The EU Carbon Border Adjustment Mechanism (CBAM) is now a live commercial issue for Malaysian manufacturers exporting selected carbon-intensive products to the European Union. Although the legal CBAM obligation normally sits with the EU importer, Malaysian producers must provide the emissions data that importers need to declare embedded emissions and manage their CBAM certificate exposure.
CBAM’s definitive regime began on 1 January 2026, replacing the earlier reporting-only transition period. The most important message for exporters is simple: if your product is within scope, your EU customer will increasingly assess not only price, quality and delivery performance, but also the credibility and carbon intensity of your product data.
Takeaways
- CBAM’s definitive regime applies from 1 January 2026.
- It currently covers cement, iron and steel, aluminium, fertilisers, hydrogen and electricity, including certain precursors and downstream goods.
- The first annual CBAM declaration and certificate surrender, for imports made during 2026, are due by 30 September 2027.
- A 50-tonne annual threshold exempts certain small importers, but it does not apply to hydrogen or electricity.
- EU importers may use European Commission default values or verified actual emissions data.
- Malaysian manufacturers should prepare product-level emissions data, evidence records and a clear process for responding to EU customer requests.
Table of Contents
What Is CBAM and Why Does It Matter?
CBAM is the EU’s mechanism for addressing carbon leakage—the risk that carbon-intensive production moves outside the EU to jurisdictions with lower carbon costs or less stringent climate rules.
It aims to ensure that selected imported goods face a carbon cost broadly comparable with that faced by EU producers under the EU Emissions Trading System (EU ETS). The EU describes CBAM as a tool to ensure that the carbon price of imported goods reflects their embedded emissions while complementing the EU ETS.
For Malaysian businesses, CBAM does not automatically mean a new tax payable directly to the Malaysian manufacturer. However, it can affect the commercial relationship with EU customers in several ways:
- EU buyers may request detailed emissions data from suppliers.
- Higher embedded emissions may increase an EU importer’s CBAM certificate cost.
- Suppliers with credible lower-emissions data may be more attractive to EU customers.
- Incomplete, inconsistent or unverifiable data may result in customer escalation, use of less favourable default values or supplier-review risk.
- Carbon data may become an increasingly important criterion in sourcing, contract renewal and product-pricing decisions.
For a broader introduction to CBAM’s purpose, scope and strategic relevance, read Carbon Border Adjustment Mechanism (CBAM): What Do Business Leaders Need to Know?.
Which Malaysian Exports May Be Affected?
CBAM currently applies to selected goods in six high-emissions sectors:
CBAM sector | Examples of affected activities or goods | Key exporter consideration |
Cement | Cement clinker, cement and related products | Process and fuel emissions can be significant |
Iron and steel | Iron, steel and selected downstream products | Product, precursor and production-route data may be needed |
Aluminium | Primary aluminium and selected aluminium products | Electricity-related emissions can be commercially material |
Fertilisers | Nitrogen fertilisers and related products | Production-route and process-emissions data are important |
Hydrogen | Imported hydrogen | Production pathway determines emissions intensity |
Electricity | Imported electricity | Specific rules apply; no 50-tonne exemption |
CBAM applicability is determined by the relevant Combined Nomenclature (CN) customs code, not merely by a product’s commercial description. A business should therefore verify the classification used by its EU customer or importer, rather than assume that a product is inside or outside CBAM scope based on its industry sector alone.
For example, a Malaysian manufacturer may consider itself a producer of fabricated metal products rather than a steel producer. However, if its product is imported into the EU under a CBAM-covered CN code, its EU customer may still need embedded-emissions data.
What Has Changed in 2026?
CBAM Has Entered the Definitive Regime
CBAM’s transitional phase ran from 1 October 2023 to 31 December 2025. During that period, EU importers submitted quarterly reports on embedded emissions but did not have to purchase or surrender CBAM certificates.
