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Verification under CBAM – Key learnings and guidance for effective preparation (Part 2)

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Using actual CBAM data can substantially reduce CBAM‑related costs for importers. However, essential data points—such as direct specific embedded emissions or specific embedded free allocation—must be available in verified form to be eligible for use in a CBAM declaration.

In this series (find part 1 here) we cover the key processes and requirements for verification under CBAM along with our experiences in preparing CBAM declarants, suppliers and non-EU producers. This second part provides guidance on how operators of installation can prepare for verification under CBAM.

Preparation for verification: Requirements

During the transitional period of the CBAM implementation (2023-2025), operators of installations in third countries were able to provide CBAM data to their EU-based customers through the official CBAM communication template for installations (the EU Commission is currently working on an updated version), the O3CI-portal of the CBAM registry (verification reports will only be issued here) or other means such as the carboneer developed EFDA template. While all such documentation of calculated CBAM data is considered an emissions report under the CBAM framework, it only represents the final output of a complete CBAM data monitoring, collection and calculation processe.

From the start of the definitive period of CBAM on 1 January 2026, any CBAM data for the calendar year 2026 intended for verification must be substantiated. Operators thus require a structured and compliant approach to data monitoring and calculation (see Figure 1), including:

  • Developing a monitoring plan and implementing the described methods and procedures in accordance with the monitoring and calculation rules in Implementing Regulation 2025/2547,
  • Preparing an emissions report incorporating relevant data from precursor suppliers and the operator’s own production processes, resulting in the final calculated CBAM data,
  • Compiling documentation and evidence supporting reported information from internal and/or external sources.

Figure 1: Components of a CBAM-compliant system for data collection and calculation for verified CBAM data (source: carboneer)

The missing foundation: the monitoring plan

Without a monitoring plan that describes and documents the systems and methods for generating CBAM relevant data at the installation level, verification cannot take place. Such monitoring system must conform to the new calculation rules under Implementing Regulations 2025/2547, 2025/2620 (free allocation adjustment) and 2025/2621 (default emissions values). Specifically, the monitoring plan must be prepared in English and include among other elements:

  • Description and diagram of the installation defining production processes, products and the system boundary,
  • List and description of emissions sources and activity data, calculation rules and precursors information,
  • Description of data management, control procedures and quality systems that ensure reliable and accurate CBAM data.

According to current information from the EU Commission, no official monitoring plan template will be provided. Instead, operators of installations in third countries must therefore design and implement installation-specific monitoring plans and systems themselves. At carboneer, we have developed a monitoring plan template aligned with the up-to-date CBAM calculation rules and requirements to support our work with producers of CBAM goods worldwide (see excerpts in Figure 2).

Figure 2: Excerpts of the carboneer CBAM monitoring plan template (source: carboneer)

CBAM preparedness: Insights from practical experience

Working on CBAM data calculation over the past years, we have repeatedly observed that many producers are insufficiently prepared for the regulatory and methodological complexity of CBAM‑specific rules. The increased use of the CBAM communication template or carboneer’s EFDA template has improved the availability of basic emissions and activity data. However, the plausibility and internal consistency of that data often remain weak or even dubious. Common issues include:

  • Fragmented data sets
  • Inconsistent or incompatible units
  • Unexplained changes over time and wrong monitoring periods
  • Missing or incomplete underlying monitoring systems

While forthcoming EU guidance documents and webinars may clarify certain aspects and expectations, they will not replace the need for producers to establish robust inhouse monitoring systems to become “verification ready”.

A fundamental challenge is that many producers still lack formal CBAM monitoring plans and documented data‑collection procedures, which are essential prerequisites for any meaningful third‑party verification. In absence of clear descriptions of system boundaries, allocation rules, and data sources, verifiers cannot reliably assess whether reported values are complete and accurate. Such shortcomings might result in negative verification statement or a prolonged verification process with potential implications for availability of verified data for the CBAM declaration deadline on 30 September 2027.

Beyond structural issues, we frequently notice that producers either do not calculate all required CBAM data points under the new CBAM calculation rules or are lulled into complacency by relying on outsourcing crucial CBAM-related tasks. Critical data points such as specific embedded free allocations (SEFA) are often missing, misinterpreted, or calculated using inconsistent assumptions. Likewise, many operators lack actual CBAM‑compliant data from their precursor suppliers and therefore depend on default factors or rough estimates. These gaps can result in financial risk and reputational exposure, as EU importers rely on this information in their commercial decision-making already now.

