Case study: Carbon border adjustment mechanism (CBAM) implementation — a city or utility pilot and the results so far

The Port of Rotterdam, Europe's largest industrial port complex handling over 140 million tonnes of cargo annually, processed CBAM declarations covering 4.2 million tonnes of embedded CO2 in its first full year under the EU's transitional reporting phase, revealing that 38% of importers initially submitted data with emissions calculation errors exceeding 20% (Port of Rotterdam Authority, 2025). This experience at a single major entry point illustrates the operational complexity that the Carbon Border Adjustment Mechanism introduces for municipalities, port authorities, and the industrial operators that depend on them. As CBAM transitions from its reporting-only phase to full financial obligations in 2026, the lessons emerging from early implementation pilots are shaping how jurisdictions across Europe prepare for what amounts to the most significant trade-climate policy instrument ever deployed.

Why It Matters

The EU's CBAM, which entered its transitional phase on October 1, 2023, requires importers of cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen to report the embedded carbon emissions of their products. Beginning January 1, 2026, importers must purchase CBAM certificates corresponding to those embedded emissions at a price linked to the EU Emissions Trading System (EU ETS) allowance price, which averaged EUR 68 per tonne of CO2 in 2025 (European Commission, 2025).

For port cities and industrial municipalities, CBAM creates direct economic consequences. The European Commission estimates that CBAM will affect approximately EUR 50 billion in annual imports across covered sectors (European Commission, 2024). Port authorities handle the physical logistics of CBAM-covered goods. Municipal governments oversee industrial zones where importers operate. Utilities that supply electricity to industrial facilities face new scrutiny of their generation mix because electricity is a CBAM-covered category.

The financial stakes are substantial. An importer bringing 100,000 tonnes of steel with embedded emissions of 1.8 tonnes of CO2 per tonne of steel into the EU faces a potential annual CBAM liability of approximately EUR 12.2 million at current ETS prices. Miscalculating embedded emissions by even 10% translates to a EUR 1.2 million error in either direction: underpayment triggers penalties, while overpayment erodes competitiveness.

Key Concepts

CBAM operates through a certificate system. Importers must register as authorized CBAM declarants, calculate the embedded emissions of their imported goods using either actual production data from the manufacturing facility or default values published by the European Commission, and surrender CBAM certificates equal to the embedded emissions minus any carbon price already paid in the country of origin.

Embedded emissions encompass both direct emissions from the production process (Scope 1) and, for certain goods like electricity and fertilizers, indirect emissions from electricity consumed during production (Scope 2). The calculation methodology requires importers to obtain verified emissions data from non-EU producers, a requirement that has proven operationally challenging given that many exporting facilities lack carbon accounting infrastructure.

Default values serve as a fallback when actual production data is unavailable. During the transitional phase, the Commission set default values based on average emissions intensities in the country of origin. Starting in 2026, importers using default values rather than verified actual data will face higher costs because default values are set at the emissions intensity of the worst-performing 10% of EU installations in each sector.

What's Working

Rotterdam Port Authority's CBAM Facilitation Program

The Port of Rotterdam Authority launched its CBAM Facilitation Program in January 2024, nine months before the transitional reporting deadline. The program established a centralized digital platform that connects customs data with CBAM reporting requirements, automatically flagging shipments of CBAM-covered goods as they enter the port and pre-populating reporting templates with available customs and shipping documentation.

The platform processes data from the port's existing Portbase logistics information system, which handles 30 million data transactions annually across 2,800 connected companies. By integrating CBAM reporting into the existing logistics data flow, the port authority reduced the average time importers spent on CBAM quarterly reports from an estimated 40 hours to 12 hours per report (Port of Rotterdam Authority, 2025).

The program also created a shared verification infrastructure. Rather than each importer independently verifying emissions data from overseas producers, the port authority contracted with three accredited verification bodies to establish a pooled verification service. This reduced verification costs from an average of EUR 15,000 per importer per year for individual verification to EUR 4,500 through the pooled arrangement, a 70% cost reduction that particularly benefited small and medium-sized importers (Port of Rotterdam Authority, 2025).

Antwerp-Bruges Port CBAM Data Exchange

The Port of Antwerp-Bruges, Europe's second-largest port by cargo volume, developed a bilateral data exchange pilot with the Turkish Exporters Assembly (TIM) covering steel and aluminum products. Turkey is the EU's largest trading partner for CBAM-covered steel products, exporting approximately 8 million tonnes annually to the EU market.