From 1 January 2026, CBAM has entered its definitive regime. EU importers above the applicable threshold must comply with authorisation, emissions-declaration and certificate-related requirements. Annual rather than quarterly declarations now apply.
The practical consequence for Malaysian exporters is that the quality of supplier data is now more commercially important. EU importers must make decisions on their 2026 imports using emissions information that should be collected, documented and, where relevant, verified.
A 50-Tonne Annual Threshold Applies
The CBAM simplification rules introduced a single annual mass-based threshold of 50 tonnes for eligible CBAM goods.
An EU importer whose cumulative annual imports of covered goods remain at or below 50 tonnes may be exempt from CBAM obligations for iron and steel, aluminium, cement and fertilisers. The threshold does not apply to hydrogen or electricity.
This is not a per-shipment exemption. It is based on the importer’s cumulative imports over the calendar year. If the threshold is exceeded, the importer’s relevant CBAM obligations apply.
For many industrial exporters, particularly in steel and aluminium supply chains, the 50-tonne threshold is unlikely to provide meaningful relief. Nevertheless, exporters should understand whether a specific EU customer or distributor is likely to remain below the threshold.
EU Importers Need Authorised CBAM Declarant Status
EU importers that exceed the relevant threshold must apply for authorisation as an authorised CBAM declarant. If the importer is not established in an EU Member State, its indirect customs representative may assume the related CBAM responsibilities.
This matters because Malaysian exporters should identify the correct party in the EU supply chain. The buyer in a commercial contract may not be the entity responsible for customs importation, CBAM declarations or certificate surrender.
What Are the Key CBAM Dates?
Date | CBAM development | Why Malaysian exporters should care |
1 January 2026 | Definitive CBAM regime began | Production and emissions data for 2026 imports now matter |
Throughout 2026 | CBAM certificate prices are determined quarterly | Importers can begin estimating potential cost exposure |
1 February 2027 | CBAM certificate sales begin | EU importers can purchase certificates for 2026 imports |
30 September 2027 | First annual CBAM declaration and certificate surrender due | EU importers must declare 2026 imports and surrender the required certificates |
From 2027 | Certificate prices move to weekly publication | Carbon-cost management becomes more dynamic |
From 2027 | Declarants must hold certificates equal to at least 50% of year-to-date embedded emissions at each quarter-end | Importers will need more frequent emissions forecasting and supplier data |
The first declaration deadline is particularly important. The EU importer must submit the annual declaration and surrender certificates for goods imported during 2026 by 30 September 2027.
Certificate sales begin on 1 February 2027. In 2026, certificate prices are calculated quarterly based on EU ETS auction prices; from 2027, they are published weekly.
Who Pays—and Who Provides the Data?
The EU authorised CBAM declarant is generally responsible for purchasing and surrendering CBAM certificates. This is typically the EU importer of record, or its eligible indirect customs representative.
However, the Malaysian manufacturer normally provides the core operational data needed to determine the imported product’s embedded emissions.
Party | Typical CBAM role |
Malaysian manufacturer | Provides production, energy, process-emissions and product data; supports verification where actual emissions are used |
EU importer | Imports goods into the EU and may be the authorised CBAM declarant |
Authorised CBAM declarant | Submits the annual declaration, purchases certificates and surrenders certificates |
Indirect customs representative | May assume CBAM obligations in specified circumstances |
Accredited verifier | Verifies actual embedded-emissions data where required |
This division of responsibility should be reflected in commercial arrangements. Malaysian exporters should review customer contracts, data-request templates, confidentiality provisions and liability clauses relating to CBAM information.
Why Product-Level Carbon Data Matters
CBAM does not rely solely on a company-wide carbon footprint. The EU importer needs emissions information associated with the relevant imported product, the production installation and the applicable reporting period.
A robust CBAM data process commonly includes:
- Fuel consumption by source and equipment.
- Electricity consumption and applicable emissions factors.
- Process-emissions data.
- Production output by relevant product category.
- Data on carbon-intensive precursors.
