Whose exports fall under the EU Carbon Border Adjustment Mechanism, and how much USD is at stake?

The EU Carbon Border Adjustment Mechanism (Regulation (EU) 2023/956) begins full financial enforcement in 2026. From that point every tonne of in-scope cement, iron and steel, aluminum, fertilizers and hydrogen imported into the EU27 will carry a carbon certificate obligation priced at the EU ETS reference level (EUR 85/tCO2 on 2023 average, EEX primary auctions). Scope-product imports into the EU27 ran at $276.0B in 2024. For the top 15 extra-EU suppliers, attributed scope-revenue exposure is tabulated below.

Who sells scope products to the EU

The EU27 imports of cement, iron and steel, aluminum, fertilizers and hydrogen products listed in Annex I of Regulation (EU) 2023/956 form the CBAM tax base. BACI does not carry bilateral HS6 panels, so exporter-to-EU attribution uses the Simola (2020, BOFIT Policy Brief 7/2020) constant-shares approximation: each exporter's scope-product exposure is scaled by that exporter's EU27 share of its total goods exports in 2024. Exposures should be read as upper bounds where the composition of EU-bound trade matches the composition of world-bound trade.

How much tax is on the table

Total embedded CO2 in EU27 CBAM-scope imports for 2024 is estimated from BACI tonnage and the published emissions-intensity factors below. The EU ETS reference price averaged EUR 85/tCO2 in 2023 and EUR 65/tCO2 in 2024 (European Commission (2024), Report on the functioning of the European carbon market, COM(2024) 590 final, citing EEX primary-auction results). USD 50-150/tCO2 brackets that range.

Emissions intensity assumptions

Who is most macro-exposed

A country's CBAM exposure matters most when it is large relative to GDP. Per-GDP ratios flag small exporters whose CBAM-scope trade to the EU dominates their external revenue, Mozambique on aluminum smelter output, Turkey on steel, Egypt on fertilizers are the textbook cases. GDP from World Bank World Development Indicators (NY.GDP.MKTP.CD) for 2023.

Global product mix of CBAM-scope exports

Breakdown of 2024 world exports in Regulation (EU) 2023/956 scope, across the five commodity groups that enter full CBAM enforcement in 2026. Electricity (CN 2716) is excluded from the USD accounting: CBAM administers it in MWh, not goods value, and BACI does not record electricity on HS lines.

EU27 scope imports over time

Before CBAM, the EU27 import trajectory for the five Annex I commodity groups tells us how large the tax base has been historically. The 2022 spike follows the Russia-Ukraine gas shock and the associated fertiliser and aluminum price run-up documented in Weisbach, Kortum, Wang and Yao (2023, 'Trade, Leakage, and the Design of a Carbon Tax', Environmental and Energy Policy and the Economy 4: 43-91), which estimates the efficient carbon-border adjustment rate and the associated leakage offsets.

Projected CBAM revenue path under the 2026-2034 phase-in

Regulation (EU) 2023/956 Article 31 fixes the CBAM free-allocation phase-out to a linear schedule: 2.5% of the full certificate obligation is charged in 2026, rising by roughly 5 percentage points per year through 2030 and accelerating to 100% from 2034 onward (Annex II and Commission Implementing Regulation (EU) 2024/3210, Article 4). The projected revenue line therefore equals (total embedded CO2 in EU27 scope imports) times (EUR 85 per tCO2, the 2023 EU ETS auction benchmark) times (phase-in factor by year), with the embedded-CO2 base held at the 2024 level and the price held at the 2023 benchmark for comparability. This isolates the policy-schedule contribution from demand- and price-path uncertainty and matches the methodology in Weisbach, Kortum, Wang and Yao (2023, Environmental and Energy Policy and the Economy 4: 43-91) for decomposing the CBAM revenue by compliance-phase-in year.

Scenario B: carbon-weighted exports under a full-scope CBAM extension

A live policy debate inside DG CLIMA concerns extending CBAM beyond the Annex I basket to downstream products (organic chemicals, polymers, glass, refined metals) and to Scope 2 indirect emissions. Scenario B here approximates that by ranking non-EU exporters on a carbon-weighted export metric: each exporter's 2024scope tonnage (from Figure 2 aggregation) multiplied by the category-specific tCO2/t intensity factor. This isolates the supplier countries whose embedded emissions, rather than USD revenue, sit at the top of the distribution, i.e. those most at risk if CBAM prices on carbon content rather than product line. Methodology follows Simola (2020) constant-shares attribution and the intensity table above.

How CBAM-concentrated is each EU partner's export book?

Figure 8 ranks the same 15 non-EU suppliers of Figure 1 by the share of their total merchandise exports that falls inside the Regulation (EU) 2023/956 Annex I scope. Under the Simola (2020) constant-shares attribution used throughout this page, the CBAM-covered share of an exporter's EU-bound trade equals the CBAM-covered share of its world-bound trade; this ratio is therefore the cleanest single number for ranking partners by bilateral CBAM exposure. Countries with a high ratio face the steepest negotiating incentives in the 2024-2026 bilateral carbon-accounting memoranda that DG CLIMA has opened with Turkey, Ukraine, Morocco and India (European Commission, 2024, CBAM Dialogue with Trading Partners, DG CLIMA).

How concentrated is the supply side of each CBAM category?