Turning CBAM data into competitive advantage: Step-by-step guidance

During support for importers and producers, our projects on CBAM verification preparation typically follow a structured sequence of phases (see Figure 3):

  1. CBAM gap assessment: Identification of methodological weaknesses, data gaps, and potential risk analysis
  2. Development of monitoring plan: Establishing a systematic and installation-specific approach to data collection
  3. CBAM data calculation: Implementation of the monitoring plan, collection of primary data, and calculation of embedded emissions and embedded free allocations
  4. Workshops and trainings for staff: Building long-term CBAM capacity within the organisation to ensure inhouse data collection, calculation and verification readiness

Figure 3: Step-by-step project structure for CBAM verification preparation by carboneer (source: carboneer)

Through early identification of data gaps, streamlined data collection, and implementation of scalable processes, suppliers and importers can thus ensure that their processes are aligned with CBAM methodology and verification standards.

Preparing for CBAM verification during 2026 will be crucial for importers and producers — particularly where commercial viability of products may be at risks if importers are forced to revert to high default values.

 

Verification under CBAM – Key learnings and guidance for effective preparation (Part 1)

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Using actual CBAM data can substantially reduce CBAM‑related costs for importers. However, essential data points—such as direct specific embedded emissions or specific embedded free allocation—must be available in verified form to be eligible for use in a CBAM declaration.

In this series we cover the key processes and requirements for verification under CBAM along with our experiences in preparing CBAM declarants, suppliers and non-EU producers. This first part focuses on the commercial importance of verified data as well as the accreditation and verification processes.

Commercial value: Verified CBAM data vs. Defaults

From 2026 onward, all CBAM-covered imports are subject to payment obligations. Costs however remain uncertain, not only because CBAM certificate prices for remaining quarters in 2026 will only be finally known ex-post, but because many importers lack clarity on availability and plausibility of actual CBAM emissions data from suppliers.

The key risk: If suppliers cannot provide verified CBAM emissions data by 30 September 2027, importers must report using default values, which are typically significantly higher. This may dramatically increase reported emissions and lead to major cost increases — potentially adding hundreds of euros per tonne — making imports economically unviable (see our article here). Figure 1 provides an overview of CBAM costs for imports of tubes and pipes from different countries in line with the default emissions values.

Figure 1: CBAM cost per tonne of tubes and pipes CN 7306 6199, based on carboneer model CBAMCC. Modelling assumptions: Import during Q1 2026, CBAM certificate price 75 €, default values, no CO2 prices paid in supply chain (source: carboneer).

Verified CBAM data therefore offers major commercial value, particularly for imports from countries facing punitive default values. Access to verified data can potentially reduce CBAM costs down to zero, safeguarding the competitiveness of both non‑EU suppliers and importers.

A key challenge arises from the split responsibilities: Emissions occur and data is generated at the supplier level, while the financial obligation to purchase CBAM certificates lies with the importer. This raises important questions about cost allocation — for example, whether cost increases should be borne by the supplier or the declarant, especially where suppliers already provide non‑verified actual data that allow for cost estimates. Possible approaches include:

  • Supplier‑led hedging strategies allowing to offer products including CBAM costs
  • Supplier contracts with defined markups or rebates depending on availability and final verified data

However, the availability of actual CBAM data in verified form is constrained by strict and complex calculation rules and verification requirements as laid out in the CBAM regulation and relevant implementing and delegated acts. During our work with importers and non-EU producers of CBAM goods we are confronted with recurring questions and misunderstandings regarding CBAM data calculations and verification. This series aims to clarify some of those topics and shed light on the relevant processes.

Potential bottleneck: Accreditation for CBAM verification

Verification bodies may only provide verification under CBAM if accredited by a National Accreditation Body (NAB) of an EU member state. As of today, no verification body has been officially accredited. NABs are expected to open CBAM accreditation schemes until May 2026 (the DAkkS as the German NAB already opened the application process) , with a tentative timeline for the first accreditations issued by late 2026. Accredited verification bodies will gain access to the CBAM Registry from September 2026 Accreditation as detailed in Delegated Regulation (EU) 2025/2551 is thus often a multi-month process designed to ensure verifiers’ ability and expertise of the specific rules on CBAM data monitoring and calculation (e.g. embedded emissions and embedded free allocations).

Several internationally operating verification bodies are already accredited under the European Emission Trading System (EU ETS) and will likely be the first official verifiers accredited for the CBAM scope as well. Verification bodies that seek accreditation under CBAM do not have to be EU-based but can also be located in third countries. To date, only 6 out of 21 NABs have confirmed that they will open their accreditation processes to applicants based in third countries (compare overview in Table 1).

