The European Union's Carbon Border Adjustment Mechanism (CBAM) has signaled three major developments in July 2026. On July 6, the second-quarter CBAM certificate price was set at 75.28 euros per ton, indicating stable carbon pricing. On July 9, the European Parliament's Environment Committee voted to expand the mechanism's scope from basic materials to include downstream products like fasteners and wire rods. During the same week, new steel import regulations took effect, slashing duty-free quotas by 47% and doubling the excess tariff from 25% to 50%.
For the full year 2026, exporters must prepay CBAM certificate fees on a quarterly basis. The first annual settlement deadline is September 30, 2027. Before that date, companies must complete three tasks: data inventory, emissions accounting, and third-party verification.
Stable Carbon Pricing, Expanded Scope, and Compounding Trade Barriers
The EU's second-quarter 2026 CBAM certificate price stands at 75.28 euros per ton (approximately 585 yuan per ton), down just 0.08 euros from the first quarter. While pricing will remain quarterly for 2026, starting in 2027, it will shift to weekly updates, directly linked to the EU ETS auction clearing price.
On July 9, 2026, the European Parliament's Environment Committee voted to extend CBAM coverage from basic raw materials like steel and aluminum to downstream products including fasteners, wire rods, springs, and even household items. The full parliament will vote on the legislation in September, but expansion is considered certain. Companies previously exempted by arguing they only handled processing stages, not basic materials, will now face direct regulation. For steel products, finished goods exported to the EU such as doors, windows, machinery parts, and metal furniture will soon require carbon data reporting.
Anti-circumvention provisions are also tightening. "Minor processing" will no longer be considered a legitimate method to avoid CBAM. When the European Commission identifies circumvention patterns, it has the authority to apply punitive default emission values from the country of origin for tax calculations.
New EU steel import regulations effective July 2026 reduce duty-free import quotas by approximately 47% and double the excess import tariff from 25% to 50%. Once quarterly quotas are exhausted, export companies face doubled tariff costs. Simultaneously, anti-dumping final duties on tires can reach up to 45.3%, with a combined base tariff of 4.5% bringing the actual tax burden close to 50%. Carbon costs and tariff barriers are now creating a compounding effect.
The Real Value of Measured Data
CBAM accounting rules feature a critical choice: using "default values" versus "measured values" for reporting. This decision directly determines whether a company pays millions of euros more or less in carbon taxes annually.
Default values are calculated based on the average emission intensity of the worst-performing country in the EU for that product, plus a mark-up specifically designed to cover the possibility that individual production facilities have higher emissions than the country average. The system's logic is that if a company fails to provide accurate data, it will be assessed under the worst-case scenario.
For electrolytic aluminum, producing one ton generates approximately 16 tons of CO₂ equivalent. At 75.28 euros per ton, the carbon cost is about 1,204 euros. If a company uses measured values, it can save hundreds of euros per ton of carbon tariff. A company exporting 10,000 tons of aluminum products annually could see a cost difference exceeding one million euros by choosing measured values over defaults.
The steel industry faces dual pressure from carbon costs and the 47% quota reduction and 50% excess tariff. One ton of crude steel has an embedded carbon emission of about 1.8 tons, costing approximately 135 euros at 75.28 euros per ton in carbon costs. Combined with the 50% excess tariff after quota exhaustion, total tax burden can approach over 40% of the selling price. The cement industry, with its extremely low profit margins, faces a high proportion of carbon costs. The fertilizer industry, while benefiting from lower default value markups, faces significant cumulative effects due to large production volumes and frequent export batches.
Another risk with default values concerns raw material traceability. CBAM rules further stipulate that if the country of origin for raw materials (precursors) used in production cannot be determined, the default value must be the highest emission intensity globally for that material. This means supply chain opacity itself can lead to punitive tax rates. Companies must not only ensure their own operations are clean but also have verifiable data from upstream suppliers.
Five Critical Milestones Until First Settlement
In September 2026, the European Parliament will vote on the CBAM expansion legislation, and the first batch of third-country verification bodies will be granted accreditation. Companies must complete verification body engagement and sign pre-verification agreements.
By December 2026, the registration channel for CBAM "independent persons" responsible for certification will open. Companies must complete full-year emissions data accounting and internal audits.
On February 1, 2027, the centralized CBAM certificate purchase platform will launch. EU importers must complete their first certificate purchases, supported by exporters.
By September 30, 2027, the deadline for the 2026 annual CBAM declaration and certificate settlement, companies must complete their annual CBAM report and certificate settlement.
On January 1, 2028, the expanded CBAM coverage for downstream products is scheduled to take effect. Companies must extend their carbon data systems to downstream products.
