On January 1, 2026, Europe's Carbon Border Adjustment Mechanism moved from a reporting exercise to a real financial obligation. Importers of steel, cement, aluminium, fertilisers, hydrogen, and electricity into the EU now accumulate carbon costs on every shipment - costs that will be settled through CBAM certificate purchases starting February 2027.
The authorization deadline for importers exceeding 50 tonnes annually is March 31, 2026. After that date, importing CBAM-covered goods without authorization becomes a compliance violation carrying penalties of up to €500 per tonne of unreported CO₂.
This is no longer a future regulation. It is reshaping procurement decisions, project economics, and competitive positioning across every infrastructure sector Delphi tracks - right now.
How CBAM actually works in 2026
The mechanics are straightforward but the details matter.
Every tonne of embedded CO₂ in imported CBAM goods now carries a price. That price is set quarterly in 2026, based on volume-weighted EU ETS auction clearing prices. As of late 2025, EU ETS allowances were trading around €70–84 per tonne of CO₂. From 2027, pricing shifts to weekly averages.
In 2026, the actual cost exposure is still modest because of the free allocation adjustment. The CBAM phase-in factor for 2026 is just 2.5% - meaning importers pay only on the portion of emissions not covered by the EU's remaining free allowances to domestic producers. That factor rises to 5% in 2027, 10% in 2028, and reaches 100% by 2034 as free allocation is fully phased out.
But the strategic implications are already much larger than the 2026 bill.
Why 2.5% matters more than it sounds
A 2.5% CBAM factor in year one sounds negligible. For a large steel importer bringing 50,000 tonnes of blast-furnace steel into the EU at roughly 1.9 tonnes of CO₂ per tonne of product, the 2026 cost might be in the low hundreds of thousands of euros. Manageable.
The problem is trajectory. By 2030, that factor hits roughly 48.5%. By 2034, it's 100%. For the same steel importer, the annual CBAM bill at full phase-in - assuming EU ETS prices stay in the €70–90 range - approaches €6–8 million per year. That changes the economics of supplier selection, production route, and sourcing geography entirely.
Companies making procurement and capital investment decisions in 2026 are not optimizing for 2026 costs. They are positioning for 2030 and beyond. And that is where the mechanism starts to reshape entire value chains.
The sectors where CBAM hits hardest
Steel and iron account for the largest share of CBAM-covered import volumes into the EU. The carbon intensity difference between blast-furnace steel (typically 1.8–2.2 tCO₂/t) and electric arc furnace steel using scrap (0.3–0.5 tCO₂/t) or hydrogen-based direct reduced iron (potentially below 0.5 tCO₂/t) is enormous. As CBAM costs scale up, the premium that green steel commands starts to look less like a premium and more like a cost avoidance.
This is already accelerating interest in European H₂-DRI projects - SSAB's HYBRIT, Salzgitter's SALCOS, ArcelorMittal's Hamburg and Gijón plants, thyssenkrupp's Duisburg conversion. Each of these projects was already underway, but CBAM provides the demand-side economics that make offtake agreements more attractive to EU buyers.
Cement faces a similar dynamic. With embedded emissions of 0.6–0.9 tCO₂ per tonne of clinker, cement is among the most carbon-intensive materials on the CBAM list. The EU's domestic cement industry is already covered by the ETS, but imported cement - particularly from Turkey, which is the largest non-EU cement exporter to Europe - now faces a visible and escalating carbon cost. HeidelbergMaterials' Brevik CCS project in Norway and the broader push toward alternative binders, calcined clay blends, and clinker ratio reduction all become more commercially urgent under CBAM.
Hydrogen is notable because it is explicitly excluded from the 50-tonne de minimis threshold. Every kilogram of hydrogen imported into the EU is subject to CBAM from day one, regardless of volume. For green hydrogen producers, this is actually an advantage - their production emissions are near zero, so they face minimal CBAM liability. For grey hydrogen imports (produced via steam methane reforming without carbon capture), the cost is substantial: roughly 9–12 kg of CO₂ per kg of hydrogen, creating a CBAM-driven cost differential that directly favours clean production.
Aluminium and fertilisers round out the current scope. In December 2025, the European Commission also proposed extending CBAM to downstream products - processed steel, aluminium-intensive goods, and other manufactured items - from 2028. That proposal is now in the legislative process and, if adopted, would significantly expand the mechanism's reach.
The data problem hiding inside CBAM
The regulation's most underestimated challenge is not the cost of certificates. It is the data infrastructure required to comply.
Importers need product-specific, installation-level embedded emissions data from their non-EU suppliers. Where verified actual data is unavailable, default values apply - and those defaults are deliberately conservative. They are set at the emission intensity of the highest-emitting countries with reliable data, plus a surcharge that rises from 10% in 2026 to 30% by 2028.
In practical terms, using default values can inflate your CBAM liability by 30–50% compared to actual verified data. This creates a direct commercial incentive for EU buyers to work with suppliers who can provide verified emissions data - and a disadvantage for suppliers who cannot.
For the infrastructure sectors Delphi tracks, this means emissions data quality becomes a competitive differentiator. A steel producer who can provide verified, installation-specific emissions data to their EU customers is structurally advantaged over one who cannot. A hydrogen project developer who can demonstrate near-zero production emissions has a quantifiable cost advantage over grey hydrogen imports.
What Delphi tracks across CBAM-affected sectors
Delphi's knowledge graph connects production facilities to their technology routes, emissions profiles, and the downstream projects they supply. Across green steel, hydrogen, cement, carbon capture, and carbon markets, we track the structured relationships that CBAM is now making financially material:
Which steel producers are operating or constructing H₂-DRI facilities, and what are their projected emissions intensities. Which hydrogen projects have reached final investment decision, what electrolyzer technology they use, and what their expected production costs and carbon footprints are. Which cement plants are implementing carbon capture, clinker substitution, or alternative binder technologies. How EU ETS pricing, CBAM phase-in schedules, and national carbon pricing mechanisms interact to shape the cost landscape for each production route.
This is the kind of structured, cross-sector intelligence that CBAM compliance and strategic sourcing decisions now require. The regulation has turned emissions data from a sustainability reporting exercise into a procurement and financial planning input.
The bottom line
CBAM is live. The 2026 costs are small. The 2030 costs will not be. Every infrastructure project, procurement decision, and investment case in CBAM-covered sectors now has a carbon cost variable that scales predictably over the next eight years.
The companies and project developers who treat this as a data problem - building the emissions visibility to optimize their position - will capture the advantage. Those who wait for costs to become material before acting will find themselves locked into high-carbon supply chains with limited room to manoeuvre.
The authorization deadline is March 31, 2026. The strategic deadline was yesterday.