Table 1: List of National Accreditation Bodies for CBAM verifiers in the EU

Country National Accreditation Body (incl. link) Accreditation of applicants in third countries
Austria Akkreditierung Austria (AA)
Belgium Belgian Accreditation Council (BELAC)
Croatia Croatian Accreditation Agency (HAA)
Czech Republic Czech Accreditation Institute (CAI)
Denmark Danish Accreditation Fund (DANAK)
Finland Finnish Accreditation Service (FINAS)
France Comité français d’accréditation (COFRAC) Yes
Germany Deutsche Akkreditierungsstelle (DAkkS)
Greece Hellenic Accreditation System (ESYD) Yes
Hungary National Accreditation Authority (NAH)
Italy Ente Italiano di Accreditamento (Accredia) Yes
Latvia Latvian National Accreditation Bureau (LATAK)
Lithuania Lithuanian Accreditation Bureau (LA)
Netherlands Raad voor Accreditatie (RvA) Yes
Norway Norsk akkreditering (NA)
Poland Polskie Centrum Akredytacji (PCA) Yes
Portugal Instituto Português de Acreditação (IPAC)
Romania Romanian Accreditation Association (RENAR)
Slovenia Slovenska Akreditacija (SA)
Spain Entidad Nacional de Acreditación (ENAC)
Sweden Swedish Board for Accreditation and Conformity Assessment (Swedac) Yes

In our work, we frequently encounter “certification” or “verification” statements on CBAM data by third parties which at closer scrutiny do not hold up to the CBAM data calculation rules or conform to the CBAM verification standards. Four main bottlenecks may impede importers from using actual verified data in their CBAM declaration due 30 September 2027:

  • Limited availability of accredited verification bodies and auditors
  • Short verification period (Jan-Sep 2027)
  • Verification requirements throughout the value chain
  • Moderate level of producer preparedness

Timely preparation for verification by non-EU producers of CBAM goods already during 2026 is crucial to mitigate these risks, increase confidence in CBAM data and thus reduce prospective costs for CBAM declarants.

A complex and lengthy process: How CBAM verification works

CBAM data such as embedded emissions or embedded free allocation must be verified for each monitoring period, i.e. every calendar year, before an importer may use it in their annual CBAM declaration (see Figure 2). Verification must be performed by accredited CBAM verifiers in line with the principles in Implementing Regulation (EU) 2025/2546, using a risk‑based approach similar to the EU ETS.

Figure 2: The annual verification process (source: carboneer)

A key feature of the process are mandatory site visits as part of the verification activities: For the first year of the definitive phase in 2026, a physical on‑site visit to each installation producing CBAM goods is mandatory. From 2027 onwards, verifiers may, under defined low‑risk conditions and where no significant changes have occurred, replace a physical visit with a virtual visit or waive it entirely, but a physical site visit must still take place at least once every two years.

In practice, the verification process might take three months for well‑prepared operators but can take considerably longer in case the operator’s preparation is insufficient. The process follows several structured stages (see Figure 3): initial risk analysis and kick‑off, detailed verification planning and document request, audit and site visit with data testing and interviews, followed by processing, clarification of findings and adjustments, internal quality assurance on the verifier side, and finally issuance of the verification statement and standardised verification report in the CBAM Registry.

Figure 3: Indicative timeline and details of a CBAM verification process (source: carboneer)

As accredited verifiers are expected to be officially announced only in late 2026, non-EU producers currently should use the time to prepare for the verification process — or even conduct pre-verification activities — during 2026.

In the second part of this series, we will provide practical guidance on how producers can prepare efficiently for CBAM verification.

CBAM Verification

Reducing CBAM costs through verification

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Importers of CBAM goods are currently struggling with great uncertainty. Do they have to use the  high default values for grey emissions when submitting their CBAM declaration for import in 2026 or are their suppliers able to provide actual verified CBAM data? The cost implication of the two options can differ greatly.

High uncertainties for importers

While CBAM goods could be imported before 1 January 2026 without an obligation to pay, all imports have been subject to a payment obligation since the start of 2026 (see our article regarding the start of the definitive CBAM phase). However, many importers are not yet clear how high the payment for the grey emissions will be. On the one hand, the reason for the unclarity is that CBAM certificate prices for imports during 2026 will only be determined at the end of each quarter.

However, the second and often more critical reason is that if suppliers do not know if their suppliers can provide verified real data for embodied emissions and CBAM benchmarks (specific free allocation) by 30.09.2027 (2026 CBAM declaration deadline for imports). If they cannot, the importer must use default values for reporting. The default values for grey emissions are very high for some countries and products and may double or triple product prices.

