European Union CBAM Regulation Entered into Force

The European Union’s Carbon Border Adjustment Mechanism (CBAM), introduced by the European Commission, has entered a critical new phase as of 2026. Following the end of the transitional reporting period on 31 December 2025, CBAM is now progressing into its “definitive implementation phase,” which includes direct financial obligations for importers.

Recent developments indicate that while the European Union is strengthening the mechanism, it is also advancing a comprehensive simplification package aimed particularly at reducing the administrative burden on SMEs.

As is known, CBAM was established to align the carbon costs of imported products with the EU Emissions Trading System (EU ETS), particularly in sectors with a high risk of carbon leakage such as iron and steel, cement, aluminum, fertilizers, electricity, and hydrogen.

Under the latest regulatory developments carried out by EU institutions, an important simplification agreement regarding CBAM was reached within the “Omnibus I” package. While preserving the climate ambitions of the mechanism, the package introduces significant facilitation measures for small-scale importers.

One of the most notable aspects of the new regulations is the introduction of a new annual exemption threshold of 50 tons for importers. Accordingly, the previous low-value customs threshold is being removed, and many SMEs and occasional importers are expected to be exempt from CBAM obligations. Despite this exemption, approximately 99% of the embedded emissions covered by the mechanism are expected to remain within the system.

Although the definitive implementation phase of CBAM officially began on 1 January 2026, the European Union is considering postponing the obligation for companies to purchase CBAM certificates until 2027. During this period, companies are expected to be given additional time to establish emissions calculation infrastructures, improve supply chain data collection systems, and develop verification processes.

In addition, under the updated framework, the simplification of authorization procedures, easier emissions calculation methodologies, broader use of default emission values, harmonized sanctions among EU member states, and stronger control mechanisms against circumvention practices are being planned.

According to the new timetable, the first annual CBAM declaration and certificate surrender obligations for 2026 imports are expected to begin on 30 September 2027. The European Union is also discussing expanding the scope of CBAM to downstream product groups such as machinery, automotive components, and construction materials.

This development is expected to further increase the impact of CBAM on Turkish industrial exports in the coming years. For Türkiye, CBAM is no longer merely a technical reporting issue; it is increasingly becoming a matter of direct competitiveness and market access.

In particular, exporters operating in sectors highly integrated into EU supply chains — including iron and steel, aluminum, cement, chemicals, and fertilizers — are facing growing pressure to measure product-level carbon emissions, establish verifiable data infrastructures, reduce Scope 1 and Scope 2 emissions, increase renewable energy investments, and strengthen sustainability and ESG reporting systems.

CBAM is no longer viewed solely as a climate policy instrument. The mechanism is gradually evolving into a structural trade regulation reshaping global supply chains, investment flows, and industrial competitiveness.

For companies exporting to the European market, verifiable carbon data, transparent emissions management, and low-carbon production capacity are becoming competitive factors as important as price and quality.

As the definitive implementation phase accelerates throughout 2026 and 2027, companies that adapt early to carbon management and decarbonization investments are expected to gain significant strategic advantages in the European market.

For detailed information and access to the relevant legislation, you may visit the European Commission CBAM Press Release webpage. European Commission CBAM Press Release