Your Compliance ProgrammeTell us your scope
Your products and HS codes, your EU buyers and the data you hold today.
We map the exposure
A gap analysis of your embedded-emissions data and CBAM readiness, before any cost is committed.
One quote, one contract
Fixed scope, delivered with Kiwa, verification report in hand.
