EU CBAM: What It Means for Saudi Steel Trade
The EU Carbon Border Adjustment Mechanism explained for Saudi steel producers and exporters: definitive phase from 2026, 50-tonne threshold, certificates, emissions data and competitiveness.
Saudi Steel Work Editorial Team · · 3 min read
Short answer: The EU Carbon Border Adjustment Mechanism (CBAM) puts a carbon price on imports of steel and other covered goods into the EU. After a reporting-only transitional period from October 2023 to December 2025, the definitive phase began on 1 January 2026: EU importers above a 50-tonne annual threshold must buy certificates for embedded emissions, with certificate sales starting in February 2027 for 2026 imports. Saudi exporters with credible, lower emissions data are better placed.
CBAM is one of the most significant changes to international steel trade in years. Although it is an EU measure, it matters to Saudi producers, exporters and the wider regional market.
Timeline
| Date | Milestone |
|---|---|
| Oct 2023 – Dec 2025 | Transitional period: quarterly reporting of embedded emissions, no payment |
| 1 Jan 2026 | Definitive phase begins for covered goods including iron and steel |
| Feb 2027 | Sale of CBAM certificates begins, covering 2026 imports |
| 30 Sep 2027 | First annual CBAM declaration due for 2026 imports |
| 2026–2034 | EU free allocation phases out; CBAM payable share rises correspondingly |
Simplifications adopted in 2025 introduced a 50-tonne per importer per year de minimis threshold for iron and steel, aluminium, cement and fertilisers, replacing the earlier per-consignment value exemption (HSF Kramer; Reconomy).
How it works (simplified)
- EU importers declare the embedded emissions of covered goods
- They surrender certificates priced on EU carbon market (ETS) prices
- Deductions may apply for carbon prices already paid in the country of origin
- Default values apply when verified data is unavailable — usually less favourable
Why it matters for Saudi steel
- Data becomes a competitive asset. Exporters who can provide verified installation-level emissions data avoid punitive default values.
- Production route matters. Gas-based DRI-EAF production typically has lower emissions than coal-based routes (green steel, hydrogen DRI).
- Trade flows shift. Measures in major markets redirect volumes, affecting regional prices (what affects steel prices).
What exporters should do
- Measure and verify emissions at installation level
- Prepare data in CBAM-compatible formats for EU customers
- Track EU guidance and default values
- Consider decarbonisation investments as a market-access strategy
For buyers inside the Kingdom
CBAM doesn't apply to domestic purchases, but expect growing availability of emissions data and EPDs from producers, useful for green building projects.
Note: this is a general summary. Refer to official EU sources and professional advice for compliance.
Sources: HSF Kramer, Reconomy, osapiens.