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CBAM is the EU Carbon Border Adjustment Mechanism (commonly called the “carbon tariff”), formally levied from January 1, 2026. It makes imported goods pay the difference between their embedded emissions and the EU ETS carbon price, to prevent carbon leakage.
What it means for Chinese companies: exporters in the six covered sectors (steel/aluminium/cement/fertiliser/hydrogen/electricity) must calculate their full-chain carbon footprint and provide third-party verified data, otherwise goods may be held at port or fined.
Key dates: from January 1, 2026, goods entering EU customs after that date give rise to a carbon cost; but actual payment waits until February 2027, when the EU begins selling CBAM certificates — importers must settle the full CBAM cost for all 2026 imports in a single payment by September 30, 2027. It is not paid during 2026 itself, but the cost already arises on 2026 goods.
CBAM is determined by the “goods arrival date”, not by the contract signing date, therefore:
1. Projects executed last year, shipped this year: if the goods arrive in the EU after January 1, 2026, CBAM applies — even if the contract was signed back in 2024, as long as customs clearance happens after that date you must declare and bear the carbon cost.
Note: goods produced in 2025 use 2025 emission data; goods produced in 2026 use 2026 data — they cannot be mixed.
2. Projects signed now, delivered next year: a 2027 delivery falls entirely within the formal levy period, so the CBAM carbon cost must be priced into the quote — at an EU ETS carbon price of around €80/tonne, the customer needs to reserve that cost in advance.
It is at the granularity of “a single shipment + the corresponding CN code + the production factory” — not a factory-wide blended report.
First, one code to get straight: the HS code you are familiar with maps to the EU's 8-digit CN code in CBAM — HS is the internationally shared first six digits, the EU adds two more, and declarations are made against the CN code.
Different CN codes must be separated: for example, if your factory exports both cold-rolled steel sheet (7209.15) and galvanised sheet (7210.49), these are different CN codes and must be accounted for and declared separately — they cannot be mixed.
Same CN code, same factory — an annual average may be used: if the same factory produces a single CN code all year, no matter how many batches go to different customers, you do not need to calculate emissions per batch — you can calculate a full-year average emission intensity and distribute it across customers, which reduces the accounting workload.
Every shipment must still be declared individually: even for the same CN code and the same factory, each shipment to the EU must have its quantity and corresponding emission data reported at customs clearance — the whole year's output cannot be reported in one go.
Calculation Formula: CBAM Payable = (Actual Embedded Emission Intensity - EU Benchmark) × Goods Quantity × EU ETS Weekly Average Carbon Price - Domestic Carbon Costs Already Paid
Three types of core data to prepare:
1. Direct Emission Data: Fuel combustion emissions from your factory production process (e.g., coal and natural gas consumption × corresponding emission factors), plus process emissions (e.g., cement calcination, aluminium electrolysis). These must be supported by fuel purchase invoices and production metering records.
2. Indirect Emission Data: The amount of purchased electricity/steam used for production, multiplied by the corresponding grid emission factor — self-generated green electricity counts as zero.
3. Upstream Precursor Emission Data: If your production uses CBAM-controlled raw materials (e.g., aluminium ingots for profiles, crude steel for screws), upstream suppliers must provide emission data — without it, the EU will apply the highest default value, significantly increasing your costs.
Simple or complex product? This decides how many layers you have to calculate. If the production process uses no CBAM-controlled raw materials, it is a simple product: precursor emissions are treated as zero and you only calculate direct and indirect emissions. If controlled raw materials are used, it is a complex product and the embedded emissions of upstream precursors must be added on top. Get this layer wrong and the emission intensity you calculate will be far off — so classify the product before you start accounting.
The bottom line: solar PV, green electricity and green certificates have no “offset” or “deduction” effect. They can only lower the carbon baseline of product accounting at the source — by reducing indirect emissions from purchased electricity — not a post-tax relief, and not a tool you can use to offset the carbon tariff.
Solar PV: self-generated, self-consumed green electricity has its indirect emissions counted as zero, and that is its only route.
Green certificates: ordinary green certificates are not recognised by the EU. Only strict physical green electricity qualifies, and it must meet all three conditions below.
The three EU conditions for green electricity:
1. A direct physical PPA (not certificate purchase)
2. Generation and production facilities connected to the same grid, with official proof
3. Hourly matching (generation = production consumption period)
Buying green certificates alone without meeting all three: the reduction is invalid and cannot be deducted. So when planning green electricity, confirm first that you can obtain hourly-matched evidence, then decide how to invest — otherwise you spend the money and reduce nothing.