The value of verified actual data

Such an increase in costs is not feasible for many companies, which in turn could bring the import of these goods to a standstill or result in high margin reductions for importers. As an example, Figure 1 shows the difference in CBAM costs for importing steel pipes from India, once with verified data and once with the assumption of default values.

Figure 1: Example of CBAM costs using verified data vs. default values (Source: carboneer)

In this case, the cost difference between verified real values and standard values would amount to almost 240,000 EUR. An importer of these products would therefore have to pay CBAM costs of EUR 323 per tonne of imported product using the standard values. With a product price without CBAM of EUR 800-1200 per tonne, the additional CBAM costs are therefore very significant.

For the strategic and economic evaluation of suppliers, goods and products, affected companies should evaluate and compare different suppliers and their products in scenario analyses (see Figure 2 with an excerpt from carboneer’s CBAMCC model).

Figure 2: Scenario analysis for the strategic evaluation of CBAM (Source: CBAMCC carboneer)

Without appropriate assessment and preparation, the CBAM declaration and the obligation to surrender CBAM certificates in 2027 could be a nasty surprise for importers.

Preparation for verification

However, in order to be able to use actual data from suppliers, this data must be available in verified form. Only independent verifiers, accredited by the national accreditation bodies of EU member states, are allowed to determine the authenticity of data under CBAM. Furthermore, suppliers must prepare extensively for verification, as the inspection bodies themselves are not allowed to provide support for the collection or calculation of CBAM data.

It is expected that the first accredited verifiers will not be known until earliest mid-2026. The final verification will also not be completed before the beginning of 2027, as the production data from 2026 will only be available by the start of the new year. Figure 3 shows the data flow from producer to importer.

Figure 3: The annual verification process (Source: carboneer)

In addition to a mandatory inspection of the supplier’s facility by the auditor, producers of CBAM goods must also submit a monitoring plan that describes in detail the methodologies for measuring, calculating and collecting a large number of relevant data points. Without such a plan, no verification of the data can take place.

As of 1 January 2026, the rules for CBAM emission calculation have also changed and other data points, such as the CBAM benchmarks, are necessary to successfully pass a verification. In our experience, only a few producers and suppliers can fully comply with the current CBAM rules. The high number of production sites worldwide as well as potential capacity limitations at the verifiers makes verification without sufficient preparation in many cases unlikely. Without verified actual data, CBAM costs for importers could increase dramatically.

In our experience, structured support can prepare suppliers for verification within a few weeks. Especially if the potential cost savings for the importer would mean tens to hundreds of thousands of euros, direct supplier support is currently one of the most promising ways to limit CBAM costs and gain competitive advantage.

We will dive into further ways to reduce or secure CBAM costs, especially with regard to the management of CBAM certificates, in upcoming articles and webinars.

CBAM enters the definitive period: key regulatory updates and scope extension

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Following two years of a transitional reporting-only phase that began in October 2023, the EU Carbon Border Adjustment Mechanisms (CBAM) will move into its definitive period on 1 January 2026, when financial obligations will start to apply. In December 2025, the European Commission released a comprehensive package of implementing and delegated acts to operationalise this shift, alongside a legislative proposal to significantly expand CBAM’s scope and strengthen its anti-circumvention framework. Together, these developments confirm CBAM’s as a central pillar of the EU’s climate and industrial policy.

Stay informed and join us during the carboneer webinar “Digesting the latest CBAM updates – Implications for stakeholders” on 8 January 2026.

Current status and the start of the definitive period in 2026

During the transitional phase, importers of covered goods had to report embedded emissions on a quarterly basis without purchasing CBAM certificates. This phase ends on 31 December 2025. From 1 January 2026, CBAM enters its definitive period, triggering the obligation for authorised CBAM declarants (imports above the mass threshold of currently 50 tonnes of CBAM goods per year) to surrender CBAM certificates corresponding to the embedded emissions of imported goods, adjusted for free allocation under the EU Emissions Trading System (EU ETS). The first surrender deadline will be the 30 September 2027 for imports during the year 2026.

The financial application of CBAM will be phased in gradually, mirroring the progressive phase-out of free allocation under the EU ETS through 2034. This alignment is intended to ensure a level playing field between EU producers and third-country suppliers, while maintaining the environmental integrity of the EU’s climate framework.

Publication of final legislation for the definitive CBAM period

On 17 December 2025 – just two weeks before the start of the definitive period – the European Commission published a package of adopted draft implementing and delegated acts designed to make CBAM fully operational. These documents provide long-awaited legal and technical clarity for importers, producers, verifiers, and national authorities for the start of the definitive CBAM period. While first provided on a provisional basis, most of the documents are already officially adopted through publication in the Official Journal of the European Union (compare Table 1).

