CBAM: The decarbonisation dilemma — modernisation or carbon certificates

The European Union's Carbon Border Adjustment Mechanism (CBAM) is changing the landscape of industrial investment decisions. On 1 January 2026, CBAM entered its definitive phase, imposing carbon costs on imports of certain goods such as steel and cement.^[1] The mechanism is designed to prevent "carbon leakage" and ensure a level playing field for European and non-European producers, while encouraging global reductions in greenhouse gas emissions. Industrial companies now face a strategic choice: invest in decarbonising production to reduce their carbon footprint, or bear the cost of buying CBAM certificates.

The dilemma is particularly acute amid rising carbon prices and general pressure on industry. CBAM certificate prices already stand at €75 per tonne of CO₂,^[2] creating a significant financial burden for importers. Beyond its direct impact on the cost of imports, CBAM also affects wider economic trends, including energy costs and investment priorities.

The decision to invest in modernisation or pay for certificates becomes key to long-term competitiveness. It requires a careful analysis of the potential benefits of reducing emissions, such as a better reputation, access to new markets and avoiding future carbon payments, against the immediate costs of technology upgrades.

How does CBAM affect industrial companies' investment strategies?

CBAM's impact on industrial companies' investment strategies shows in a shift of priorities towards decarbonisation and optimisation of production processes. Since 2026, when CBAM became fully operational, companies exporting to the EU have to take into account the cost of the greenhouse gas emissions embedded in their products. This leads to revised investment plans in which upgrading equipment and introducing low-carbon technologies become not just an environmental initiative but an economic necessity.

This decarbonisation pressure drives investment in sectors such as steel and cement production, among the first sectors covered by CBAM. This may include switching to hydrogen as a fuel, deploying carbon capture and storage (CCS) technologies or optimising energy consumption.

How do modernisation costs compare with the cost of carbon certificates?

The balance between modernisation costs and the cost of carbon certificates is central to investment analysis in the CBAM era. With CBAM certificates priced at €75 per tonne of CO₂,^[2] industrial companies must calculate carefully whether it is cheaper to buy these certificates or to invest in technologies that avoid these costs. The purchase and resale of CBAM certificates will begin in February 2027,^[5] which gives companies some time for strategic planning.

This choice depends on many factors, including emission volumes, the availability and cost of low-carbon technologies, and the expected dynamics of carbon prices. Changes in sector coverage, the supply of emission allowances (EUAs), free allocation and industrial funding can significantly affect the final cost of carbon.

For some companies, especially those with high emissions and limited scope for rapid decarbonisation, buying certificates may be the short-term solution. In the long term, however, investing in modernisation can be more cost-effective, as it not only reduces current carbon costs but also increases competitiveness, lowers operating costs and opens access to green financial instruments.

What risks and opportunities does CBAM create for industry?

CBAM creates both significant risks and new opportunities for industrial companies. The risks include higher operating costs for exporters to the EU, which can reduce their competitiveness if they cannot decarbonise their production quickly. This may reshape global supply chains as companies look for suppliers with a smaller carbon footprint or move production to regions with less stringent environmental requirements or lower carbon prices.

CBAM also opens up opportunities for companies that invest in decarbonisation: access to new markets, a stronger brand reputation and competitive advantages from low-carbon products. Companies that adopt advanced technologies can become leaders in their industries, attracting sustainability-focused investors and partners.

The mechanism also encourages the development of new decarbonisation technologies: demand for clean solutions may give rise to new industries and jobs. In the context of global efforts to cut emissions, CBAM is one of the instruments supporting the transition to a more sustainable economy.

What are the long-term economic consequences of CBAM for global trade?

The long-term economic consequences of CBAM for global trade are multifaceted: a reshaping of global supply chains, shifting investment flows and a potential boost to global decarbonisation. With CBAM fully operational since 1 January 2026, the cost of carbon becomes an integral part of the price of imported goods, changing the economics of trade relations.

One of the key consequences is a rethink of supplier geography. Companies may prefer suppliers from countries where production has a smaller carbon footprint or where effective carbon pricing mechanisms are already in place. Here CBAM does not just affect imports into the EU: it creates a domino effect, encouraging other countries to develop their own carbon mechanisms to avoid losing competitiveness in the European market.

Another consequence is growing investment in green technologies and infrastructure. As companies seek to reduce their carbon costs, they will invest in modernising production, developing renewable energy and adopting energy-efficient solutions. This in turn may support the global transition to a low-carbon economy, although it may also raise the prices of certain goods as decarbonisation costs are passed on to the final price of products.

Analytical conclusion

CBAM has become an integral part of the regulatory landscape shaping the future of industry. With its definitive phase starting in 2026, companies face a choice between investing in decarbonisation and paying for carbon certificates. A certificate price of €75 per tonne of CO₂^[2] is a strong argument for modernisation. A long-term strategy requires an in-depth cost-benefit analysis that considers not only direct financial indicators but also the potential risks and opportunities related to reputation, market access and innovation.

Sources

• [1] CBAM – wo Unternehmen heute stehen und was jetzt zu tun ist — Haufe
• [2] CBAM-Kosten 2026: Preis pro Tonne und Kostenentwicklung bis 2034
• [3] CBAM-Reform: EU-Kommission plant Zertifikate bis 2038 für Stahl
• [4] Bundesförderung Industrie und Klimaschutz | BMWE
• [5] DEHSt — CBAM Certificates
• [6] CBAM und Energiewende-Bürokratie: Chemie bremst Investitionen bis 2026/27
• [7] The European Commission has launched a public consultation on the rules for selling CBAM certificates (in Ukrainian)
• [8] EU Carbon Border Tax: CBAM Reshapes Global Trade in 2026