CBAM Penalties and Enforcement: What Happens If You Don't Comply?

Non-compliance with CBAM carries significant financial penalties and can result in goods being blocked at EU borders. This guide explains the enforcement mechanisms and the consequences of non-compliance.

Published April 2026·Last updated April 2026·carbonborderadjustment.co.za

CBAM Penalties and Enforcement: What Happens If You Don't Comply?

CBAM is not a voluntary scheme — it is a legally binding EU regulation with significant financial penalties for non-compliance. Understanding the enforcement mechanisms is essential for SA exporters and their EU customers.

The Penalty Structure

EU Regulation 2023/956 establishes a clear penalty structure for CBAM non-compliance:

| Violation | Penalty | |-----------|---------| | Failure to surrender certificates by deadline | EUR 100/tCO₂ of missing certificates | | Importing without Authorised CBAM Declarant status | Goods seized + national penalties | | Submitting inaccurate embedded carbon data | Certificate top-up + penalties | | Deliberate misrepresentation | Criminal liability (national law) |

The EUR 100/tCO₂ penalty is significantly higher than the certificate price (~EUR 65.42/tCO₂), making non-compliance far more expensive than compliance.

Enforcement Mechanisms

1. EU Customs Integration The EU Customs system is integrated with the CBAM Registry. When an EU importer submits a customs declaration for CBAM-covered goods, the system automatically checks:

▸Whether the importer is registered as an Authorised CBAM Declarant
▸Whether the importer has sufficient CBAM certificates in their account

If either check fails, the customs declaration is rejected and the goods are held.

2. Annual Declaration Review The European Commission reviews all annual CBAM declarations for accuracy and completeness. Declarations that appear inconsistent with known production data or industry benchmarks are flagged for investigation.

3. National Competent Authority Oversight Each EU member state has a national competent authority responsible for CBAM enforcement. These authorities have broad powers to investigate non-compliance, including:

▸Requesting production records and emissions data
▸Conducting site visits (in cooperation with the exporting country's authorities)
▸Imposing financial penalties under national law

The SA Exporter's Risk

While CBAM penalties are imposed on EU importers, SA exporters face indirect risks:

▸Contractual liability — If your EU customer faces CBAM penalties due to inaccurate data you provided, they may seek to recover costs from you
▸Market access risk — EU importers who face repeated CBAM penalties may stop sourcing from SA suppliers to reduce compliance risk
▸Reputational risk — CBAM non-compliance can damage your reputation in EU markets

Protecting Yourself

SA exporters can protect themselves by:

▸Providing accurate, verified embedded carbon data to EU customers
▸Documenting your SA carbon tax payments for the deduction claim
▸Registering your operations in the EU CBAM Registry as an operator
▸Maintaining records of all CBAM-related data for at least 5 years

For a complete CBAM compliance registration pathway, visit the Digital Product Passport Registry.

Frequently Asked Questions

What is the penalty for not surrendering CBAM certificates?

The penalty for failing to surrender sufficient CBAM certificates by the September 30 deadline is EUR 100 per tonne of unreported embedded emissions. This is in addition to the obligation to still purchase and surrender the missing certificates.

What happens if an EU importer is not registered as an Authorised CBAM Declarant?

EU importers who are not registered as Authorised CBAM Declarants cannot legally import CBAM-covered goods. Attempting to import without registration can result in goods being seized at the EU border and significant penalties.

Can SA exporters be penalised for CBAM non-compliance?

CBAM penalties are imposed on EU importers, not SA exporters. However, if your EU customers face CBAM penalties, they may seek to recover costs from you, particularly if you failed to provide accurate embedded carbon data.

What happens if embedded carbon data is found to be inaccurate?

If the European Commission determines that embedded carbon data submitted in a CBAM declaration is inaccurate, the importer may be required to purchase additional certificates and pay penalties. Deliberate misrepresentation can result in criminal liability.

How does the EU enforce CBAM compliance?

CBAM is enforced through the EU Customs system, the EU CBAM Registry, and national competent authorities. The European Commission has broad powers to investigate non-compliance, including access to production records and third-party verification reports.

Gate 3 — Complete Registration

✓ Gate 1 KYC · ✓ Gate 2 CBAM · Gate 3 DPP →

Digital Product Passport Registry

Complete all three compliance gates — Gate 1 KYC identity verification, Gate 2 CBAM financial authorisation, and Gate 3 Digital Product Passport registration — in one place at the DPP Registry.

Start Three Gates Registration →