EU CBAM expansion: what the 2026 scope change means for renewable component exporters
The EU's Carbon Border Adjustment Mechanism enters its definitive phase in 2026 with an expanded scope that now touches polysilicon, ingots, and select inverter components. Chinese and Indian exporters face new embedded-emissions reporting obligations that will reshape EU module sourcing through 2028.
In 50 words: EU CBAM's 2026 definitive phase pulls polysilicon, silicon ingots, and select inverter components into the carbon-border charge regime. Exporters must report embedded emissions verified by accredited third parties from July 2026, with financial settlement beginning January 2027. Indian and Chinese suppliers face material cost adjustments.
Scope expansion
CBAM's transitional phase (October 2023–December 2025) covered cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen. The 2026 definitive phase amendments — formally adopted in the November 2025 trilogue — extend the scope to:
- Polysilicon (HS 2804.61)
- Silicon ingots and wafers (HS 3818.00)
- Select power electronics components (HS 8541, 8504 sub-codes)
- Downstream extension to finished modules is under consultation for Phase III, 2028.
Timeline
- July 1, 2026 — Mandatory verified embedded-emissions reporting begins for in-scope goods entering EU customs territory. Reports must be filed quarterly by importers.
- January 1, 2027 — Financial settlement begins. Importers must surrender CBAM certificates priced at the weekly average EU ETS price, less any carbon price already paid in the country of origin.
- 2028 — Free allocation of EU ETS allowances begins phase-out for affected EU sectors; CBAM ratchets up in parallel.
Practical impact on module supply chains
The embedded-emissions calculation methodology for polysilicon assumes default values heavily weighted to grid-electricity carbon intensity. Chinese polysilicon produced in coal-heavy Xinjiang grids will carry a default embedded-emissions figure substantially higher than polysilicon produced in hydro-heavy Sichuan or in renewable-heavy European facilities.
Modelled cost impact at €85/tCO2 EU ETS reference (2026 forward curve):
- Polysilicon from coal-grid origin: +€0.018–0.024 per watt at module level
- Polysilicon from hydro-grid origin: +€0.005–0.008 per watt
- Polysilicon from renewable-grid origin: near zero
For a 600 W bifacial module, that's a €11–14 cost wedge between coal-grid and hydro-grid polysilicon supply. At today's EU module prices, that's a single-digit-percent cost addition — meaningful but not market-breaking.
What Indian exporters should do now
Indian polysilicon and ingot capacity coming online in 2026–2027 sits on a grid carbon intensity (roughly 670 gCO2/kWh) that is lower than China's coal-dominant polysilicon hubs but higher than European or Sichuan-hydro sources. Practical steps:
- Verify your embedded emissions early. Engage an EU-accredited verifier in Q2 2026, not Q3 — slots are filling.
- Captive renewable PPAs. Polysilicon and ingot facilities with verifiable captive renewable PPAs can claim reduced embedded-emissions figures.
- Document origin granularly. Mixed-source polysilicon shipments will be assigned the higher default value if origin can't be verified per batch.
What to watch next
The Phase III consultation on module-level scope is the larger structural risk. If finished modules come into CBAM scope in 2028, the calculation aggregates emissions across the entire silicon-to-module chain. That would make module sourcing strategy a primary lever for EU developers, not a secondary one.
Researched and drafted with AI assistance; reviewed and edited by the named author within 24 hours of draft. See our editorial standards and AI disclosure.