Penalties for cbam are extremely severe from January 2026 as the EU Carbon Border Adjustment Mechanism is becoming mandatory for importers and exporters. The CBAM is currently in the transitional phase—a period of learning and reporting. The start of the definitive system means financial liability for suppliers and importers. In this blog we understand all penalties for cbam.
Penalties for cbam are very severe once it enters the mandatory reporting phase from January 2026. The Carbon Border Adjustment Mechanism (CBAM) is a present-day reality. While we are currently in the transitional phase—a period of learning and reporting—the landscape will change dramatically on January 1, 2026. This date marks the start of the definitive system, where reporting transitions into financial liability. Many businesses are treating CBAM as a simple data submission exercise. This is a catastrophic miscalculation. Once the definitive period begins, the penalties for non-compliance will be severe, direct, and capable of crippling a company’s financial health and its ability to operate within the European Union.
In this blog, we will dissect the five most significant penalties for cbam that your company could face for failing to comply from 2026 onward. Understanding these risks is the first step in building a robust and defensible compliance strategy.
1. Major penalties for non-compliance: Financial fines for non-compliance
One of the primary penalties for cbam is imposed when importers fail to submit the accurate CBAM certificates every quarter.
- Scenario: If an importer does not use enough CBAM certificates to cover the embedded emissions in their goods imported the previous year, they will be subject to a CBAM tax or fine.
- Penalty: The proposed penalties for non-compliance are excessively punitive. It is set at €100 per missing CBAM certificate. To put this in context, if the price of a CBAM certificate (linked to the EU ETS price) is €75, the fine for not having that one certificate would be €100—a penalty of over 130% on top of the original cost.
- The Business Impact: This isn’t a simple slap on the wrist. For a large-scale importer, a miscalculation could result in fines amounting to millions of euros, directly impacting profitability.
2. Penalty for inaccurate data or failing to submit sufficient CBAM certificates
- Scenario: An importer submits an annual declaration that underreports embedded emissions or does not submit enough CBAM certificates to cover the actual emissions of imported goods.
- Penalty: The penalty is €100 per tonne of unreported CO₂ emissions.
- Additional Requirement: The importer must still submit the correct number of CBAM certificates for the unreported emissions.
- Implication: This means paying both the market price of the CBAM certificates and the €100/tonne fine, making non-compliance extremely costly.
3. Delayed submission penalties for CBAM
The CBAM regulation sets strict deadlines for quarterly reports (during transitional phase) and annual declarations (definitive phase).
- Scenario: An authorised declarant fails to submit the annual CBAM declaration or quarterly report by the due date.
- Penalty: A financial penalty will be applied. While the exact amount may be determined by national authorities, the EU regulation authorises “effective, proportionate, and dissuasive” fines. This could be a fixed sum or calculated per day of delay.
- Implication: Persistent delays could trigger more severe enforcement actions, including suspension of authorization to import CBAM goods.
4. Data verification penalties for non-compliance of CBAM
Importers are responsible for the accuracy of the data submitted, which includes ensuring it is verified in line with EU standards.
- Scenario: An importer submits data that has not been verified according to the accepted methodologies or uses unaccredited verification approaches.
- Penalty: This constitutes submission of inaccurate data, so penalties align with Point 1 above (€100/tonne). Additionally, national authorities may impose administrative penalties and require a third-party audit at the importer’s expense.
- Implication: Lack of due diligence in verification not only leads to fines but also increases scrutiny and potential suspension of the importer’s CBAM account.
5. Trade discontinuity and shipment delays
While not a single “penalty” in the legal text, this is the ultimate consequence that binds all the other penalties for non-compliance together.
Beyond direct fines, non-compliance can disrupt business operations significantly.
- Scenario: If an importer repeatedly fails to comply, the competent national authority may suspend or revoke their CBAM authorization.
- Implication: The importer cannot import CBAM-covered goods until compliance is restored. This leads to shipment delays, supply chain disruption, and contractual penalties. Non-compliant shipments may be detained at EU borders until CBAM obligations are met, incurring demurrage and storage costs. Being flagged as non-compliant can affect relationships with EU customers and financial institutions.
Conclusion: Compliance is your only shield against severe penalties
The penalties for cbam coming into force in January 2026 are not empty threats. They are a carefully designed, escalating framework of sanctions. The message is clear: the cost of non-compliance will always be significantly higher than the cost of compliance.
The transitional period (2023-2025) is your company’s grace period. It is not a time to do the minimum. It is a critical window to build a defense against these severe CBAM penalties by:
- Mapping your supply chain and identifying all data sources.
- Establishing communication protocols with your suppliers.
- Implementing a robust CBAM accounting platform that automates data collection, ensures calculation accuracy, and maintains a flawless audit trail.
- Conducting dry runs of your reporting and certificate submit process.
Proactive compliance is no longer just a sustainability goal; it is a core financial and strategic imperative to avoid the devastating penalties for non-compliance. The businesses that start preparing today will not only avoid these financial and operational disasters but will also gain a significant competitive advantage through superior carbon intelligence.
What is the main financial penalty for non-compliance starting in January 2026?
The fine is the same as the penalty under the EU Emissions Trading System (ETS): €100 per tonne of CO₂ equivalent for each unsurrendered certificate. This amount is adjusted annually for inflation.
What are the penalties for reporting errors, data verification failure, or delayed submission?
During the transitional phase (ending December 31, 2025), these penalties ranged from €10 to €50 per tonne of unreported or incorrectly reported CO₂e, but these can be higher in the definitive phase from 2026.
What are the consequences of not ensuring third-party verification of data?
If verification fails or is incomplete, the Competent Authority can issue an assessment using the high default values for the non-verified portion of emissions.
