How Does CBAM Affect My Exports to Europe? A Practical Guide for Small Manufacturers

Your EU Customers Now Have a New Cost — And It's Coming From You

Here's the uncomfortable truth about CBAM: your EU customer doesn't absorb the cost — they pass it back to you.

"If you can't prove your actual emissions, your EU customer will use EU default values — which are based on the worst-performing production methods globally." — European Commission, CBAM Q&A (May 2026)

When a European importer buys your steel, aluminium, cement, or fertiliser, they now need to purchase CBAM certificates to cover the carbon emissions embedded in your products. If you can't prove your actual emissions, they'll use EU default values — which are based on the worst-performing production methods globally.

The result? Your products become more expensive compared to suppliers who can provide verified emissions data.

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The Cost Chain: How CBAM Flows Through Your Business

Your Factory → Your Product → EU Importer → CBAM Certificates → EU National Authority
     ↓                              ↓                                    ↓
You provide                   They pay for                     Money goes to
emissions data                certificates                     EU climate fund

Who Actually Pays?

Party	Role	Financial Impact
You (non-EU exporter)	Provide emissions data	Indirect — affects pricing competitiveness
EU importer	Purchase CBAM certificates	Direct — they pay upfront
EU national authority	Issue certificates	Receives revenue
End customer	Buy the product	May see price increases

The critical insight: Your EU customer will negotiate CBAM costs into your contract. If you can't provide low-emissions data, you lose the price war.

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Sector-by-Sector Impact Analysis

Iron & Steel: The Biggest Hit

Steel is the most heavily affected sector under CBAM. In 2026, only 2.5% of embedded emissions require certificate purchase (free allocation phases out by 2034).

Steel Production Route	Emissions (t CO₂/t)	2026 Cost (×2.5%)	2034 Cost (100%)
BF-BOF (most common)	1.85 – 2.30	€3.48 – €4.34/t	€139 – €173/t
EAF with scrap	0.40 – 0.70	€0.75 – €1.32/t	€30 – €53/t
DRI-EAF	1.10 – 1.50	€2.07 – €2.83/t	€83 – €113/t

Key takeaway: If you produce steel via BF-BOF (the most common route in developing countries), your CBAM cost is 3-5x higher than EAF producers using scrap — and this gap widens as free allocation phases out.

Steel accounts for the majority of CBAM-related compliance costs, given its high trade volume and emission intensity across production routes.

Aluminium: Energy-Intensive Exposure

Aluminium production is extremely energy-intensive, making it highly exposed to CBAM:

Aluminium Production	Emissions (t CO₂/t)	2026 Cost (×2.5%)	2034 Cost (100%)
Coal-powered smelting	15.0 – 20.0	€28.19 – €37.58/t	€1,130 – €1,507/t
Hydropower smelting	2.0 – 4.0	€3.77 – €7.54/t	€151 – €301/t
Gas-powered smelting	6.0 – 8.0	€11.30 – €15.07/t	€452 – €603/t

The difference is staggering: An aluminium exporter using coal-powered electricity pays 5-10x more in CBAM certificates than one using hydropower.

Cement: Clinker Is Key

Cement emissions come primarily from the calcination process (chemical reaction) and fuel combustion:

Component	Share of Cement Emissions	CBAM Relevance
Calcination (CO₂ from limestone)	~60%	Cannot be reduced by fuel switching
Fuel combustion	~35%	Can be reduced with alternative fuels
Electricity consumption	~5%	Covered as indirect emissions

Fertilisers: Ammonia Is the Driver

For fertiliser producers, ammonia production is the main emissions source:

Fertiliser Type	Primary Emissions Source	CBAM Exposure
Ammonia (NH₃)	Natural gas combustion + process emissions	Very High
Urea	Ammonia feedstock + reaction emissions	Very High
NPK mixtures	Dependent on nitrogen source	High
Phosphates	Lower direct emissions	Moderate

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The 50-Tonne Threshold: Are You Affected?

CBAM applies to importers bringing in more than 50 tonnes of CBAM goods per year. But here's what many SMEs miss:

Threshold Calculation

Factor	Details
Measurement	Mass-based (tonnes)
Period	Per calendar year
Threshold	50 tonnes of CBAM goods
Applies to	EU importer (not the exporter)

Practical example: If you export 60 tonnes of steel products to the EU annually, your importer exceeds the threshold and must register as an authorised CBAM declarant.

What Happens Below the Threshold?

