Carbon Border Taxes Raised Construction Material Costs
New import regulations forced builders to account for carbon intensity, shifting project costs for steel and concrete.
Updated on Sept. 24, 2026 in Construction
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The European Union implemented the definitive phase of its Carbon Border Adjustment Mechanism (CBAM) in January 2026, forcing importers to pay for the carbon footprint of incoming building materials. This policy change directly increased material expenses for developers and contractors who rely on global supply chains.
Why it matters
CBAM was introduced to equalize the cost of imported products with domestic goods and prevent carbon leakage, but it has now transformed emissions from an environmental metric into a direct financial liability. Businesses must now adjust procurement strategies as embodied carbon becomes a primary driver of project costs.
Structural steel and concrete account for 70% to 75% of a building's initial embodied carbon, representing a massive liability under new rules. Importers are now required to surrender certificates tied to the weekly average of EU Emissions Trading System allowances.
The players
European Union
A political and economic union that enforces carbon pricing mechanisms to regulate industrial emissions.
United Kingdom
A sovereign nation currently establishing its own carbon border regulations to protect domestic steel production.
The details
Under the new mechanism, importers must provide verified, installation-level emissions data to secure certificates. This cost is effectively passed through to construction firms, as manufacturing, transportation, and installation now account for 80% to 90% of total construction greenhouse gas emissions. Because steel and concrete are carbon-intensive to produce, they have become the primary targets for these border levies, forcing firms to re-evaluate vendor geography.
Timeline
January 2026 marked the start of the EU CBAM definitive phase.
December 2025 served as the baseline for structural steel price increases.
March 2026 saw the official launch of the UK Steel Strategy.
January 2027 is the scheduled launch date for the UK CBAM.
2028 is the target for the proposed EU expansion into 180 downstream products.
Market Landscape
The introduction of CBAM represents a significant departure from historical procurement models where only domestic environmental compliance mattered. It follows the precedent set by the EU Emissions Trading System, extending carbon pricing from internal production to the entire global supply chain.
Operators should immediately audit their supply chain to identify high-carbon materials and forecast potential price spikes. Given the 2028 expansion, financial planning must now include contingent budget lines for carbon certificate costs on secondary building components.
The takeaway
Embodied carbon is now a direct operational expense that can fluctuate weekly based on regulatory pricing. Procurement teams should prioritize verifying the carbon intensity of steel and concrete vendors to avoid sudden price volatility.
Further reading
For more on industry shifts, see the Construction section.
Source note: This article includes information reported by Construction Management.
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