Carbon Border Adjustment Mechanism: Key CBAM pinch points explained

What is the Carbon Border Adjustment Mechanism?

The EU’s Carbon Border Adjustment Mechanism (CBAM) is designed to prevent carbon leakage—a situation where companies move production to regions with weaker environmental rules. This creates unfair competition for EU-based manufacturers and undermines global climate goals.

By imposing a carbon levy on imported, high-emission goods, CBAM encourages transparency, fairness, and accountability across global supply chains. Learn more from the European Commission here.

The main CBAM pinch points

CBAM compliance is data-heavy and administratively complex. Below are the main areas where businesses are encountering difficulties—split between importers/declarants and suppliers.

Importer / Declarant: Common CBAM challenges

1. Registering as a CBAM Declarant
   The first step is registering as a CBAM declarant in all relevant EU member states. This process mirrors national tax registration systems and can be lengthy, technical, and require certificates or identity checks.
   Tip: Register early to avoid administrative bottlenecks that could delay compliance.
2. Gathering Accurate Emissions Data
   Global supply chains make data collection difficult. Many suppliers lack visibility into their embedded emissions, forcing importers to use default EU emissions factors—often resulting in higher cost estimates.

Businesses should:

• Establish clear communication with suppliers.
• Emphasise the financial value of accurate reporting.
• Consider cost-sharing for emissions monitoring to improve accuracy.

3. Verification Requirements
   From 2026, third-party verification of CBAM data will be mandatory. Preparing early with robust data management and verification systems will help minimise errors and ensure compliance readiness.

Supplier pinch points

Suppliers outside the EU often struggle to provide compliant data or navigate the EU’s technical templates—particularly the Installation Template. Misinterpretations can lead to incomplete or incorrect submissions.

To overcome these challenges:

• Maintain close collaboration between importers and suppliers.
• Use digital systems for real-time emissions tracking.
• Adopt proper monitoring and reporting tools early.

How Valpak simplifies CBAM compliance

Valpak’s CBAM Compliance Service removes the complexity with a full, end-to-end solution that covers every stage of your compliance journey:

• Obligation identification – Determine CBAM-obligated products and suppliers
• Registration support – Navigate member state requirements efficiently
• Supplier engagement – Collect emissions data via Valpak’s digital survey
• Data verification – Benchmark and validate data for accuracy
• Report submission – Submit directly through EU compliance portals
• Integration – Align CBAM with broader sustainability and Net Zero goals

Take our quick CBAM Obligation Quiz to see if your business is affected, or visit our CBAM Compliance Service page to learn more.

Key takeaway

Meeting the EU’s Carbon Border Adjustment Mechanism requirements doesn’t have to be daunting. With the right strategy and expert support, you can reduce compliance risks, build supplier transparency, and stay ahead of evolving EU carbon policies.

Visit our CBAM Compliancepage or contact Valpak today to discuss your CBAM Compliance Service needs.