The Carbon Border Adjustment Mechanism (CBAM) is one of the EU's most ambitious measures in the area of climate-driven trade policy. Since October 2023 it has been in its transitional reporting phase, and from 2026 the obligation to actually pay will kick in. For importers bringing goods from China, understanding CBAM is essential to plan costs and sourcing strategies.
Which products are affected
In its first phase, CBAM covers six categories: cement, iron and steel, aluminium, fertilisers, electricity and hydrogen. This means that if you import aluminium profiles, metal structures, steel fasteners, special cements or fertilisers from China, you need to calculate and report the CO2 emissions associated with producing those goods. The EU plans to expand the scope to more sectors in the coming years.
How it works in practice
The importer must purchase CBAM certificates whose price is linked to the CO2 price in the European emissions market (EU ETS), currently around 60-70 euros per tonne of CO2. If your Chinese supplier can prove they have already paid a carbon price in China, that amount is deducted. The catch is that the Chinese carbon market currently covers only the power sector and the price hovers around 8-10 euros/tonne, well below the European level.
Estimated cost impact
To illustrate: importing one tonne of hot-rolled steel from China can entail a CBAM surcharge of between 100 and 180 euros, depending on the energy efficiency of the producing plant. For aluminium the impact is even higher, given that Chinese aluminium production relies heavily on coal-fired power. These surcharges can significantly alter the competitiveness of certain Chinese products against European manufacturers or producers from countries with a smaller carbon footprint.
Our recommendation
If you import products affected by CBAM, act now: ask your Chinese suppliers for verified emissions data per unit of product, evaluate alternative suppliers with a lower carbon footprint (some Chinese factories are investing heavily in renewable energy), and calculate the impact on your margins. At MingTa Group we can support you in this process, helping you identify factories with environmental certifications such as ISO 14001 and verifiable emissions reporting.