A. Introduction
Within the scope of the European Green Deal, which constitutes one of the key elements of the European Union’s (“EU”) policies to combat climate change, the EU aims to reduce greenhouse gas emissions and achieve a climate-neutral economy by 2050. In this context, while carbon costs under the EU Emissions Trading System (“EU ETS”) are expected to increase and free emission allowances are to be gradually phased out, the Carbon Border Adjustment Mechanism (“CBAM”) has been established to prevent the risk of production shifting to third countries subject to lower carbon costs.
The main legal framework of CBAM has been established by Regulation (EU) 2023/956 of the European Parliament and of the Council (the “CBAM Regulation”). The mechanism aims to impose a cost corresponding to the carbon price applicable under the EU ETS on the embedded greenhouse gas emissions generated during the production of certain carbon-intensive products imported from outside the EU. In this way, the EU seeks to reduce the difference in carbon costs between producers operating within the EU and bearing carbon costs and producers located in third countries.
The transitional period, which commenced on 1 October 2023 and was primarily based on reporting obligations, ended on 31 December 2025, and the definitive regime of CBAM entered into force as of 1 January 2026. Nevertheless, significant amendments were made to the original structure of the mechanism through the simplification rules adopted in 2025 and the secondary legislation concerning the definitive regime.
B. Scope and General Operation of CBAM
The current scope of CBAM covers certain products in the iron and steel, aluminum, cement, fertilizer, electricity and hydrogen sectors. However, the scope is not determined solely on a sectoral basis; the codes set out in the annexes to the CBAM Regulation are also taken into account. Accordingly, in determining whether a product falls within the scope of CBAM, its customs tariff classification must be reviewed in addition to its commercial characteristics.
As a general rule, the primary obligation under CBAM rests with the importer established in the EU or, where the relevant conditions are met, the indirect customs representative. However, in order to calculate the relevant obligation, the embedded emissions arising from the production of the imported product must be determined. Since a significant portion of this data must be provided by producers located outside the EU, although CBAM directly imposes obligations on EU importers, it also gives rise to significant practical and contractual consequences for producers and exporters in Türkiye.
Under the definitive regime, authorized CBAM declarants are required to declare the embedded emissions of the products they import and surrender a corresponding number of CBAM certificates. The price of the certificates is determined by reference to the auction prices of allowances under the EU ETS, based on quarterly averages in 2026 and weekly averages from 2027 onwards. Where it can be demonstrated that a carbon price has actually been paid in the country of production in respect of the relevant emissions, such amount may, subject to certain conditions, be deducted from the CBAM cost.
C. Key Recent Developments as of 2026
a. 50-Tonne Exemption Threshold
One of the most significant recent changes to CBAM is the introduction of an annual 50-tonne single mass-based threshold under Regulation (EU) 2025/2083, adopted in 2025.
Accordingly, where an importer’s total net imports of CBAM-covered goods in the iron and steel, aluminum, cement and fertilizer sectors do not exceed 50 tones within a calendar year, the relevant importer may be exempt from CBAM obligations. However, where the threshold is exceeded, the obligation applies not only to the portion exceeding 50 tones but to all relevant imports made during that calendar year. Imports of electricity and hydrogen are excluded from this mass-based exemption.
For exporters in Türkiye, an important point to note is that the 50-tonne threshold is assessed on the basis of the EU importer, rather than the exporter. Therefore, the fact that a Turkish producer’s exports to a particular customer remain below 50 tones does not, by itself, mean that the exemption applies; the importer’s CBAM-covered imports from other suppliers must also be taken into account.
b. Importance of Emissions Data
Under the definitive regime, the key factor in determining the CBAM obligation is the amount of embedded emissions contained in the imported products. Accordingly, it is important for producers in Türkiye to establish systems enabling emissions arising from their production processes to be calculated in a reliable and traceable manner and in accordance with the methodology prescribed by the applicable legislation.
Producers are required to regularly monitor data such as production processes, the amount of energy and fuel used, precursor inputs and the methods used to allocate emissions to products. In this context, the definitive regime guidance documents published by the European Commission in August 2026 also provide detailed explanations regarding the determination of actual emission values, monitoring plans and sector-specific calculation methods.
