EU CBAM to shake Thai exports as definitive phase starts on Jan 1

Thailand’s exports to Europe face fresh pressure from the European Union’s Carbon Border Adjustment Mechanism (CBAM), which enters its definitive phase on January 1, 2026. 

The EU has also rolled out Regulation (EU) 2025/2083, described as a CBAM “simplification” package, aimed at reducing complexity and easing the burden on small importers ahead of full implementation. 

What CBAM will require

Under CBAM, importers in the EU will have to account for the embedded greenhouse gas emissions of goods imported in six main categories: iron and steel, aluminium, cement, fertilisers, electricity and hydrogen. Importers will be required to cover those emissions through CBAM certificates, aligning the cost of imported carbon-intensive goods with the EU’s climate policies.

The EU is also expected to widen the scope over time to additional product groups such as plastics and polymers, glass, ceramics, paper and basic chemicals.

Key simplifications in the new EU rules

A central change is an exemption designed for small import volumes. The EU has introduced a 50-tonne-per-year mass threshold for certain CBAM goods (including iron and steel, aluminium, fertilisers and cement). Importers below that threshold are exempt, but electricity and hydrogen are not covered by the exemption. 

Other changes tighten and clarify compliance, including:

• Clearer carbon calculation rules, with independent verification required when using actual emissions data, while default values may apply where real data is not provided.
• Default values referenced to higher-emitting benchmarks (including an approach based on the average of the ten exporting countries with the highest emission intensities for certain calculations). 
• Easier crediting for carbon prices paid outside the EU, with options to use EU-set reference values rather than proving every document in full.
• Tighter requirements for indirect customs representatives, including needing authorised CBAM declarant status and facing penalties for breaches. 
• Expanded definitions of evasion, targeting practices such as splitting shipments into smaller lots or using misleading paperwork.

KResearch: 28 billion baht at risk; steel most exposed

Kasikorn Research Center estimates CBAM could affect 3.8% of Thailand’s exports to the EU in 2026, worth about 28 billion baht, as the policy moves beyond the transition period and begins aligning with the EU Emissions Trading System (EU ETS).

The research house said iron and steel and aluminium are expected to be the first sectors to feel the impact, because EU importers will factor CBAM costs into purchasing decisions.

It cited 2024 export values to the EU of:

• Iron and steel: US$95.1 million
• Aluminium: US$56.7 million
• Cement and fertilisers: comparatively small values

KResearch noted that CBAM certificate costs are linked to embedded emissions, with an indicative carbon price range cited in the report of 60–90 euros per tonne.

Why Thai steel is seen as the most vulnerable

KResearch said Thailand’s production emissions per tonne can be far higher than Europe’s—at times up to 17 times higher—particularly where producers rely on coal-based processes.

For steel and steel products, it estimated CBAM compliance could raise costs by 1,300–1,500 baht per tonne (around 1.5–1.7% of product value), putting annual CBAM-related costs at roughly 167–193 million baht for Thai steel exporters to the EU.

It said the Thai steel industry may need to:

• shift towards electric arc furnaces (EAF) powered by renewable energy, and
• develop green hydrogen-based steelmaking, to avoid losing EU market share to cleaner producers such as South Korea, Japan, or EU-based manufacturers.

Other sectors: aluminium, cement, fertilisers, electricity and hydrogen

• Aluminium: While Thailand’s export value is smaller, aluminium production is carbon-intensive. The report said producers cannot ignore the risk, and flagged the need for renewable-powered electrification and improved processes.
• Cement: Exports to the EU are minimal, but the sector is already pursuing lower-carbon cement and a net-zero pathway.
• Fertilisers: Exports are small, but producers may need to move towards green ammonia using renewable electricity rather than conventional natural-gas-based processes.
• Electricity and hydrogen: Thailand does not export these to the EU, but electricity emissions still matter because power is an input into CBAM-covered manufacturing.

Big firms preparing; SMEs still lagging

Visit Limlurcha, vice-chairman of the Thai Chamber of Commerce, said CBAM is a global rule change that cannot be avoided. He said large Thai firms—especially in steel, aluminium and cement—have begun collecting carbon data and adjusting processes, but many SMEs are still only starting to understand the requirements.

He flagged key obstacles including high investment costs, fragmented carbon-data systems, and Europe’s complex calculation standards—raising concerns that smaller firms may not be ready in time.

Officials: payment phase is approaching; EU secondary rules still incomplete

Chotima Iamsawasdikul, Director-General of the Department of Trade Negotiations at the Commerce Ministry, said business groups including the Federation of Thai Industries, the Thai Chamber, and steel associations have been preparing throughout the transition period, when importers were required to report data and could use EU default values if information was incomplete.

However, she said uncertainty remains because parts of the EU’s detailed implementing rules have yet to be fully published, even as the definitive phase approaches. 

She added that if Thailand passes a climate change law, it could help build national carbon-management systems and better prepare Thai businesses for EU-style rules.

German ambassador: Thai climate law could reduce CBAM pain

German Ambassador Dr Ernst Reichel said that if Thailand advances a climate change law and applies fair charges on high-emitting industries, the impact of CBAM on businesses could be reduced, while also positioning Thailand for future trade and investment conditions shaped by climate regulation.

He urged Thai exporters and firms across supply chains to act now by measuring and documenting emissions, building traceable energy and materials systems, investing in low-carbon technology, improving sustainability reporting, and exploring partnerships for green technology transfer and finance.