If your EU customer imports less than 50 tonnes, they're exempt from CBAM obligations — for now. However:

• The EU is considering lowering the threshold in future revisions
• Even below-threshold importers may request emissions data to stay competitive
• Your competitors who prepare now will have an advantage when thresholds change

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How CBAM Changes Your Pricing Strategy

The Cost Pass-Through Model

Most EU importers use one of these approaches:

Strategy	How It Works	Impact on You
Full pass-through	CBAM cost added to your invoice price	You absorb the cost
Shared burden	Importer and exporter split CBAM costs	Negotiation required
Preferred supplier	Lower CBAM costs = better pricing	Competitive advantage
Default value penalty	Importer uses default values, charges you more	Worst-case scenario

Real Pricing Impact: Steel Example

Scenario: You export 200 tonnes of steel to Germany annually.

Data Source	Emissions Factor	2026 CBAM Cost (×2.5%)	2034 CBAM Cost (100%)
Your actual data (efficient)	1.50 t CO₂/t	€565	€22,608
EU default value (BF-BOF)	2.30 t CO₂/t	€865	€34,666
Difference	—	€300	€12,058

By providing actual emissions data, you save €12,058 annually by 2034 — and your EU customer is more likely to keep buying from you. In 2026, the saving is smaller (€300) but the habit of data-sharing pays off long-term.

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The Communication Gap: What Your EU Customers Need

Most EU importers are not emissions experts. They need clear, structured data from you:

Data Your EU Customer Needs

Data Point	Format	Why It's Needed
Direct emissions (Scope 1)	t CO₂ per tonne of product	Core CBAM requirement
Indirect emissions (Scope 2)	t CO₂ per tonne of product	Required for cement & fertilisers
Production route	Description + CN codes	Determines emission factor
Energy sources	Fuel type, electricity mix	Affects calculation accuracy
Raw material inputs	Quantities + sources	For precursor emissions
Carbon price paid	Currency + proof	For deduction claims

How to Provide This Data

1. Communication Sheet — EU's standardised format for non-EU operators
2. CBAM default values — Used when you provide nothing (worst case for you)
3. Actual verified data — Your real emissions, verified by an accredited verifier (best case for you)

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What Happens at Each CBAM Milestone

2026 Timeline

Date	Milestone	Action Required
January 1, 2026	CBAM definitive period begins	Importers must have CBAM account number
Q1 2026	First certificate price published (€75.36)	Importers calculate obligations
April 1, 2026	Q2 begins	Quarterly reporting continues
September 30, 2027	First CBAM declaration due	Importers surrender certificates for 2026

What You Should Do Now

• Confirm your products' CN codes match CBAM sectors
• Calculate your embedded emissions (or start tracking them)
• Prepare a Communication Sheet for your EU customers
• Discuss CBAM cost-sharing with your EU buyers
• Consider registering on the CBAM registry as a non-EU operator

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Competitive Advantage: How Smart SMEs Are Turning CBAM Into Growth

While many exporters see CBAM as a threat, the smartest SMEs are using it as a differentiator:

The Early Mover Advantage

Competitor Strategy	Your Advantage
Ignoring CBAM	You're compliant and preferred
Using default values	You provide actual data = lower costs
Reacting after deadline	You're already ahead
Hiring expensive consultants	You use affordable software

Companies that provide verified emissions data are better positioned to retain EU contracts, as importers increasingly prefer suppliers who simplify their compliance obligations.

The Sustainability Premium

EU buyers increasingly prefer suppliers with strong sustainability credentials:

• Green procurement policies are spreading across EU member states
• Scope 3 reporting requirements mean EU companies need YOUR emissions data
• Carbon Border Adjustment creates a direct financial incentive for low-carbon suppliers

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Key Takeaways

• CBAM affects your export pricing even though your EU customer technically pays the certificates
• The 50-tonne threshold applies to many commercial exporters — check if your EU customer exceeds it
• Actual emissions data = lower costs than EU default values
• Steel and aluminium exporters face the highest per-tonne CBAM costs
• Communication with your EU customers is critical — they need your data
• Early preparation creates competitive advantage, not just compliance

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Make CBAM Compliance Easy with CbamTrack

CbamTrack automates the entire CBAM compliance workflow for small exporters:

• Calculate your embedded emissions in minutes, not weeks
• Generate Communication Sheets ready to send to EU customers
• Track live ETS prices so you always know your CBAM costs
• Compare default vs. actual values to see your savings potential
• Export PDF/XML reports for your EU importers

No consultants needed. No spreadsheets. Just compliance.

Start free at cbamtrack.com/signup — 14-day trial, no credit card required.

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Last updated: July 2026 | Sources: European Commission DG TAXUD, EU Regulation 2023/956, CBAM Implementing Regulation 2025/2548