What ESPR is: the EU Ecodesign for Sustainable Products Regulation, in force since July 2024, replacing the former Ecodesign Directive. It governs not just whether a product can be sold but whether it is green enough — products must meet sustainability requirements at the design stage.
What DPP is: the Digital Product Passport — a scannable digital record attached to each product, covering material composition, origin, carbon footprint and repairability. It is the entry ticket to the EU market.
When your category comes up: ESPR rolls out by product group — delegated acts follow through 2025–2026, textiles and electronics and other priority categories require a DPP from 2027, and by 2030 the vast majority of products sold in the EU are covered. The exact categories and indicators are set by those delegated acts.
Priority groups: textiles and apparel (fibre composition, durability, microplastic release), electronics and appliances (energy efficiency, repairability scoring, spare parts), and furniture and iron & steel products (material traceability, durability, design for recycling).
Batteries are the exception — look at them separately: batteries follow a different regulation — the EU Battery Regulation (EU) 2023/1542: from 18 February 2027, EV, LMT and industrial batteries above 2 kWh must each carry a battery passport.
Beyond the DPP, ESPR also sets mandatory minimums for recyclability and recycled content, requires durability and repairability, and bans the destruction of unsold consumer goods.
Explore ESPR/DPP services · Explore Battery Regulation Services
What EUDR is: the EU Deforestation Regulation, in force since June 2023. Seven commodities and their derived products exported to the EU must be shown to come neither from deforested land nor in breach of the country of origin's laws, with plot-level geolocation provided.
The seven covered commodities: wood, palm oil, rubber, coffee, cocoa, soya, and cattle/leather — covering both raw materials and derived products such as wooden furniture, rubber goods, chocolate and leather articles.
When it starts: large and medium operators take on due diligence obligations from 30 December 2025; small and micro operators come into scope from 30 June 2026.
Three hard requirements: 1. Deforestation-free — the goods and their raw materials must not come from land deforested or degraded after 31 December 2020; 2. Legally produced — compliant with the country of origin's land use, environmental, labour and tax laws; 3. Plot geolocation — geographic coordinates for all raw material origins, submitted with a Due Diligence Statement (DDS) to obtain a reference number.
Without a DDS and plot geolocation, goods cannot enter the EU market. This is not one more formality — it is a market access threshold.
What PPWR is: the EU Packaging and Packaging Waste Regulation, in force since February 2025, replacing the former Packaging Directive. It sets requirements for design for recycling, recycled content, minimisation, hazardous substance limits and harmonised labelling for all packaging placed on the EU market, imports included.
When it starts: fully applicable from 12 August 2026, with imported packaging bound by the same rules; recycled content and design-for-recycling thresholds rise in tiers through 2028–2030; targets tighten further from 2030.
The five core requirements: 1. Design for recycling — all packaging must be designed to the recyclability grading standard, and non-compliant packaging is progressively restricted from the market; 2. Minimum recycled content — plastic packaging must meet phased recycled material ratios; 3. Minimisation and void ratio — over-packaging and empty space are capped, with explicit limits for e-commerce and grouped packaging; 4. PFAS limits — fluorine compounds in food-contact packaging are subject to strict limits; 5. Harmonised labelling — material identification, sorting guidance and data carrier labels must follow a single format.
In addition, several categories of single-use plastic packaging are banned or restricted and must be replaced with reusable alternatives.
An easy one to miss: this regulation governs the packaging itself, not the product. Many exporters focus on product compliance and overlook that outer cartons, inserts and cushioning materials are in scope too.
First, the rule: CPF does not accept self-declaration. The product must be backed by an Amazon-recognised third-party certification or programme — issuing your own statement achieves nothing.
Why it is worth doing: badged products gain a dedicated storefront filter — buyers can filter by the badge and certified products enter a separate section; the green badge provides third-party endorsement and lowers the decision cost for European and American buyers; and the carbon footprint and material data can be reused for ESPR, PPWR and other EU requirements.
Four common certification pathways: 1. Carbon footprint — product carbon footprint calculated under ISO 14067 and similar methodologies and third-party verified, e.g. Carbon Trust or ClimatePartner; 2. Recycled materials — GRS, RCS and similar recycled content certifications, suited to textiles, packaging and consumer goods; 3. Forestry and bio-based — FSC and other responsible forestry certifications, for paper, wood products and furniture; 4. Efficiency and transport — Amazon programmes such as Compact by Design, which assess packaging and transport efficiency.
Four steps to go live: match a pathway → prepare and calculate data → third-party certification → badge goes live. Certificates have an expiry date and must be renewed, or the badge drops off.