The Carbon Border Adjustment Mechanism was designed as a climate policy instrument, but its practical effect on EU supply chains is structural: it reprices non-EU supply based on carbon intensity, altering the relative competitiveness of sourcing origins that have been stable for decades.
Under CBAM, EU importers pay a certificate cost equal to the carbon price their non-EU supplier would have paid had it been subject to the EU ETS. In a world where the EU ETS trades at €70–80 per tonne of CO₂ — as it has through most of 2025 and 2026 — this is a material cost variable for high-carbon supply chains. Steel, aluminium, cement, and fertilizers are the initial categories. More categories are expected in the 2026–2028 review period, including downstream products and chemicals.
The sourcing impact works in two directions. High-carbon suppliers in origins without a carbon price — certain Indian, Turkish, or Southeast Asian mills — face a cost escalation that partially erodes the labour and energy cost advantages that drove their competitive position. Lower-carbon suppliers, including some EU domestic producers and suppliers in countries with their own carbon pricing mechanisms, see their relative competitiveness improve as CBAM narrows the landed-cost gap.
For supply chain managers, this means that sourcing decisions made in 2022 or 2023 on the basis of landed cost need to be rerun with CBAM certificates added. The recalculation is not uniform across categories: a steel coil from a Turkish electric arc furnace has a fundamentally different carbon intensity than one from a coal-powered integrated blast furnace in a comparable market. Buyers who have not obtained supplier-specific embedded emissions data are working with default values that typically overstate costs and may not reflect supplier-level investments in decarbonisation.
Longer term, CBAM is accelerating two supply chain shifts already underway: nearshoring and decarbonisation of the supply base. EU procurement teams sourcing from Central and Eastern Europe — Poland, Slovakia, Romania, Czech Republic — benefit from EU ETS coverage of those suppliers, eliminating the CBAM cost differential entirely. Several CEE countries have seen record FDI inflows in 2025–2026 as supply chain teams position for this. Similarly, suppliers that can demonstrate lower embedded carbon intensity now have a procurement argument they could not make before CBAM: "our certified low-carbon aluminium costs €180 per tonne more, but you save €145 in CBAM certificates — net cost is €35, not €180."
The data infrastructure requirement is significant. CBAM embedded emissions data must be verified — either by the supplier or by an EU-accredited verifier — and procurement teams that cannot obtain verifiable data from current suppliers face certificate overpayment risk and potential regulatory exposure. The supplier qualification process now needs to include carbon data capability as a sourcing criterion, not just quality, delivery, and price.
For in-depth analysis of CBAM cost tables by category, supplier checklist, and contract clause recommendations, see our full CBAM Impact Report on the reports page.
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