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The EU Carbon Border Adjustment Mechanism (CBAM) is now in force. Exporters of steel, cement, aluminium, fertilisers, hydrogen and electricity into Europe face a carbon-linked charge tied to EU ETS prices. This guide breaks down how CBAM works, sector cost exposure for India, China and Southeast Asia, why data quality drives liability, and the transition finance gap for hard-to-abate sectors.

CBAM entered its definitive phase on Jan 1, 2026, and the first month already shows where the pressure will land. Early EU data points highlight steel dominating declarations, early pullback in imports, and rising value of verified emissions data vs default values. Fertilisers emerge as a policy stress test, while China and others signal tougher trade tensions.