From this perspective, CBAM is not merely an environmental reporting matter for exporters. Since incomplete or inaccurate emissions data provided to an EU customer may have direct consequences for the importer’s CBAM declaration and financial liability, the matter is also significant from the perspective of legal liability and contract management.
c. Initiatives to Expand the Scope of CBAM
Another significant item on the current CBAM agenda is the potential expansion of its scope from existing raw materials and intermediate products to downstream products.
In its proposal submitted on 17 December 2025, the European Commission proposed bringing certain processed products containing iron, steel and aluminum within the scope of CBAM and introducing additional measures aimed at preventing circumvention of the mechanism. Under the Commission’s proposal, the expansion of the scope is envisaged to apply as of 1 January 2028.
The Council of the EU also adopted its negotiating position on 12 June 2026 and supported the approach of extending CBAM to selected downstream products. However, as of 25 September 2026, the legislative process relating to the relevant regulation has not yet been completed.
This development is also particularly significant for Türkiye. Machinery, equipment and various metal products that are not currently directly covered by CBAM but whose production involves substantial use of iron, steel or aluminum may be brought within its scope in the future. Accordingly, companies should consider conducting CBAM scope assessments not only in respect of their current products but also with regard to their medium-term product portfolios.
D. Türkiye And Current Information Published By the Ministry of Trade
Considering Türkiye’s trade relations with the EU and, in particular, its export volumes in the iron and steel, aluminum and cement sectors, CBAM is expected to have significant implications for Turkish companies.
The Ministry of Trade has established a dedicated information section regarding the EU Carbon Border Adjustment Mechanism and, in this context, has published EU legislation, information concerning the CBAM Registry, default emission values, frequently asked questions, the transitional period review report and information presentations.
In particular, the ten definitive regime guidance documents published by the European Commission on 14 August 2026 were also announced by the Ministry of Trade on 17 August 2026. The documents, comprising four general and six sector-specific guidance documents, explain the key concepts of CBAM, the obligations of producers located outside the EU, the calculation of embedded emissions, the free allocation adjustment, and calculation methodologies specific to the cement, hydrogen, fertiliser, iron and steel, aluminum and electricity sectors.
The Ministry of Trade also held a consultation meeting on 5 January 2026 concerning various elements of the EU secondary legislation package relating to the definitive regime, including emission calculation methodologies, default values, verification and accreditation, certificate pricing, the registry system and authorized CBAM declarant status.
Although these publications of the Ministry constitute an important source of practical guidance for Turkish companies, it should be borne in mind that such guidance and information documents are explanatory in nature and that the applicable EU legislation should primarily be taken into account when determining legal obligations.
As part of the CBAM compliance process, Turkish exporters should also review, in particular, their agreements with EU customers. Issues such as which party will provide emissions data and within what timeframe, which party will bear verification costs, which party will be liable for costs arising from incomplete or inaccurate data, and how commercially sensitive production information will be protected should be expressly regulated contractually. In mergers and acquisitions, the target company’s exports falling within the scope of CBAM, product classifications, existing emissions records and CBAM provisions in customer agreements should also be separately reviewed as part of the regulatory due diligence process.
E. Conclusion
As of 1 January 2026, CBAM has moved beyond the transitional period and entered into its definitive regime, which gives rise to direct financial consequences. In this context, CBAM is no longer merely an environmental regulation requiring the reporting of emissions data but constitutes a mechanism that directly affects companies’ commercial activities from the perspectives of customs, finance, contract management and regulatory compliance.
Although the 50-tonne exemption threshold introduced in 2025 provides significant relief for small-scale imports, the ongoing legislative process concerning the expansion of the scope to downstream products indicates that CBAM may affect a broader group of companies in the coming years.
Companies exporting from Türkiye to the EU should therefore regularly assess whether their products fall within the scope of CBAM, ensure the reliability of production-based emissions data and clearly regulate the allocation of CBAM-related responsibilities and costs in their agreements with EU customers. Monitoring the current guidance published by the Ministry of Trade and the European Commission also remains important for keeping track of developments in practice.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