The pilot established standardized data templates that Turkish steel producers complete with actual emissions data verified by Turkish accreditation bodies recognized under a mutual recognition agreement. By the end of 2025, the pilot covered 62 Turkish steel producers representing 78% of Turkey's steel exports to the EU through Antwerp-Bruges. Importers using the pilot's verified data reported 94% acceptance rates on their CBAM declarations, compared to 71% for importers relying on self-reported producer data without the standardized verification process (Port of Antwerp-Bruges, 2025).

Hamburg Port Authority's SME Support Initiative

The Hamburg Port Authority identified that small and medium-sized enterprises (SMEs) were disproportionately burdened by CBAM compliance requirements. An analysis of CBAM declarations processed through Hamburg in 2024 found that companies importing fewer than 1,000 tonnes of CBAM-covered goods per year spent an average of EUR 28 per tonne on compliance costs, compared to EUR 3 per tonne for large importers handling more than 50,000 tonnes annually.

Hamburg's response was a dedicated SME support initiative that provided free compliance training (reaching 1,400 companies in 2024), subsidized access to emissions calculation software, and a helpdesk staffed by CBAM specialists. The initiative reduced SME compliance error rates from 52% to 18% within its first year and prevented an estimated EUR 8 million in potential penalties across participating companies (Hamburg Port Authority, 2025).

What's Not Working

Data Quality from Non-EU Producers

The most persistent challenge across all pilot jurisdictions is obtaining reliable emissions data from non-EU manufacturing facilities. The European Commission's own assessment of transitional phase data found that only 34% of CBAM reports submitted in 2024 contained verified actual emissions data from producers. The remainder used estimates, default values, or producer self-declarations without independent verification (European Commission, 2025).

The problem is particularly acute for imports from countries without established carbon pricing or emissions monitoring frameworks. Indian steel and cement producers, for example, face no domestic requirement to calculate facility-level carbon intensity. A survey by the Confederation of Indian Industry found that 61% of Indian exporters to the EU lacked the metering, monitoring, and record-keeping infrastructure needed to provide CBAM-compliant emissions data (CII, 2025).

Customs Classification Mismatches

CBAM coverage is defined by Combined Nomenclature (CN) codes, the EU's product classification system. However, customs declarations do not always map cleanly to CBAM product categories. The Port of Rotterdam reported that 12% of shipments initially flagged as CBAM-covered were reclassified upon detailed review, while 6% of shipments not initially flagged were later determined to contain CBAM-covered goods (Port of Rotterdam Authority, 2025).

These classification errors create compliance risks in both directions. Importers who fail to report CBAM-covered goods face penalties of EUR 10 to EUR 50 per tonne of unreported embedded emissions. Importers who over-report face unnecessary certificate purchase costs and administrative burden. The port authorities have advocated for the European Commission to publish more granular classification guidance, particularly for composite and processed goods that contain CBAM-covered materials as components.

Verification Bottlenecks

The accredited verifier market has not scaled to meet CBAM demand. As of early 2026, only 47 verification bodies across the EU hold CBAM accreditation, compared to the estimated 300 to 400 needed to handle the projected volume of verification requests when full financial obligations begin (European Accreditation, 2025). Wait times for verification appointments exceeded 12 weeks in late 2025, creating a compliance bottleneck that threatens to delay certificate purchases and trigger penalties for importers acting in good faith.

Key Players

Established organizations:

• European Commission DG TAXUD: administers the CBAM regulatory framework and operates the CBAM registry
• Port of Rotterdam Authority: operates the largest CBAM facilitation program at a European port
• Port of Antwerp-Bruges: pioneered bilateral data exchange with Turkish exporters for verified emissions data
• Hamburg Port Authority: developed the leading SME support initiative for CBAM compliance
• Customs authorities of EU member states: responsible for enforcement and border checks of CBAM declarations

Startups and technology providers:

• Arbor (Berlin): provides automated CBAM reporting software that integrates with enterprise resource planning systems and customs platforms
• Circ (London): offers a CBAM compliance-as-a-service platform targeting mid-market importers
• CarbonChain (London): delivers supply chain carbon accounting with CBAM-specific modules for metals and minerals importers

Investors and institutions:

• European Investment Bank: provided EUR 12 million in technical assistance funding for CBAM readiness programs in EU port cities
• World Bank Group: supports CBAM readiness in developing country exporters through the Partnership for Market Implementation
• European Bank for Reconstruction and Development: finances carbon accounting infrastructure in Eastern European and North African exporting nations

