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From 1 January 2026, the European Union’s Carbon Border Adjustment Mechanism entered its definitive phase. For companies importing steel, aluminium, cement and other covered products from outside the EU, CBAM is no longer primarily a reporting requirement. It is becoming a procurement, compliance and cost consideration — with direct implications for construction, development and ultimately commercial real estate.
For several years, sustainability requirements in real estate have largely been discussed in relation to building certifications, energy consumption, operational efficiency and ESG reporting.
CBAM introduces another dimension.
The carbon intensity of certain materials entering the European Union can now influence not only their environmental profile, but also their landed cost, administrative requirements and availability.
For developers, general contractors, façade contractors, industrial operators and property owners, this means that the origin and carbon footprint of construction materials are becoming increasingly relevant commercial variables.
The Carbon Border Adjustment Mechanism — CBAM — is the European Union's system for applying a carbon cost to certain carbon-intensive products imported from outside the EU.
The objective is relatively straightforward.
European manufacturers operating under the EU Emissions Trading System (EU ETS) face a cost associated with their greenhouse-gas emissions. Without a corresponding mechanism for imports, producers located outside the EU could potentially manufacture carbon-intensive goods without an equivalent carbon constraint and export them into the European market.
CBAM is designed to progressively reduce that difference.
Following a transitional reporting period between October 2023 and December 2025, the definitive CBAM regime became applicable on 1 January 2026.
For businesses importing covered goods, this fundamentally changes the nature of the regulation.
CBAM now involves three interconnected elements:
For the construction and real estate industries, the most relevant sectors are iron and steel, aluminium and cement. CBAM additionally covers fertilisers, electricity and hydrogen.
The construction industry relies heavily on exactly the material categories targeted by CBAM.
Structural steel, steel sections, aluminium profiles, façade components, aluminium sheets, certain windows and frames, steel structures, fasteners and cement products can all fall within the CBAM framework depending on their customs classification.
The legislation is broader than simply raw aluminium or crude steel.
For example, the CBAM Regulation specifically includes aluminium bars, rods and profiles under CN 7604 and aluminium structures and parts of structures under CN 7610. In the steel category, covered goods include certain structures and structural components under CN 7308, as well as screws, bolts, nuts, washers and similar products under CN 7318.
This is particularly relevant to façade construction.
An aluminium profile imported from a producer outside the EU may therefore carry a CBAM implication. So may a steel substructure or other structural component.
Cement clinker and several categories of Portland and hydraulic cement are similarly included within the mechanism.
However, CBAM does not automatically apply simply because a product contains aluminium, steel or cement.
The decisive factor is its Combined Nomenclature — CN — customs classification and whether that code appears in Annex I of the CBAM Regulation. Procurement departments and importers should therefore avoid assessing CBAM exposure based only on commercial product descriptions.
For construction businesses, correct customs classification has effectively become part of carbon-compliance management.
One of the most important changes introduced before the definitive regime was a simplification intended to remove smaller importers from most CBAM obligations.
A single annual mass-based threshold of 50 tonnes now applies cumulatively to imports in four sectors:
cement, iron and steel, aluminium and fertilisers.
An importer whose cumulative imports of covered goods across these sectors do not exceed 50 tonnes during a calendar year generally benefits from the minimis exemption.
The important word is cumulatively.
The threshold is not calculated independently for each individual product, supplier or shipment.
Consider a company importing during the same year:
20 tonnes of aluminium profiles,
20 tonnes of structural steel, and
15 tonnes of other covered steel products.
The relevant cumulative quantity would be 55 tonnes.
Once the threshold is exceeded, the importer becomes subject to CBAM obligations for the relevant calendar year — including obligations covering the emissions associated with the covered goods imported during that year, rather than only the quantity exceeding 50 tonnes.
For companies operating close to the threshold, monitoring quantities throughout the year is therefore essential.
Splitting imports artificially between transactions or arrangements purely to remain below the threshold is also specifically addressed by the regulation's anti-circumvention provisions.
For importers expecting to exceed the applicable threshold, one of the central requirements of the definitive regime is obtaining the status of Authorised CBAM Declarant.
This is not simply another field added to the customs declaration.
The authorisation creates a formal compliance relationship between the importer, national authorities, customs authorities and the EU CBAM Registry.
The principal conditions for authorisation include an appropriate compliance record regarding customs, taxation and CBAM rules, sufficient financial and operational capacity, establishment within the Member State where the application is made and possession of an EORI number.
Applications are managed electronically through the CBAM Registry and its Authorisation Management Module.
Once authorised, the company receives a CBAM account through which its future obligations are administered.
The authorisation is recognised across EU Member States.
A special transitional provision allowed companies that had submitted their application by 31 March 2026 to continue importing during 2026 while their application was being processed. That provision was designed specifically to avoid disruption during the initial implementation period; it should not be viewed as a permanent grace period for future import activity.
In practical terms, companies planning significant imports of covered products should therefore evaluate their CBAM status before the procurement order reaches the customs stage, rather than treating it as a matter to resolve once the goods arrive in the EU.
CBAM compliance is increasingly integrated with customs controls.
Customs authorities communicate information including the importer, EORI number, CBAM account number, CN code, quantity, country of origin and customs procedure to the relevant European systems.
