Brazilian industrial exporters continued to face a high degree of uncertainty following the entry into force of the EU’s Carbon Border Adjustment Mechanism (CBAM), as key aspects of the system — including methodologies, certification processes and compliance requirements — remained under development.
Three months after implementation began, market participants said there is still limited clarity about how the mechanism would operate in practice, reinforcing challenges for companies seeking to adapt to the new framework.
Meanwhile, the National Confederation of Industry (CNI), the entity representing Brazilian industry, told Fastmarkets that the mechanism is already creating challenges.
“Companies that are not prepared to measure and report their emissions may face additional costs and difficulties in accessing the European market,” Davi Bomtempo, superintendent of Environment and Sustainability at CNI, aid on March 11, adding that the ability to provide verifiable carbon data has become a key condition for maintaining export competitiveness.
The EU’s instrument to apply a carbon price on imported products ensures that foreign producers face costs equivalent to those paid by European companies under the bloc’s emissions trading system.
Importers must now report and verify the emissions embedded in products such as steel and aluminium and purchase corresponding certificates, effectively extending carbon pricing to international trade.
The impact is expected to be concentrated in emissions-intensive sectors, with iron, steel and aluminium among the most exposed, given their relevance in exports to the EU, according to the CNI.
Short-term impact limited by unclear CBAM rules
Despite the formal requirements, the verification infrastructure is not yet fully operational, according to industry sources.
“People are still being trained, and methodologies and calculations are still being defined,” Silvia Nascimento, chief executive officer of the green long steel producer Aço Verde do Brasil (AVB), told Fastmarkets on March 27.
AVB produces long steel products sustainably, being the steelmaker with the lowest CO2 emissions per tonne of steel produced in Brazil, according to GHG Protocol data.
The company produces rebar and wire rod and aims to export these products to Europe in the future.
Fastmarkets’ monthly price assessment for steel wire rod (mesh quality) export, fob main port Latin America was $545-585 per tonne on March 6, up from $525-545 per tonne in the previous month.
For now, through CBF Indústria de Gusa, one of Brazil’s pig iron producers, they produce 260,000-300,000 tonnes of pig iron per year, with 50% destined for Europe.
Fastmarkets’ weekly price assessment for pig iron export, fob port of Vitoria/Rio, Brazil was $460 per tonne on March 27, up from $450-465 per tonne on March 20.
And Fastmarkets’ weekly price assessment for pig iron, export, fob Ponta da Madeira, Brazil was $455-475 per tonne on March 27, up from $450-460 per tonne a week earlier.
“We’ve already reached out to certifiers, such as SGS and Bureau Veritas, with processes expected to move forward around September or October this year,” Nascimento added, noting that no companies have been certified so far. “Some say certain products will be included, others say they won’t. So everything is still very preliminary at this stage.”
The emissions verification process is expected to begin in the fourth quarter of 2026, while the first CBAM Certificate price will be published on Tuesday April 7, the European Commission reported.
This lack of clarity has made it difficult for exporters to assess potential costs or define adjustment strategies, particularly as certification requirements remain unclear.
“There may be an advantage [for Brazilian exporters], but no one can clearly quantify how significant that advantage will be. It all depends on what the final certification requirements look like,” Nascimento said.
Market participants also pointed to uncertainty regarding the timing of costs. While CBAM entered into force in 2026, payments for that year’s imports are expected to be settled in 2027, with charges applied retroactively from January 1, 2026, adding another layer of complexity for exporters.
In terms of product-level impact, market participants see limited immediate commercial shifts, as, according to Nascimento, “at the moment, it doesn’t make much sense commercially.”
Domestic regulation gains urgency under CBAM
The mechanism is also reshaping the domestic regulatory debate, reinforcing pressure for the operationalization of Brazil’s regulated carbon market. Under CBAM rules, importers can reduce the number of certificates purchased if it is proven that a carbon price has already been paid in the country of origin.
“Countries with explicit carbon pricing will have a competitive advantage over those that do not,” the CNI said, noting that the mechanism reinforces the need to advance Brazil’s regulated carbon market to avoid the transfer of resources abroad.
The Brazilian government, in turn, is moving forward with the implementation of the system following the enactment of the Brazilian Emissions Trading System (SBCE) law in December 2024, currently focusing on defining governance, sectoral scope and monitoring, reporting and verification (MRV) rules.
“We are in the phase of structuring the pillars of the system, including governance, scope definition and the development of the central registry and MRV criteria,” Cristina Reis, the country’s extraordinary secretary for the Carbon Market, said in an interview with Fastmarkets on March 16.
Reis noted that key steps are expected to be completed in 2026, with some measures already planned for the first half of the year.
For Bomtempo, a central point is advancing the implementation of the SBCE and providing legal certainty to the system. “To achieve this, it will be important to publish the implementing regulations by the end of 2026 and to structure the rules for monitoring, reporting and verification of emissions,” he said.
He stressed that the CNI was selected to represent the industrial sector in the Permanent Technical Advisory Committee of the SBCE, which will play an important role in defining the rules of Brazil’s carbon market.
The government said it is seeking to align the system with international carbon markets, according to Reis, including interoperability of MRV rules and emissions accounting, as part of a broader strategy to strengthen competitiveness and facilitate integration with other jurisdictions.
