← External Forces: Climate & Resource (all topics)
CBAM (EU carbon border adjustment mechanism)
What it is
The EU Carbon Border Adjustment Mechanism entered its definitive phase on 1 Jan 2026, after three years of reporting-only obligations. Importers must now surrender certificates matching the embedded emissions of steel, aluminium, cement, fertiliser, electricity and hydrogen entering the EU
Where verified emissions data is absent, punitive default values apply
Impact on industries
- The exposure is severe for Indian blast furnace steel - default values imply a carbon charge around EUR 254-270 per tonne of HRC, which would make exports uncompetitive outright
- It penalises the route rather than the producer, so an efficient BF-BOF mill is taxed on the technology's emissions intensity regardless of its own performance
- Verified emissions reporting avoids the punitive defaults, and Indian mills say they can submit audited data to the Commission
- Redirection is already happening toward Africa and West Asia, and the India-EU FTA negotiation is being watched for transitional relief