Action Checklist

• Map all imported goods against CBAM Combined Nomenclature codes to identify covered products and assess annual embedded emissions exposure
• Establish direct data exchange agreements with non-EU producers for verified actual emissions data rather than relying on default values
• Engage an accredited CBAM verification body at least six months before the annual declaration deadline to secure verification capacity
• Implement automated customs-to-CBAM reporting workflows that flag covered shipments at the point of customs entry
• Calculate financial exposure under both actual and default emissions values to quantify the cost premium of inadequate producer data
• Join port authority or industry association pooled verification programs to reduce per-company compliance costs
• Train procurement teams to include CBAM cost implications in supplier selection and contract negotiation for covered goods
• Monitor the EU ETS allowance price and CBAM certificate pricing to inform purchasing timing decisions

FAQ

Q: How does CBAM interact with carbon prices already paid in the country of origin? A: Importers can deduct any carbon price effectively paid in the country of origin from their CBAM certificate obligation. This includes explicit carbon taxes and emissions trading scheme costs, but not energy taxes or fuel excise duties. The deduction requires documented proof of carbon price payment from the exporting country's competent authority. As of early 2026, the European Commission has published recognized carbon pricing instruments for 14 non-EU jurisdictions, including the UK ETS, the California-Quebec cap-and-trade system, and South Korea's ETS.

Q: What penalties apply for non-compliance with CBAM reporting and certificate requirements? A: During the transitional reporting phase (October 2023 to December 2025), penalties for failure to report or inaccurate reporting range from EUR 10 to EUR 50 per tonne of unreported embedded emissions. Starting January 2026, failure to surrender sufficient CBAM certificates triggers a penalty of EUR 100 per tonne of CO2 equivalent not covered, indexed to inflation, plus the obligation to purchase the missing certificates. Repeat non-compliance can result in suspension of the importer's authorized CBAM declarant status, effectively blocking further imports of CBAM-covered goods.

Q: Should importers use actual emissions data or default values for CBAM reporting? A: Actual emissions data is strongly preferred for two reasons. First, default values from 2026 onward are set at the emissions intensity of the worst-performing 10% of EU installations, meaning they typically overstate actual emissions by 30 to 60% compared to modern production facilities. Second, importers who demonstrate access to verified actual data establish a competitive advantage because their CBAM costs more accurately reflect their supply chain's carbon performance. The investment in obtaining actual data (typically EUR 5,000 to EUR 20,000 per producer facility for initial setup) is recovered within one to two reporting cycles for most importers with meaningful volumes.

Q: How will CBAM expand beyond its current product scope? A: The European Commission is mandated to review CBAM's product scope by 2030, with potential expansion to organic chemicals, polymers, glass, and ceramics. The Commission's 2025 impact assessment identified these sectors as having the highest carbon leakage risk among currently uncovered industries. Several member states, including France and the Netherlands, have advocated for accelerated expansion to include downstream products such as automobiles and machinery that incorporate CBAM-covered materials, though this faces opposition from manufacturing industry associations concerned about administrative complexity.

Sources

• European Commission. (2024). Carbon Border Adjustment Mechanism: First Annual Review of the Transitional Period. Brussels: European Commission, DG TAXUD.
• European Commission. (2025). CBAM Transitional Phase Data Quality Assessment: Analysis of Quarterly Reports 2024. Brussels: European Commission, DG TAXUD.
• Port of Rotterdam Authority. (2025). CBAM Facilitation Program: First Year Performance Report. Rotterdam: Port of Rotterdam Authority.
• Port of Antwerp-Bruges. (2025). Turkey-EU CBAM Data Exchange Pilot: Results and Recommendations. Antwerp: Port of Antwerp-Bruges.
• Hamburg Port Authority. (2025). SME CBAM Compliance Support Initiative: Impact Assessment. Hamburg: Hamburg Port Authority.
• Confederation of Indian Industry. (2025). CBAM Readiness Survey: Indian Exporters to the European Union. New Delhi: CII.
• European Accreditation. (2025). CBAM Verification Capacity Assessment: Supply and Demand Analysis. Paris: European Accreditation.
• World Bank Group. (2025). Partnership for Market Implementation: Supporting Developing Country Readiness for Carbon Border Adjustments. Washington, DC: World Bank.