- Product-specific allocation methods for shared production activities.
- Calculation methodologies and assumptions.
- Evidence records, such as invoices, meter readings, production logs and fuel-purchase documents.
EU importers may use European Commission default values where actual verified data are unavailable. However, actual emissions may be more commercially favourable if the manufacturing installation performs better than the relevant default value. Actual emissions used for CBAM need to meet applicable verification requirements.
This creates a clear commercial distinction:
Data approach | Potential advantage | Potential risk |
Commission default value | Easier where supplier data are unavailable | May not reflect a lower-emissions manufacturing process |
Verified actual emissions | Can demonstrate lower-carbon performance and potentially reduce importer cost | Requires stronger data controls, evidence and third-party verification |
For Malaysian businesses, the objective should be to understand whether actual emissions data could improve their position with EU customers—not merely to meet a questionnaire.
For practical guidance on common data problems and corrective actions, read Product Carbon Footprint Data Gaps: How to Fix Them for ISO 14067, CBAM and DPP Readiness.
What Should Malaysian Manufacturers Do Now?
- Confirm product and customer exposure
Identify all products exported to the EU and confirm whether their import CN codes fall within CBAM scope.
Your assessment should identify:
- EU customers and importing entities.
- Import routes and Incoterms.
- CBAM-covered products and CN codes.
- Relevant manufacturing installations.
- 2026 export volumes.
- Whether the customer expects to exceed the 50-tonne annual threshold.
- Whether the customer intends to use default values or verified actual data.
Do not assume that a distributor, trader or customer has already completed this assessment. Ask for confirmation and document the response.
- Build a repeatable emissions-data process
Create a controlled process to collect, calculate, review and retain CBAM-related information. Assign clear internal ownership across sustainability, operations, engineering, finance, procurement, logistics and commercial teams.
The process should enable the business to answer:
- Which facility produced the exported good?
- What were the direct and relevant indirect emissions associated with production?
- Which activity data and emission factors were used?
- How were emissions allocated between products?
- Can the calculation be traced back to source records?
- Can a verifier understand and test the calculation?
A credible process is more valuable than a one-off spreadsheet prepared only when a customer requests information.
- Decide whether verification is needed
If an EU importer intends to use actual emissions, the supplier should assess verification readiness early. The process is likely to require sufficient documentary evidence, clear boundaries, consistent methodologies and appropriate internal review.
The European Commission has published guidance for non-EU installation operators and verification-related parties, reflecting the increasing operational importance of verified actual data under CBAM.
- Engage EU customers before year-end
Agree early on the information required, format, reporting period, submission deadline and review process.
Useful questions for EU customers include:
- Who is the authorised CBAM declarant?
- Which products and CN codes are included?
- Which production facilities should provide data?
- Will the importer use default values or verified actual emissions?
- What template, methodology and supporting evidence are required?
- What is the deadline for supplier information?
- Who will review and approve the data before submission?
For further Malaysian-specific preparation steps, read CBAM Definitive Phase 2026: Malaysian Manufacturers Exporting to EU Must Prepare Now.
How Bernard Business Consulting can help you
CBAM has changed from a future policy issue into a current supply-chain requirement. Malaysian manufacturers exporting covered goods to the EU should focus on a practical question: can we provide credible, product-level emissions data that our EU customer can use with confidence?
Companies that act early can reduce disruption, avoid rushed data collection, support customer compliance and potentially strengthen their position in European supply chains. Companies that delay may be more likely to rely on default values, face repeated customer queries or lose ground to suppliers with stronger carbon-data capability.
For support with CBAM applicability assessment, product-level emissions data, documentation, calculation processes and verification readiness, explore Bernard Business Consulting’s CBAM Reporting services.
This article is for general information only and reflects developments available as at September 2026. It is not legal, tax, customs or assurance advice. Businesses should review current EU legislation and European Commission guidance, and seek advice appropriate to their specific circumstances.
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