Energy, Emissions and Heavy Industry

On 1 January 2026 the European Union's Carbon Border Adjustment Mechanism, CBAM, entered its definitive phase. From that day an importer bringing steel, aluminium, cement, fertilisers, hydrogen or electricity into the EU, along with some downstream products such as screws and bolts, had to be an authorised CBAM declarant, and would owe certificates for the emissions embedded in those goods, priced at the average auction price of EU emissions allowances; sales of certificates for 2026 imports start in 2027. Importers of less than about 50 tonnes of covered goods a year were exempted by a 2025 simplification that kept about 99% of embedded emissions in scope. The charge replaces, over time, the free allowances that had protected Europe's heavy industry from imports: free allocation falls by 2.5% in 2026 and is phased out by 2034, and the importer's obligation rises as it falls (reported; told in this series' book on energy).

For an American manufacturer the new regime is a tariff schedule by production route. A stylized calculation in the companion, at an allowance price of €85 a tonne of carbon dioxide, puts the charge on a tonne of blast-furnace steel, at about 2 tonnes of CO2, at about €4 in 2026, about €82 in 2030 and about €170 in 2034, against about €1, €21 and €43 for scrap-based electric-arc steel at about half a tonne. About 70–72% of US steel is made in electric-arc furnaces (US Geological Survey). A US minimill exporting to Europe would pay far less than a coal-based Asian exporter, and an American company whose European subsidiary imports steel or aluminium from Asia, Türkiye or India pays CBAM there. In 2026 the burden was mostly data and administration, registering, collecting verified emissions from each foreign mill and avoiding the default values set to penalise missing data. By the early 2030s it becomes a large share of a steel product's margin.

At the same time Washington moved the other way. The Environmental Protection Agency finalised on 12 February 2026 its rescission of the 2009 greenhouse-gas endangerment finding and the repeal of all vehicle greenhouse-gas standards, under challenge in the D.C. Circuit; it kept its 4 parts-per-trillion limits on PFOA and PFOS in drinking water but moved compliance to 2031; and on 14 July 2026 it proposed easing the warranty, useful-life and credit provisions of its 2027 heavy-duty NOx rule while keeping the limits and the date (reported). A US manufacturer that sells to European customers, to California or to large brands with net-zero targets still faces carbon questions from its customers, even when its own government asks fewer.