Regulations •

CBAM: the EU Carbon Border Adjustment Mechanism and its link to the DPP

What CBAM is, which goods and companies the CBAM regulation covers, how the timeline runs from the transitional phase to the definitive phase from 2026, what the Omnibus simplification changed, and how CBAM reporting overlaps with the Product Carbon Footprint and the Digital Product Passport.

Author: myDPP Team

CBAM: the EU Carbon Border Adjustment Mechanism and its link to the DPP

Key takeaways

CBAM stands for Carbon Border Adjustment Mechanism - the EU’s carbon border levy, set out in the CBAM Regulation (EU) 2023/956. It puts a price on the “embedded” carbon emissions of certain carbon-intensive imported goods, so that imports face the same carbon price as EU-made goods pay under the EU Emissions Trading System (EU ETS). It initially covers six product groups: cement, iron and steel, aluminium, fertilisers, electricity and hydrogen. After the transitional phase (1 October 2023 to 31 December 2025), which was reporting only, the definitive phase begins on 1 January 2026. The Omnibus simplification (Regulation (EU) 2025/2083) eased the rules: a de minimis threshold of 50 tonnes per importer per year takes roughly 90% of importers out of scope, and the sale of CBAM certificates was postponed to February 2027. CBAM is not a labelling instrument and does not replace a Digital Product Passport - but both rely on the same per-product carbon data. myDPP does not file a CBAM declaration; it stores and communicates the verified product data that CBAM and the DPP both need.

If you would first like to understand the basics of the passport itself, we recommend the introductory article Digital Product Passport in 15 minutes: what the DPP is and why the EU is introducing it.

What is CBAM?

CBAM (Carbon Border Adjustment Mechanism) is the EU’s tool against what is called carbon leakage - the shifting of carbon-intensive production to countries with weaker climate rules, or the replacement of domestic production with cheaper, high-emission imports. The logic is simple: EU manufacturers already pay a price for their carbon emissions through the EU Emissions Trading System. CBAM places an equivalent price on the emissions embedded in imports, so competition does not reward whoever meets the lowest climate standard.

The legal basis is the CBAM Regulation (EU) 2023/956, in force since 17 May 2023. CBAM is explicitly not a tariff and not a quality label. It is a climate-policy adjustment applied at the border that phases in gradually as free ETS allowances for the covered sectors are phased out (2026 to 2034).

Which goods, and who is affected?

CBAM initially applies to six carbon-intensive product groups, identified by their customs tariff codes (CN codes):

  • Cement
  • Iron and steel (including certain downstream products such as screws and bolts)
  • Aluminium
  • Fertilisers
  • Electricity
  • Hydrogen

The obligated party is generally the importer of these goods into the EU, in the definitive phase as an authorised CBAM declarant. Who is affected now depends on a volume threshold introduced by the Omnibus simplification: a de minimis threshold of 50 tonnes of net mass per importer per calendar year exempts small and occasional importers from authorisation, declaration and certificate obligations. It covers roughly 90% of importers, while the remaining obligated parties still account for around 99% of embedded emissions. The threshold applies to all CBAM goods except electricity and hydrogen.

An important note for manufacturers in DPP sectors: batteries, textiles, electronics or furniture are not directly covered by CBAM as such. They are affected only indirectly, because steel and aluminium are common input materials - one more reason to keep clean carbon data across the supply chain anyway.

The CBAM timeline: transitional and definitive phase

CBAM runs in two phases, and the 2025 Omnibus simplification staggered the move into the definitive phase:

  • Transitional phase (1 October 2023 - 31 December 2025): A pure reporting obligation. Importers reported the embedded emissions of their goods quarterly in CBAM reports, with no financial charge.
  • Definitive phase (from 1 January 2026): The substantive obligations begin for goods imported from 2026 - authorisation as a CBAM declarant and accountability for embedded emissions.
  • Omnibus adjustment (Regulation (EU) 2025/2083): The sale of CBAM certificates was postponed from 1 January 2026 to 1 February 2027. The first annual CBAM declaration and the surrender of certificates are due by 30 September 2027, covering emissions from goods imported during 2026.

In practice this means that 2026 is the first year for which CBAM obligations substantively accrue, but the actual payment through certificates only happens in 2027. Because specific procedural details depend on the final Omnibus texts and implementing acts, always verify the current position against the latest EU legal acts.

How does CBAM work?

