A joint article by PwC Germany and enmacc.
Since January 2026, CBAM directly affects purchasing, pricing, and margins for importers. Many companies are still focused on reporting obligations, but in the background, CO₂-cost-driven additional burdens fluctuate with the EU ETS price. How can these new costs be made transparent and actively managed? And what role do procurement strategies and hedging play? This article provides a concise introduction.
1. CBAM as a new cost and risk factor
Since 2026, the CO₂ Border Adjustment Mechanism (CBAM) has been active and is now a reality for companies. For imports of emission-intensive goods such as aluminum, iron and steel, electricity, hydrogen, fertilisers, or cement into the EU, additional CO₂ costs arise from the mandatory purchase of CBAM certificates. The price of these certificates is linked to the price of EU Emission Allowances (EUAs) in the EU Emissions Trading System (EU ETS).
While the first submission of CBAM reports and certificates occurs at staggered times, these costs already need to be considered today in medium-term corporate planning, purchasing budgets, margin models, and price lists—often through mechanisms beyond simple pass-through to customers.
In practice, processes and reporting obligations are often the focus. At the same time, CBAM creates a new, volatile cost component that is not automatically reflected in established management logics for purchasing, controlling, and risk management. Companies therefore need to decide whether they want to merely comply with CBAM or actively treat CO₂ costs as a manageable factor in purchasing.
2. Understanding CBAM costs and reflecting them in margins and prices
CBAM costs follow a clear but often underestimated logic. They result from the imported volume of CBAM goods, their respective emission intensity, and the CBAM price. Since the quantity can only be influenced in the short term to a limited extent from a production or supply perspective, the lever of emission intensity becomes even more important. Verified actual emission values can be significantly lower than regulatory standard values. If standard values must be used, both the required number of certificates and the cost per product increase significantly with emissions, with noticeable effects on margins and pricing.
To manage these effects, companies must make CBAM costs visible at the product and supplier level. Only then can gross margins be reliably assessed, price surcharges justified, and contractual adjustments prepared. As a reference for CBAM price development, the CBAM index published by the European Energy Exchange (EEX) can be used, which reflects the weekly CBAM price, calculated using EUA auction results.
3. Procurement of CBAM certificates
CBAM certificates cannot be held indefinitely and are subject to timing requirements. The obvious solution is to calculate the demand quarterly and purchase certificates shortly before the submission or holding deadline. This minimal strategy meets regulatory requirements but ignores the main cost driver: the CBAM price linked to the EUA price and its significant fluctuations.
Companies that want to actively manage CBAM costs need a procurement strategy for CBAM certificates that aligns with their business model and strategic orientation. Important factors include import planning and forecast quality, available liquidity, the company’s risk profile, and the ability to pass CBAM costs along the value chain. From this, strategic patterns can be derived, such as staggered purchases throughout the year, the use of trigger prices, or regular acquisition of fixed partial volumes. This smooths price spikes, reduces budget risks, and better integrates CBAM costs with purchasing and sales decisions.
4. Hedging price risks with EUAs
CBAM price risks can be managed through a structured hedging process, typically involving five steps, from analysing exposure (expected future CBAM volumes and costs) to defining objectives and strategies, and ongoing monitoring of hedge positions.
A practical approach is to hedge the CBAM price exposure using products from the existing EU Emissions Trading System, i.e., using EUAs as a proxy hedge. The price component of the CBAM risk is defined by the average of EUA auction results from the previous period (quarterly in 2026, then weekly). As the chart shows, EUA spot prices and the CBAM reference price from the EEX track closely. Due to this high correlation, it makes sense to use EUAs as a proxy hedge for CBAM price risks. Companies can secure a price level before the actual procurement of CBAM certificates, gaining budget and planning certainty.
To test this, a simple hedging strategy was modeled using historical market data:
- Purchase EUA certificates for the expected annual CBAM volume (in t CO₂) via spot or forwards before the start of the year.
- Weekly sale of a corresponding EUA partial volume on the spot market on Wednesdays to acquire the necessary CBAM certificates the following week.
Based on historical EUA spot prices and the CBAM reference price, the hedge effectiveness, i.e., risk reduction, was 96% for 2024 and 98% for 2025, reducing a large portion of price volatility. The weekly difference between exposure and hedge shows an average delta of 0.05 €/t CO₂ in 2024 and 0.23 €/t CO₂ in 2025, very low deltas despite occasional weekly spikes. Such peak risks can be reduced by staggered procurement/sale of CBAM certificates and the underlying EUA positions.
This is deliberately a simplified example, showing that EUAs can generally be used effectively to hedge CBAM price risks. The trading strategy can be further improved through targeted use of EUA futures to lock in prices and clear rules for building, rolling, and monitoring hedge positions.
5. Next steps for professional CBAM cost management
CBAM will impact companies for many years. Focusing solely on compliance, timely reporting and necessary certificate purchase, risks permanently high and volatile CO₂ costs. Active CBAM management goes beyond this: it combines compliance with transparent cost analysis, strategic procurement, and hedging to manage price risks proactively. Based on this, governance, responsibilities, and processes should be defined, bringing together purchasing, controlling, risk management, and treasury.
The next step is to translate procurement strategies and possible hedging approaches into policies and systems, including adjustments in contract templates, reporting, and IT, as well as training for involved teams. This transforms CBAM from an additional burden into a manageable cost item that can be actively integrated into price and margin management.
