A shipment of hydrogen entering the EU today carries a carbon cost no matter how small it is. A shipment of steel gets a 50-tonne cushion before the same rules apply. That asymmetry is written directly into the rules of CBAM, the EU's Carbon Border Adjustment Mechanism, and it tells where Brussels expects the next wave of carbon pricing pressure to land.

CBAM's definitive phase is running

CBAM entered its definitive phase on 1 January 2026, replacing the reporting-only transitional period that ran from October 2023. Under the definitive regime, EU importers of six product groups (cement, iron and steel, aluminium, fertilisers, electricity and hydrogen) must register as authorised CBAM declarants, submit verified annual emissions declarations and buy certificates priced to track the EU Emissions Trading System. Certificate sales open in February 2027, and the first annual declaration and surrender, covering 2026 imports, falls due on 30 September 2027. Miss it and the penalty runs €100 per tonne of unaccounted CO2. The certificate price itself already exists too: the Commission set it at €75.36 per tonne of CO2 for Q1 2026, tracking the EU ETS auction average, and published a near-identical €75.28 for Q2. The EU is phasing out free ETS allocations for producers in these same sectors through 2034, closing the gap between the price importers pay and the price domestic industry already pays.

A new de minimis threshold, introduced through last year's simplification package, exempts importers of cement, steel, aluminium and fertilisers from these obligations if they bring in under 50 tonnes of covered goods a year. The Commission estimates this removes close to 90% of importers from the compliance burden while keeping 99% of embedded emissions in scope. Hydrogen and electricity got no such exemption, regardless of volume. If a regulator wanted to signal which sectors it considers most exposed to carbon leakage risk without saying so outright, this is roughly how it would do it.

Why hydrogen and fertiliser rules already touch oil and gas

CBAM's product list does not mention oil, gas, refining or midstream infrastructure. Upstream extraction and LNG sit outside Annex I entirely, for now, so do petrochemicals. That gap is specifically about imports: EU-based refineries and petrochemical plants already pay for their own emissions directly under the domestic EU ETS. CBAM's border-pricing logic hasn't reached imports in those industries yet. Hydrogen and fertilisers, the two areas already carrying CBAM's strictest rules, run almost entirely on gas.

About three-quarters of global hydrogen production still comes from natural gas through steam methane reforming, consuming close to 290 billion cubic metres of gas in 2024 alone, according to the IEA's Global Hydrogen Review 2025. Ammonia, the feedstock behind nearly all nitrogen fertiliser, tells a similar story: over 70% of global production runs on natural gas-based steam reforming, pulling in around 170 bcm of gas a year and accounting for a fifth of industrial gas demand, per the IEA's Ammonia Technology Roadmap. Strip away the product labels, and both of CBAM's most tightly regulated sectors are, functionally, gas-processing industries operating under different names.

The carbon price now attached to hydrogen and fertiliser entering the EU is, in practice, a carbon price on a slice of the gas value chain. CBAM stops short of naming oil and gas companies directly – the economics it prices belong to them anyway.

CBAM's scope expansion: what comes next

The Commission wrote CBAM with room to grow. Article 30 of the founding regulation requires it to keep reviewing the mechanism's scope and report on extending it to further EU ETS sectors and downstream products. In December 2025, the Commission acted on that mandate, proposing to bring roughly 180 additional steel- and aluminium-intensive downstream products into CBAM from 1 January 2028. That proposal is still moving through the legislative process, and it covers finished goods rather than oil and gas activities. It also confirms that the Commission keeps widening the mechanism. Industry analysts have flagged 2030 as the point by which CBAM could realistically reach most of the sectors already inside the EU ETS, upstream and refining among them, though EU law does not lock in that date yet.

