What Is CBAM?
The Carbon Border Adjustment Mechanism (CBAM), known in Turkish as SKDM, is one of the key instruments of the European Union’s climate policies aimed at reducing carbon emissions. Following the transitional period, the mechanism has been applied with its financial obligations since 1 January 2026.
The main objective is to reduce the competitive disparities arising from carbon costs. While producers operating in the European Union have been paying for their carbon emissions under the Emissions Trading System (EU ETS) since 2005, the same product may not bear this cost when it is manufactured in a country without carbon pricing and placed on the EU market. This gives rise to the risk known as carbon leakage.
CBAM takes into account the carbon emissions generated during the production of imported goods and requires this cost to be covered at the import stage. In this way, it aims both to reduce carbon leakage and to level the playing field.
Which Sectors Does CBAM Cover?
In its initial phase, the mechanism covers the cement, iron and steel, aluminium, fertiliser, electricity and hydrogen sectors. What these sectors have in common is that their production processes generate high levels of greenhouse gas emissions and that they are among the sectors with the highest risk of carbon leakage.
The CBAM certificate price payable is calculated on the basis of the carbon price formed in the European Union Emissions Trading System. If a carbon pricing mechanism (such as an ETS or a carbon tax) is in place in the exporting country and meets the conditions recognised by the EU, the carbon cost paid domestically can be deducted from the CBAM obligation.
The European Commission plans to expand the scope in the coming years. Under the current timeline, certain downstream products made from steel and aluminium are expected to be brought into the system from 2028.
CBAM Implementation Timeline
The CBAM transitional period began on 1 October 2023. During this period, importers only reported the embedded carbon emissions of their goods; no financial obligation applied. The period was designed as a transitional phase to allow companies to prepare their emissions calculation and reporting infrastructure.
As of 1 January 2026, financial obligations took effect and verified emissions data became the basis for compliance. The first CBAM declarations and certificate surrenders for the year 2026 are scheduled to take place in 2027.
How Does CBAM Affect Türkiye?
The European Union remains Türkiye’s largest export market. The iron and steel, cement and aluminium sectors, which account for a significant share of Türkiye’s exports to the EU, fall directly within the scope of CBAM. For this reason, Türkiye is regarded as one of the countries that will be most affected by the mechanism.
According to joint studies by the Ministry of Environment, Urbanisation and Climate Change of the Republic of Türkiye and the European Bank for Reconstruction and Development (EBRD), CBAM-related costs could reach significant levels in the absence of national carbon pricing. Conversely, the introduction of a national carbon pricing system would reduce the financial burden on exporters and could allow part of the CBAM cost otherwise payable to the EU to remain within the country.
Accordingly, Türkiye has launched the pilot phase of its national Emissions Trading System (TR ETS). Full-scale implementation is planned to be introduced in the coming years.
What Should Companies Do?
The first step in the CBAM compliance process is to determine, on the basis of customs tariff codes (GTİP), whether products fall within the scope of the mechanism.
The second step is to establish a facility-level emissions monitoring, reporting and verification (MRV) infrastructure, since CBAM is based on verified emission values.
In addition, it is important to closely follow the compliance efforts related to the Emissions Trading System in Türkiye. In the period ahead, effective management of carbon costs will become not only a compliance obligation for exporting companies but also a source of competitive advantage.
CBAM is no longer regarded merely as part of environmental policy. For companies trading with the European Union, it is recognised as a new trade order that directly affects cost management, pricing and export strategies.
