August 17, 2026 · CBAM · 4 min read
For Turkish companies exporting to the European Union, CBAM is set to become one of the most important trade/compliance topics of the coming years. In this guide, we explain what CBAM is, which sectors it affects, and how businesses should prepare.
CBAM (Carbon Border Adjustment Mechanism) is a mechanism that entered into force under European Union Regulation (EU) 2023/956. Its purpose is to prevent "carbon leakage" — that is, to stop the unfair competitive advantage created when EU-based producers are subject to strict carbon pricing (the EU ETS) while the same product can be imported from countries with more relaxed environmental regulations. In short, CBAM ensures that the carbon emissions generated during the production of certain products imported into the EU are subject to a carbon cost EQUIVALENT to that of EU-based producers.
The European Union is Turkey's largest export market. In the sectors covered by CBAM (particularly iron-steel and aluminum), Turkey is among the countries that export significant volumes to the EU. This means CBAM is not an abstract EU internal policy for Turkish producers, but a concrete issue with direct cost and competitiveness implications — since the CBAM certificate cost will be reflected in the final product price, unprepared companies risk losing market share.
CBAM currently covers 6 sectors: Iron-Steel, Cement, Aluminum, Fertilizer, Electricity, and Hydrogen. Each sector is further broken down into dozens of sub-product categories — for example, the Iron-Steel sector alone has 10 separate product groups (pig iron, ferro-alloys, hot/cold-rolled flat products, seamless/welded tubes), each with its own embedded emissions coefficient. We share the FULL list of all 25 products and each of their coefficients in table form on the CBAM section of our Bibliography page.
Detailed guides for each sector, with product sub-categories, coefficients, and verified worked examples:
CBAM doesn't take effect suddenly at full cost — there's a gradual transition schedule. The free allocation phase-out rate (i.e., the growing share the importer must pay) starts at 10% in 2026, rising to 25% in 2027, 40% in 2028, and reaching 100% by 2032. This gives businesses a multi-year window to prepare — but it's important to remember that this window is steadily narrowing.
"Embedded emissions" are the total direct and indirect emissions arising during a product's cradle-to-gate process (from raw material extraction to factory gate). Exporting companies are required to measure the embedded emissions of the products they manufacture and report them to their EU importer (or directly through a CBAM declaration). This process requires the company to allocate its own Scope 1-2 emissions data at the product level — which is why CBAM readiness actually starts with a solid corporate carbon accounting infrastructure (see our Scope 1, 2, 3 guide).
CBAM certificate cost is indexed to the weekly-updated EU ETS (Emissions Trading System) reference carbon price. Simplified formula:
Cost (€) = Product Quantity (tons) × Embedded Emissions Coefficient (ton CO2e/ton) × EU ETS Price (€/ton) × Free Allocation Phase-Out Rate
Example: For a company exporting 50 tons of Hot-Rolled Flat Steel (coefficient: 1.90 ton
CO2e/ton, EU ETS price €72.5/ton, 2026 phase-out rate 10%):
50 × 1.90 × 72.5 × 0.10 = ≈ €689
At the same export volume, this figure will rise to roughly 2.5 times that amount in 2027 (at a 25% rate), and 10 times that amount by 2032 (at a 100% rate) — which is why preparing early provides a significant long-term cost advantage.
1. Start collecting your embedded emissions data now — building a solid data infrastructure before the transition period ends is far less costly than leaving it to the last minute.
2. Increase supply chain transparency — your own suppliers' emissions data is part of your embedded emissions.
3. Evaluate low-carbon production investments — switching to renewable energy or improving process efficiency can reduce both your CBAM cost and your overall operational cost.
Calculate your CBAM cost in advance
Forecast your certificate cost with the CBAM simulation module in our Enterprise plan.
Explore the CBAM Module