A CBAM rate transmits to landed cost in inverse proportion to non-EU supplier substitutability. Where supply is diffuse, the EU importer can route around the highest-intensity origins; where supply is concentrated, the rate hits one-for-one. Figure 9 reports the Herfindahl-Hirschman Index of attributed EU-bound supply across non-EU exporters for each Annex I category in 2024, on the Hirschman (1945) and US DOJ/FTC (2023, Horizontal Merger Guidelines§2) 0-10,000 scale. Categories above HHI 2,500 are 'highly concentrated' in the DOJ frame; categories above HHI 1,500 are 'moderately concentrated'. The Commission's CBAM Impact Assessment (SWD(2021) 643 final, Annex 4) uses the same threshold logic for landed-cost pass-through estimates.

How this is used

• Industrial-strategy advisory. Figure 3 flags exporters whose CBAM bill is material relative to GDP; these are the sovereigns most likely to negotiate bilateral carbon-accounting memoranda with the EU or retaliate via WTO consultations.
• Supply-chain procurement. European buyers use Figure 4 to see which origins concentrate in low-intensity lines (clinker-free cement, secondary aluminum) versus the high-intensity grey-H2 and primary-aluminum lines that carry the steepest CBAM certificate cost.
• Public-finance planning. Figure 2 scales the EU CBAM revenue band at full enforcement (2034), which is material for the own-resources package adopted under COM(2023) 262.

Methodology and limitations

• Bilateral HS6 attribution.BACI does not publish bilateral by HS6 in this workbench build. Exporter-to-EU exposure uses constant-shares attribution: exporter's scope-product exports × (exporter's EU27 share of total goods exports). Where an exporter's EU-bound composition is more or less scope-heavy than its world-bound composition, the attributed figure is biased accordingly. Simola (2020) uses the same approximation and documents the bias bound.
• Emissions intensity. Each category uses a single global-average factor cited above. Actual CBAM certificates are computed plant-by-plant under Commission Implementing Regulation (EU) 2023/1773. Country-level product-composition effects are not captured (e.g. a steel exporter that sells primarily finished tubes versus primary slab will differ from the 1.91 tCO2/t global average).
• Electricity. CN 2716 is excluded. CBAM electricity is settled in MWh and has a distinct implementing act timetable.
• Free allocation. 2023/956 Article 31 phases CBAM liability in at 2.5% in 2026, rising to 100% in 2034. Figure 2 headline numbers are 100% enforcement; see the Figure 2 reading for the first-year scale-down.

Policy read: how the 2026 definitive period sits within the wider climate-trade regime

CBAM is the leading edge of an uneven global carbon-pricing architecture. The EU Fit for 55 package (COM(2021) 550) pairs CBAM with the Emissions Trading System reform that scraps free allowances for CBAM sectors on the same 2026-2034 linear taper (Directive (EU) 2023/959), so CBAM is structurally complementary rather than a new tax. COP29 in Baku (November 2024) operationalised the Article 6.2 and 6.4 carbon-credit rules agreed at COP28, which gives EU importers a possible route to offset part of the CBAM obligation through certified international transfers of mitigation outcomes; the EU has stated that Article 6 credits will not count against CBAM until accounting standards converge. The US Inflation Reduction Act (Public Law 117-169, 2022) takes a production-subsidy rather than pricing approach; the resulting US-EU gap is the policy space behind the proposed Global Arrangement on Sustainable Steel and Aluminum negotiations. The WTO has not ruled on CBAM's compatibility with Article I (MFN) or Article III (national treatment); the leading literature (Weisbach et al. 2023; Horn and Mavroidis 2011) argues that a well-designed CBAM conforms with GATT Article XX (b) and (g) environmental exceptions, but litigation risk remains material for the 2026-2030 transition.

References

• European Parliament and Council (2023). Regulation (EU) 2023/956 of 10 May 2023 establishing a Carbon Border Adjustment Mechanism. OJ L 130, 16.5.2023, p. 52.
• European Parliament and Council (2023). Directive (EU) 2023/959 amending Directive 2003/87/EC on the EU ETS. OJ L 130, 16.5.2023, p. 134.
• European Commission (2021). Fit for 55 package. COM(2021) 550 final.
• United States Congress (2022). Inflation Reduction Act of 2022, Public Law 117-169.
• UNFCCC (2024). Report of the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement on its sixth session (CMA 6), Baku, November 2024. Decisions on Article 6.2 and 6.4 operationalisation.
• Weisbach, D. A., Kortum, S., Wang, M., & Yao, Y. (2023). 'Trade, Leakage, and the Design of a Carbon Tax.' Environmental and Energy Policy and the Economy 4: 43-91.
• Horn, H., & Mavroidis, P. C. (2011). 'To B(TA) or Not to B(TA)? On the Legality and Desirability of Border Tax Adjustments from a Trade Perspective.' The World Economy 34(11): 1911-1937.
• European Commission (2023). Commission Implementing Regulation (EU) 2023/1773 of 17 August 2023 laying down the rules for the application of the transitional period of CBAM. OJ L 228, 15.9.2023, p. 94.
• European Commission (2024). Report on the functioning of the European carbon market in 2023. COM(2024) 590 final.
• IEA (2023). Iron and Steel Technology Roadmap update. International Energy Agency, Paris.
• IEA (2023). Cement tracking report and Global Hydrogen Review 2023. International Energy Agency, Paris.
• IEA (2021). Ammonia Technology Roadmap: Towards more sustainable nitrogen fertiliser production. International Energy Agency, Paris.
• International Aluminium Institute (2023). Greenhouse Gas Emissions Intensity: Primary Aluminium. IAI Statistics.
• Simola, H. (2020). 'CBAM: What will it mean for trade?' Bank of Finland Institute for Emerging Economies (BOFIT) Policy Brief 7/2020.