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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 83/tCO2 on 2023 average, EEX primary auctions). Scope-product imports into the EU27 ran at $334.5B in 2024. For the top 15 extra-EU suppliers, attributed scope-revenue exposure is tabulated below.
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 (2021, BOFIT Policy Brief 10/2021) 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.
WITH scope_exp AS (
SELECT country_code, SUM(export_value)*1000 AS v
FROM 'country_year_product/year=2024/*.parquet'
WHERE product_code IN (<300 scope HS6 codes>) AND export_value > 0
GROUP BY country_code
),
total_exp AS (
SELECT country_code, SUM(export_value)*1000 AS v
FROM 'country_year_product/year=2024/*.parquet'
GROUP BY country_code
),
eu_bilateral AS (
SELECT exporter_code, SUM(total_value)*1000 AS v
FROM 'bilateral_year/year=2024/*.parquet'
WHERE importer_code IN (<EU27 codes>)
GROUP BY exporter_code
)
SELECT c.iso3,
scope_exp.v * (eu_bilateral.v / NULLIF(total_exp.v, 0)) AS eu_exposure_usd
FROM scope_exp
JOIN countries c ON c.code = scope_exp.country_code
LEFT JOIN total_exp USING (country_code)
LEFT JOIN eu_bilateral ON eu_bilateral.exporter_code = scope_exp.country_code
WHERE c.iso3 NOT IN (<EU27 iso3 list>)
ORDER BY eu_exposure_usd DESC NULLS LAST LIMIT 15;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 83/tCO2 in 2023 and EUR 65/tCO2 in 2024 (European Commission (2024), Report on the functioning of the European carbon market, COM(2024) 538 final, citing EEX primary-auction results). USD 50-150/tCO2 brackets that range.
| Category | tCO2 per tonne | Source |
|---|---|---|
| Cement | 0.83 | IEA (2023), Cement tracking, global average direct CO2 per tonne of cement ~0.6 t + process ~0.23 t ≈ 0.83 tCO2/t. |
| Iron and steel | 1.91 | IEA (2023), Iron and Steel Technology Roadmap update; global average 1.91 tCO2 per tonne of crude steel. |
| Aluminum | 15.90 | International Aluminium Institute (2023), Greenhouse Gas Emissions Intensity: 15.9 tCO2e per tonne of primary aluminium (global average, Scope 1+2+3). |
| Fertilizers | 2.60 | IEA (2021), Ammonia Technology Roadmap: average 2.4-2.8 tCO2 per tonne of ammonia; urea and compound N fertilizers typically 2.6 tCO2/t product. Midpoint used. |
| Hydrogen | 10.00 | IEA (2023), Global Hydrogen Review: grey hydrogen from unabated steam methane reforming emits ~10 tCO2 per tonne of H2. |
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.
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.
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: 43-90), which estimates the efficient carbon-border adjustment rate and the associated leakage offsets.
SELECT year, SUM(import_value)*1000 AS eu_import_usd FROM 'country_year_product/**/*.parquet' WHERE product_code IN (<scope HS6>) AND country_code IN (<EU27>) GROUP BY year ORDER BY year;
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 of Regulation (EU) 2023/956). The projected revenue line therefore equals (total embedded CO2 in EU27 scope imports) times (EUR 83 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: 43-90) for decomposing the CBAM revenue by compliance-phase-in year.
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 (2021) constant-shares attribution and the intensity table above.
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 (2021) 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).
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 (2010, Horizontal Merger Guidelines§5.3) 0-10,000 scale. Categories above HHI 2,500 are 'highly concentrated' in the historical 2010 convention; categories from HHI 1,500 through 2,500 are 'moderately concentrated'. These categories describe concentration in the attributed flows; they do not estimate tariff or carbon-cost pass-through.
The 1,500/2,500 bands here follow the historical 2010 DOJ/FTC guidelines, withdrawn in 2023. The 2023 guidelines use a highly concentrated threshold above 1,800. These figures measure concentration across exporting countries, not firms in a defined market; the bands are descriptive benchmarks, not antitrust findings.
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.
SELECT category, SUM(import_value)*1000 AS usd, SUM(import_qty) AS tons FROM 'country_year_product/year=2024/*.parquet' WHERE product_code IN (<scope HS6>) AND country_code IN (<EU27>) GROUP BY category; -- Liability = Σ_cat (tons × intensity_cat) × price_USD_per_tCO2
| 0.25% |
| KOR Korea, Rep. | $3.9B | $1.84T | 0.21% |
| GBR United Kingdom | $6.8B | $3.42T | 0.20% |
| CHN China | $31.8B | $18.27T | 0.17% |
| IDN Indonesia | $2.3B | $1.37T | 0.17% |
| RUS Russia | $3.4B | $2.07T | 0.16% |
| IND India | $4.6B | $3.64T | 0.13% |
| BRA Brazil | $2.3B | $2.19T | 0.11% |
| JPN Japan | $4.3B | $4.21T | 0.10% |
| USA United States | $10.4B | $27.29T | 0.038% |
-- Phase-in schedule per Reg (EU) 2023/956 Annex II: -- 2026: 2.5%, 2027: 5.0%, 2028: 10.0%, 2029: 22.5%, -- 2030: 48.5%, 2031: 61.0%, 2032: 73.5%, 2033: 86.0%, -- 2034+: 100%. -- Revenue_y,cat = tons_cat x intensity_cat x EUR83 x factor_y
-- Exporter embedded-CO2 under Scenario B: scale each exporter's -- scope USD by the world category tonnage/intensity mix. -- world_embedded_CO2 = sum over categories of (EU27 tons) * intensity -- exporter_mtco2 = scope_exp_usd / world_scope_usd * world_embedded_CO2
SELECT iso3, scope_exp_usd / total_exp_usd * 100 AS scope_share_pct FROM scope_exp JOIN total_exp USING (country_code) JOIN countries c ON c.code = scope_exp.country_code WHERE iso3 NOT IN (<EU27>) ORDER BY scope_share_pct DESC LIMIT 15;
-- For each Annex I category, attribute non-EU supply to EU27 via -- exporter's EU27 share of total bilateral exports (Simola 2021), then -- compute HHI on the resulting share distribution. WITH cyp_share AS ( SELECT country_code, product_code, SUM(export_value) AS v FROM 'country_year_product/year=2024/*.parquet' WHERE product_code IN (<category HS6>) AND export_value > 0 GROUP BY country_code, product_code ), imp AS ( SELECT exporter_code, SUM(total_value)*1000 AS v FROM 'bilateral_year/year=2024/*.parquet' WHERE importer_code IN (<EU27 codes>) GROUP BY exporter_code ) SELECT c.iso3, SUM(imp.v * cyp_share.v / world_v) AS attrib_v FROM cyp_share JOIN imp USING (country_code) JOIN countries c ON c.code = cyp_share.country_code WHERE c.iso3 NOT IN (<EU27 iso3>) GROUP BY c.iso3; -- HHI = 10000 * Σ (s_i)² across non-EU exporters, per category.