Where an importer subject to CBAM requirements does not hold the appropriate authorised status, further imports can ultimately be prevented.
This creates a risk beyond administrative penalties.
For construction businesses, it can become a supply-chain and programme risk.
A shipment of façade profiles, steel structures or another critical component delayed at customs can affect installation sequencing, subcontractors, practical completion dates and ultimately project cash flow.
CBAM therefore needs to be considered not only by finance or sustainability departments, but also by procurement, logistics and project-management teams.
Authorisation is only one part of the system.
The definitive regime also introduces the financial component of CBAM.
A CBAM certificate represents one tonne of CO₂ equivalent embedded in imported goods.
The certificate price is linked to the EU ETS carbon market.
For 2026 imports, the European Commission calculates quarterly CBAM certificate prices based on EU ETS allowance auction prices. The published price was €75.36 for Q1 2026 and €75.28 for Q2 2026. Certificates corresponding to 2026 imports will become available for purchase from February 2027.
These figures should not be interpreted as a simple €75 surcharge for every tonne of imported material.
The calculation concerns the embedded greenhouse-gas emissions associated with producing those goods.
The final number of certificates required may also be adjusted to reflect the gradual reduction of free EU ETS allowances and, subject to the applicable conditions and evidence, carbon pricing already effectively paid in the country of origin.
Two apparently identical aluminium profiles from two different producers may eventually generate different CBAM exposure if their production processes have materially different carbon intensities.
The carbon efficiency of the manufacturer therefore starts to have a monetary value.
Historically, construction procurement has focused heavily on price, specifications, quality, certification, delivery time and payment conditions.
CBAM introduces another question:
Can the supplier provide reliable carbon-emissions data for the product being purchased?
During the definitive regime, companies may use applicable default values or actual verified emissions data under the rules established by the Commission.
Where actual emissions are used, the producer outside the EU must provide the relevant emissions information and the data must satisfy the CBAM verification framework. The first CBAM declaration covering 2026 imports must be submitted by 30 September 2027, together with the corresponding surrender obligation.
For procurement departments, this means supplier qualification should increasingly include carbon-data capability.
A supplier offering a marginally lower material price but unable to provide adequate emissions documentation could become less competitive once carbon cost, default values, compliance work and administrative risk are considered.
The lowest factory-gate price may therefore no longer represent the lowest effective procurement cost.
The immediate regulatory obligation sits primarily with the importer.
The economic consequences, however, can move through the entire supply chain.
Importers may incorporate CBAM certificate costs and administrative expenses into their sales prices.
Contractors may price carbon exposure into procurement packages.
Developers may encounter different pricing between EU-manufactured materials and imports from carbon-intensive producers.
Suppliers able to demonstrate efficient production may gain a commercial advantage over competitors with higher embedded emissions.
Over time, these effects can influence construction costs for new developments, refurbishments and major capital-expenditure programmes.
The impact is particularly relevant for material-intensive packages such as building façades, steel structures and certain industrial developments.
At first sight, CBAM appears to be an international trade and environmental regulation rather than a real estate issue.
In practice, the connection is increasingly direct.
Commercial buildings represent large concentrations of embodied carbon. Steel, aluminium, concrete and façade systems are major components of both construction cost and embodied emissions.
As environmental regulation moves progressively from operational energy toward the carbon associated with materials and construction, the procurement strategy behind a building becomes increasingly relevant to its economics.
For property owners and developers, CBAM can therefore affect several areas simultaneously.
Development budgets may need larger contingencies where substantial quantities of covered materials are imported.
Tender comparisons may need to distinguish between EU and non-EU sourcing and between suppliers with different carbon intensities.
Construction contracts will increasingly need clarity regarding responsibility for CBAM costs and carbon documentation.
Refurbishment programmes involving large façade or structural packages may require the same scrutiny as new developments.
And increasingly sophisticated tenants, lenders and investors may expect stronger visibility over both operational and embodied carbon.
CBAM should therefore not be viewed in isolation.
It forms part of a broader evolution in which carbon performance is moving from an ESG metric toward a measurable financial variable within real estate.
Companies importing construction materials from outside the European Union should now integrate several checks into their procurement process:
The fundamental change is procedural as much as financial.
CBAM needs to move upstream — from customs clearance into the procurement decision itself.
CBAM is another example of how regulatory change outside the traditional boundaries of real estate can ultimately influence property economics.
For developers and owners, construction materials can no longer be assessed exclusively according to purchase price and technical performance.
Origin, carbon intensity, customs classification and regulatory exposure are becoming part of the commercial equation.
For contractors and importers, early compliance will be considerably easier than resolving CBAM exposure once a shipment is already moving toward the European Union.
And for investors and asset managers, the implications extend beyond individual material purchases. Higher transparency around embodied carbon, increasingly sophisticated ESG requirements and the gradual incorporation of carbon costs into construction supply chains are likely to influence future development and refurbishment decisions.
The direction of travel is clear.
Carbon is increasingly becoming a cost that can be measured, allocated and ultimately priced.
For the European construction and commercial real estate markets, CBAM turns that principle into a procurement reality.
This article is intended for general market information and does not constitute legal, customs, tax or regulatory advice. CBAM applicability should be assessed on the basis of the relevant CN codes, importer structure and current EU and national regulations.