All 24 implementation documents for CBAM were released by the end of 2025, covering accounting, verification, certificate pricing, default values, and free quota adjustments. The rules are now clear. The question for companies is: with 14 months until the first settlement, is the data ready?
Verification Accreditation Window
On June 30, 2026, the EU updated CBAM certification rules, allowing third-country verification bodies to voluntarily apply to EU National Accreditation Bodies (NABs) for qualifications. The first batch of accredited bodies is expected to be approved in September 2026. However, only three of the 24 NABs fully accept applications from third countries: Italy's Accredia, the Netherlands' RvA, and Sweden's Swedac. Thirteen bodies, including Germany's DAkkS, serve only EU entities, making them inaccessible to Chinese companies.
CBAM implementing regulations require that the first year of verification must include a physical on-site visit, with virtual visits not permitted. From the second year onward, virtual inspections may be used under specific conditions, but a physical visit is required at least every two years. On-site verifiers will inspect production facilities, monitoring equipment, and data recording systems, with a materiality threshold set at 5% of emissions data.
Chinese companies have two options. The first is to engage international verification bodies with EU accreditation. CTI Huace Testing has completed the acquisition of Greece's Emicert, a greenhouse gas verification body, leveraging Emicert's EU ETS verification experience and qualifications to provide a "domestic service plus EU accreditation" one-stop pre-verification service. The second option is for domestic third-party verification bodies to independently apply for accreditation, which requires promptly understanding the specific requirements and technical thresholds of the three NABs: Accredia, RvA, and Swedac.
Regardless of the chosen path, the window is narrowing. The September batch of accredited bodies will face a peak in application queues. Delaying by even a step could mean on-site verification is scheduled for the first half of 2027, directly compressing the preparation time for reporting.
Five-Step Compliance Checklist for Companies
The first step is to initiate an internal carbon data inventory, to be completed within the third quarter of 2026. This involves a comprehensive calculation of emissions data for the first, second, and third quarters of 2026, following the calculation methods of EU Implementing Regulation 2025/2546. Key areas to verify include direct emissions from production processes, indirect emissions from purchased electricity and heat, and embedded emissions from precursor materials such as aluminum ingots and alumina. Data traceability must cover at least one full quarter to withstand on-site verification.
The second step is to establish an English version of the monitoring plan, to be completed between the third and fourth quarters of 2026. CBAM requires companies to submit a monitoring plan in English to the verification body, covering production process descriptions, emission source identification, monitoring methods, and data recording and storage methods. The plan must meet EU-approved methodological requirements and undergo internal review before the initial verification.
The third step is to engage a verification body and complete a pre-verification, to be carried out from the fourth quarter of 2026 to the first quarter of 2027. Priority should be given to organizations with EU local verification accreditation, and a pre-verification agreement should be signed as early as possible. The pre-verification follows official CBAM verification standards, covering compliance of company and facility information, completeness and methodological compliance of the monitoring plan, accurate calculation and verification of emissions data, calculation and verification of free quotas, and a 5% materiality level assessment. After the pre-verification report is issued, companies must rectify any non-conformities identified.
The fourth step is to assist EU importers in completing declarations and certificate purchases, to be carried out from the first to the third quarter of 2027. The EU importer, as the authorized CBAM declarant, is the legally responsible entity for declaration and settlement. Chinese export companies must provide verified emissions data, production facility information, raw material traceability codes, and other data to the importer to help them complete purchases once the certificate platform goes live on February 1, 2027, and to complete the first annual settlement by September 30, 2027. A practical tip is that if the importer has not yet obtained authorized declarant status, companies should remind them to complete the application before March 31, 2026. If the deadline has passed, importers must urgently confirm their declarant status and promptly complete the application.
The fifth step is to establish a long-term carbon cost management mechanism, to be normalized from 2027 onward. CBAM compliance is not a one-time task. Starting in 2027, certificate prices will be updated weekly, meaning carbon price fluctuations will directly impact corporate profit margins. Companies are advised to establish three regular mechanisms: carbon price monitoring through dedicated personnel or tools to track EU ETS auction prices and CBAM weekly certificate prices in real time to anticipate cost changes; rolling emissions data updates on a quarterly basis to ensure continuous, traceable data support for annual declarations from 2027 onward; and supply chain carbon management extension as CBAM coverage expands to downstream products like fasteners and wire rods, requiring companies to extend carbon data management from their own operations upstream to raw material suppliers to establish a traceable supply chain carbon footprint system.
Summary of the five-step compliance checklist: carbon data inventory by Q3 2026, English monitoring plan by Q4 2026, verification body engagement and pre-verification from Q4 2026 to Q1 2027, assistance to EU importers for declaration and certificate purchase from Q1 to Q3 2027, and establishment of a long-term carbon cost management mechanism from 2027 onward.
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