For anyone running project economics in oil and gas, the impact lands on how every other decarbonisation decision gets priced. A CAPEX case that treated carbon cost as a footnote can no longer point to genuine regulatory uncertainty about timing. A comparable, functioning carbon price already exists one sector over, in the same value chain, with certificates, penalties, a registry and a review clause built to keep expanding its own reach. Two of the sectors sitting closest to oil and gas got less cushioning than steel or cement did. Waiting for certainty before moving on a CCS retrofit or a methane detection programme now means waiting past the point where the adjacent economics have already been reset. The same goes for an electrification project on process heat.

Oil and gas decarbonisation economics at DECARBON 2027

Technology choices for decarbonising oil and gas get plenty of stage time at industry events. Harder to find is a room built around the economics underneath those choices: how a functioning border carbon price changes project returns, and how the EU border is already repricing gas-based hydrogen and fertiliser economics. The regulatory logic behind that repricing is likely to keep moving down the value chain, and that's the harder conversation to find.

DECARBON 2027, taking place in Berlin on 15-16 February, is built for that conversation. It brings together operators, licensors and solution providers running these numbers today, in a closed-door format built for people who need to compare notes on this and the other questions shaping their projects.

Get the full agenda

FAQ

What is DECARBON 2027?

DECARBON 2027 is the Oil & Gas Decarbonisation Congress – a closed-door B2B event bringing together senior operators, EPCs and technology providers from across the global oil and gas value chain. The programme covers CCUS, low-carbon hydrogen, methane abatement, energy efficiency, regulatory compliance and digital tools for net-zero.

When and where does DECARBON 2027 take place?

DECARBON 2027 takes place on 15-16 February 2027 in Berlin, Germany. The two-day programme includes sessions, a technology exhibition and structured B2B meetings.

Who attends DECARBON 2027?

DECARBON 2027 gathers C-level executives, sustainability leads, technical experts and operational decision-makers from major oil and gas operators, upstream producers, midstream companies and refiners, alongside the technology, EPC and service companies supporting the sector's energy transition. The congress operates on a closed-door model, with participants selected to maintain a focused professional environment of end-users, solution providers and licensors.

How do companies participate in DECARBON 2027?

Companies participate in DECARBON 2027 as delegates, sponsors, exhibitors or speakers. Participation details are available on request.

Is oil and gas covered by the EU carbon border tax?

Oil and gas is not directly covered by the EU carbon border tax yet. The EU's carbon border tax, CBAM, currently covers cement, iron and steel, aluminium, fertilisers, electricity and hydrogen, not upstream, midstream or downstream activities. But hydrogen and ammonia-based fertiliser production run largely on natural gas, so the tax already prices a significant slice of gas-based industrial chemistry.

Why are hydrogen and fertilisers already covered by CBAM?

Hydrogen and fertilisers were included in CBAM's original 2023 regulation as high carbon-leakage-risk sectors. Since January 2026, hydrogen carries no import exemption at all, unlike steel, cement and aluminium, which get a 50-tonne annual de minimis threshold before obligations apply.

References

• European Commission, Taxation and Customs Union — CBAM definitive regime and price of CBAM certificates: https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism/cbam-definitive-regime_en / https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism/price-cbam-certificates_en

• EUR-Lex – Regulation (EU) 2023/956 establishing CBAM, including the Article 30 review clause: https://eur-lex.europa.eu/eli/reg/2023/956/oj/eng

• International Carbon Action Partnership (ICAP) – CBAM compliance-phase timeline and the de minimis threshold, including the hydrogen/electricity exclusion: https://icapcarbonaction.com/en/news/eu-cbam-enters-compliance-phase-and-outlines-path-ahead

• Mayer Brown – the Commission's December 2025 proposal to expand CBAM to downstream products: https://www.mayerbrown.com/en/insights/publications/2025/12/european-commission-issues-cbam-operational-rules-and-proposes-downstream-extension-of-the-cbam-scope

• IEA – Global Hydrogen Review 2025: https://www.iea.org/reports/global-hydrogen-review-2025/executive-summary

• IEA – Ammonia Technology Roadmap: https://www.iea.org/reports/ammonia-technology-roadmap/executive-summary