Carbon Border Adjustment Mechanism (CBAM): Business Identity Requirements for Carbon Compliance
The EU Carbon Border Adjustment Mechanism (CBAM) requires importers to verify the identity of their suppliers. Here is what CBAM means for business identity verification.
Definition
The Carbon Border Adjustment Mechanism (CBAM) is an EU policy tool that puts a carbon price on imports of certain goods from outside the EU, equivalent to the carbon price that EU producers pay under the EU Emissions Trading System (ETS). CBAM entered into force on 1 October 2023, with a transitional phase running until 31 December 2025. The full CBAM mechanism applies from 1 January 2026.
CBAM currently covers cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen. EU importers of these goods — known as CBAM declarants — must register with their national competent authority, submit annual CBAM declarations reporting the quantity and embedded carbon emissions of imported goods, and surrender CBAM certificates corresponding to the carbon price of those emissions.
CBAM's relevance to business identity verification arises from its reporting requirements. CBAM declarants must report the identity of their non-EU suppliers — specifically, the supplier's legal name, registration number, and country of establishment — in their annual CBAM declarations. This requires importers to have verified information about their suppliers' legal identity. A verified digital business identity for non-EU suppliers provides importers with the authoritative identity information they need for CBAM compliance reporting.
How CBAM works
CBAM works through a three-stage process: registration, reporting, and certificate surrender.
Stage 1 — Registration. EU importers of CBAM-covered goods must register as CBAM declarants with their national competent authority. Registration requires providing information about the importer's legal identity and the goods they import. Only authorised CBAM declarants can import CBAM-covered goods.
Stage 2 — Reporting. CBAM declarants must submit annual CBAM declarations by 31 May each year, reporting the quantity of CBAM-covered goods imported in the previous calendar year and the embedded carbon emissions of those goods. The declaration must include the identity of the non-EU suppliers — legal name, registration number, and country of establishment — and the emissions data provided by those suppliers.
Stage 3 — Certificate surrender. CBAM declarants must surrender CBAM certificates corresponding to the embedded carbon emissions of the goods they have imported. The price of CBAM certificates is calculated weekly based on the average auction price of EU ETS allowances.
| Phase | Period | Requirements |
|---|---|---|
| Transitional phase | 1 Oct 2023 – 31 Dec 2025 | Reporting only — no certificate surrender required |
| Full mechanism | From 1 Jan 2026 | Registration, reporting, and certificate surrender required |
| First annual declaration | 31 May 2027 | First annual CBAM declaration for 2026 imports |
Why CBAM matters for business identity
CBAM matters for business identity because it creates a regulatory requirement for verified supplier identity that applies to any business in CBAM-covered supply chains. EU importers must verify the identity of their non-EU suppliers — and non-EU exporters must provide their EU importers with verified identity information and accurate emissions data.
For non-EU exporters of CBAM-covered goods, establishing a verified digital business identity is increasingly important for maintaining access to EU markets. EU importers will prefer to source from suppliers that have verified digital identities — because this simplifies their CBAM compliance reporting and reduces the risk of reporting errors that could result in penalties.
Support your CBAM compliance with a verified business identity. Non-EU exporters with verified digital identities are preferred by EU importers for CBAM-covered supply chains. Claim your free passport →
Frequently asked questions
What is the Carbon Border Adjustment Mechanism (CBAM)?
The Carbon Border Adjustment Mechanism (CBAM) is an EU policy tool that puts a carbon price on imports of certain goods from outside the EU. CBAM entered into force on 1 October 2023, with the full mechanism applying from 1 January 2026. CBAM currently covers cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen.
How does CBAM relate to business identity verification?
CBAM requires EU importers to verify the identity of their non-EU suppliers and to report that identity in their annual CBAM declarations. A verified digital business identity for non-EU suppliers provides importers with the authoritative identity information they need for CBAM compliance reporting.
What is a CBAM declarant?
A CBAM declarant is an EU importer that is authorised to import CBAM-covered goods. CBAM declarants must register with their national competent authority, submit annual CBAM declarations, and surrender CBAM certificates corresponding to the carbon price of imported goods' embedded emissions.
Does CBAM apply to non-EU businesses?
CBAM directly applies to EU importers. However, it indirectly affects non-EU businesses that export CBAM-covered goods to the EU. Non-EU exporters must provide their EU importers with accurate data about the embedded carbon emissions of their goods — which requires verified business identities and accurate emissions data.
What goods are covered by CBAM?
CBAM currently covers: cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen. The European Commission is expected to expand CBAM coverage to additional sectors in future reviews.
Sources and further reading
- CBAM Regulation (EU) 2023/956 — EUR-Lex
- Carbon Border Adjustment Mechanism — Wikipedia
- CBAM — European Commission
- Organization Schema — Schema.org