The core of CBAM is embedded emissions - the amount of greenhouse gas released in producing an imported good, expressed in tonnes of CO2 equivalent. The process in the definitive phase follows four building blocks:

  1. Authorisation. The importer applies to the national competent authority for the status of authorised CBAM declarant and is entered in the CBAM registry.
  2. Determine emissions. For each good, embedded emissions are established - direct and, for some goods, indirect. The data comes from the producer outside the EU (installation-level values); where reliable figures are missing, default values are permitted under conditions.
  3. CBAM declaration. Once a year, the declarant reports the total quantity of goods and their embedded emissions.
  4. Surrender certificates. The declarant buys CBAM certificates, priced in line with the ETS price, and surrenders as many as correspond to the reported emissions - minus any carbon price already paid in the country of production.

The greatest operational effort lies not in the surrender but in step 2: obtaining reliable per-product carbon data from the supply chain. This is exactly where CBAM touches the world of the Digital Product Passport.

CBAM, PCF and the Digital Product Passport: where they overlap

CBAM, the Product Carbon Footprint (PCF) and the Digital Product Passport are three different instruments, but they draw on the same underlying quantity: carbon emissions per product, measured along the supply chain. Collect this data for one, and you almost have it for the other.

  • The embedded emissions of a CBAM good and the PCF of a product are closely related product-level metrics - both answer “how much carbon is in this unit?”.
  • The Battery Regulation (EU) 2023/1542 already requires a mandatory carbon footprint declaration in the battery passport, and the ESPR lets the Commission require a carbon footprint as a passport field in the DPP.
  • Claims such as “low-carbon” or “climate neutral” need robust evidence under the EmpCo Directive - the same data, as our article on the Green Claims Directive explains.

The common denominator is an auditable per-product data foundation: material composition, origin, energy, suppliers and the carbon value derived from them. Maintain that foundation once and it serves CBAM reports, the PCF, the DPP and environmental claims from a single source.

What CBAM is not

An honest framing matters, precisely because CBAM, PCF and DPP are often mentioned in the same breath:

  • CBAM is an import and border-adjustment rule, not a product-labelling law. It produces no QR code and no consumer-facing product page.
  • A Digital Product Passport does not replace a CBAM declaration. The declaration is filed through the CBAM registry with the competent authority, not through a passport.
  • myDPP does not calculate embedded emissions, does not file CBAM declarations and does not buy CBAM certificates. Emissions calculation is a matter for LCA experts and producer data; the surrender is a matter for the authorised declarant.

What a Digital Product Passport - and myDPP - does is to store, version and communicate the verified carbon and supply-chain data in a structured way, so that the same figure is reusable for CBAM, the DPP and marketing instead of being re-collected in every system.

Preparing for CBAM: five steps

1. Check whether you are affected

Match your imports against the CBAM product groups (CN codes) and check the 50-tonne de minimis threshold. Even as a processor of steel or aluminium, it is worth looking at your input materials.

2. Secure supplier data

Request installation-level emissions data from your producers outside the EU. Clarify early where you will have to fall back on default values.

3. Sort out authorisation and registry

Determine whether you need to become an authorised CBAM declarant and prepare registration in the CBAM registry with the competent authority.

4. Connect carbon data to your product-data foundation

Record embedded emissions where material composition, origin and the PCF already live - avoiding duplicate upkeep across CBAM, the DPP and green claims.

5. Budget for cost and timeline

Estimate CBAM costs via the certificate price and prepare for the first declaration due by 30 September 2027.

Frequently asked questions (FAQ)

What is CBAM in simple terms?

CBAM is the EU’s carbon border adjustment: importers of certain carbon-intensive goods must offset the emissions embedded in them, so that imports face the same carbon price as goods produced in the EU.

Which goods are covered by CBAM?

Initially cement, iron and steel, aluminium, fertilisers, electricity and hydrogen - including certain downstream products within these groups.

When does the CBAM definitive phase apply?

The definitive phase begins for goods imported from 1 January 2026. The sale of CBAM certificates only starts on 1 February 2027, and the first annual declaration for 2026 is due by 30 September 2027.

What did the Omnibus regulation change about CBAM?

Regulation (EU) 2025/2083 introduced a de minimis threshold of 50 tonnes per importer per year (exempting roughly 90% of importers) and postponed the sale of certificates to February 2027.

Does a Digital Product Passport replace a CBAM declaration?

No. The CBAM declaration is filed through the CBAM registry. The DPP stores and communicates the underlying carbon and product data that CBAM also needs, but does not take over the declaration itself.

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