CBAM for Steel Importers: Compliance Timeline and Costs

The Carbon Border Adjustment Mechanism (CBAM, Regulation 2023/956)^[1] is the EU's answer to carbon leakage: the risk that industries relocate production to countries with weaker climate policies. For steel importers, CBAM represents the most significant change to import economics since EU accession. If you import steel or steel products into the EU, this article explains what you need to know and do.

The CBAM Timeline for Steel

October 2023 to December 2025: Transitional period. Importers submitted quarterly CBAM reports declaring the embedded emissions of imported goods under Implementing Regulation 2023/1773^[2]. No financial payments were required, but the reporting obligations were real. Companies that failed to report faced penalties of EUR 10 to 50 per tonne of unreported emissions.

January 2026: Financial obligations begin. As of 1 January 2026, importers must purchase CBAM certificates to cover the embedded emissions of imported steel. The certificate price is linked to the weekly average EU ETS auction price^[3], creating direct parity between the carbon cost of EU-produced and imported steel.

2026 to 2034: Progressive phase-in. The financial obligation is phased in as free EU ETS allocation to steel producers is phased out under the revised EU ETS Directive 2003/87/EC^[5]. In 2026, importers pay for the portion of emissions not covered by the remaining free allocation to EU steelmakers. By 2034, free allocation reaches zero and importers pay the full carbon cost.

How Steel Import Costs Change

Steel production is carbon-intensive. The global average for crude steel is approximately 1.85 tonnes CO2 per tonne of steel^[4], though this varies significantly by production route. Blast furnace-basic oxygen furnace (BF-BOF) steel typically emits 2.0 to 2.2 tonnes CO2/t, while electric arc furnace (EAF) steel ranges from 0.3 to 0.8 tonnes CO2/t depending on the electricity source and scrap ratio.

Using the current EUA price of approximately EUR 70/tonne CO2, the CBAM cost per tonne of imported steel is:

BF-BOF steel (typical import): 2.1 t CO2 x EUR 70 = EUR 147 per tonne of steel. With the 2026 phase-in factor (approximately 10% of full cost as free allocation still covers most), the immediate CBAM cost is roughly EUR 15 per tonne. By 2034, the full EUR 147 applies.

EAF steel (clean grid): 0.4 t CO2 x EUR 70 = EUR 28 per tonne at full implementation. EAF steel from countries with clean electricity grids (Norway, Iceland) faces dramatically lower CBAM costs, creating a price advantage for low-carbon steel sources.

These costs compound as they flow through the supply chain. A Nordic construction company importing 10,000 tonnes of structural steel annually faces EUR 150,000 in direct CBAM costs in 2026, rising to EUR 1.47 million by 2034 if sourcing does not shift to lower-carbon options.

Reporting Requirements

CBAM reporting is more demanding than most importers initially expect:

Actual emissions data is required. While default values exist, they are set deliberately high (at the 95th percentile of emission intensity for each product category). Using actual emissions data from your steel supplier almost always results in lower CBAM costs. This requires establishing data-sharing agreements with non-EU steel producers.

Quarterly CBAM declarations must be submitted to the national competent authority (in Finland: Tulli/Customs) within one month of each quarter's end. Each declaration must specify the quantity of goods imported, the embedded emissions per product, and the CBAM certificates surrendered.

Verification requirements apply. The embedded emissions data must be verified by an accredited verifier for imports above defined thresholds. For steel, this means engaging verification bodies with metallurgical expertise, not just financial auditors.

Carbon price paid in the country of origin can be deducted. If your steel supplier already pays a carbon price in their home country (for example, the UK ETS or a Chinese national ETS), this amount is deducted from the CBAM obligation, avoiding double taxation.

Strategic Responses for Nordic Importers

Shift sourcing to low-carbon producers. CBAM creates a direct financial incentive to source from steel producers with lower specific emissions. SSAB in Sweden, for example, is investing in hydrogen-based steelmaking (HYBRIT) with near-zero emissions. Outokumpu in Finland produces stainless steel with among the lowest carbon footprints globally due to high recycled content and clean Finnish electricity.

Negotiate emissions data sharing. Reach out to your non-EU steel suppliers now and establish data-sharing protocols for actual emissions. Suppliers who cannot or will not provide verified emissions data force you to use expensive default values.

Automate CBAM calculations. With quarterly reporting deadlines and the need to match actual emissions data to each import shipment, manual CBAM compliance quickly becomes unmanageable for companies with complex steel supply chains. Integrate CBAM calculations into your procurement and customs processes.

Factor CBAM into long-term contracts. Steel procurement contracts signed today should include clauses addressing CBAM cost allocation, emissions data provision, and verification cooperation. Contracts without these provisions will create disputes as CBAM costs escalate through 2034.

References

[1] Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishing a carbon border adjustment mechanism. OJ L 130, 16.5.2023. EUR-Lex: 32023R0956.
[2] Commission Implementing Regulation (EU) 2023/1773 of 17 August 2023 laying down the rules for the application of Regulation (EU) 2023/956 as regards reporting obligations during the transitional period. OJ L 228, 15.9.2023.
[3] Directive 2003/87/EC as amended by Directive (EU) 2023/959 — EU Emissions Trading System, Article 10a on auctioning and free allocation phase-out schedule.
[4] World Steel Association, “Steel’s contribution to a low carbon future and climate resilient societies” (2024). Global average CO2 intensity of crude steel production: 1.85 t CO2/t steel.
[5] Directive 2003/87/EC of the European Parliament and of the Council establishing a scheme for greenhouse gas emission allowance trading, as amended. EUR-Lex: 32003L0087.

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