Table 1: Published legal acts for the CBAM definitive phase and proposals for further amendments of the CBAM

Legislation Content Status
IR Calculation rules for embedded emissions in force
IR Calculation of the free allocation adjustment to the number of CBAM certificates to be surrendered in force
IR Information communicated by customs authorities in force
IR  Establishment of default values in force
IR Calculation and publication of the price of CBAM certificates in force
IR Principles for verification of declared embedded emissions in force
DA Specifying the conditions for granting accreditation to verifiers in force
Regulation Extension of its scope to downstream goods and anti-circumvention measures Proposal
Regulation Establishing the Temporary Decarbonisation Fund Proposal
IR Amending and correcting: authorised CBAM declarant Amendment
IR Amending and correcting: CBAM registry Amendment
IR: Implementing Regulation, DA: Delegated Act

In parallel, the Commission proposed an amendment to the CBAM regulation to extend CBAM to downstream products and to introduce additional anti-circumvention measures. Unlike the implementing framework, this proposal for scope extension must still go through the ordinary legislative procedure involving the European Council and the European Parliament.

Delegated and implementing acts: overview and main topics

The CBAM implementing framework consists of eight implementing acts and one delegated act, addressing most of the core operational elements of the mechanism.

The implementing act on emissions calculation methodology establishes harmonised rules for monitoring and calculating embedded emissions at installation level in non-EU countries. It aligns CBAM system boundaries with those of the EU ETS and allows a combination of actual and default values for different precursors.

The implementing act on free allocation adjustment defines how CBAM obligations are reduced to reflect the free allocation of allowances in the EU ETS. It introduces CBAM benchmarks per CN code under the scope of CBAM, with a differentiation between using actual verified and default emissions values (compare our analysis here). CBAM benchmarks per CBAM product can also differ based on the production route such as for natural gas-based direct-reduced iron (DRI), as well as electric arc furnace (EAF) produced steel. This aims to avoid zero-obligation outcomes that would undermine CBAM’s environmental objectives.

The implementing act on default values sets country- and CN-code-specific default emission values for the definitive period (compare our analysis here). For non-electricity goods, these include mark-ups to reflect potential underestimation of emissions. These mark-ups are phased in with highest values of +30% for most CBAM products from 2028 onwards. The default values will be reviewed regularly, with a first reassessment expected by December 2027.

The implementing act on CBAM certificate pricing specifies how CBAM certificate prices will be determined. From 2027 onwards, prices will mirror the weekly average EU ETS allowance price, while for 2026 imports, quarterly averages will apply. Prices will be published directly in the CBAM Registry.

Two acts address verification and accreditation (compare our analysis here). Verifiers must perform on-site inspections in the first year of reporting, i.e. 2026. There is limited flexibility for virtual visits thereafter, following a risk-based approach. Accreditation for verifiers is open to entities established both inside and outside the EU, provided they are accredited by EU accreditation bodies.

Additional implementing acts cover the authorised CBAM declarant status, the definitive CBAM Registry, and information exchange with customs authorities, collectively streamlining procedures, enhancing transparency, and strengthening enforcement.

The legal acts regarding the conditions for sales and repurchase of CBAM certificates and the rules regarding CO2-prices paid in the supply chain are still under development and expected in Q1 2026.

Low CBAM benchmarks and high default values: cost implications

A key practical implication of the new framework is the cost impact of relying on default values. CBAM benchmarks for free allocation adjustments are generally low, while default emission values – increased by the mark-ups – are relatively high. As a result, importers unable to provide verified actual emissions data may face significantly higher CBAM costs (compare example in Figure 1).

Figure 1: Estimated CBAM certificate costs for imports of 1200 tonnes of tubes and pipes from India using default values (blue) and actual values (green). (source: carboneer CBAMCC model)

This design incentivises third-country producers to establish robust monitoring, reporting, and verification systems and discourages the use of default values. Over time, companies that fail to transition to verified actual data risk sustained competitive disadvantages in the EU market.

CBAM scope extension: timing, products and CN codes

Beyond operational rules, the Commission has proposed a major expansion of CBAM’s scope to downstream goods, reflecting concerns that carbon leakage could shift further along the value chain. From 1 January 2028, CBAM would cover around 180 additional products – adding roughly 7500 new importers and transforming CBAM into a full-value-chain carbon instrument.

The proposed expansion targets steel- and aluminium-intensive goods, including iron and steel articles, fabricated metals, machinery and industrial equipment, vehicles and components, medical instruments, and metal furniture and buildings (compare Table 2). These products typically contain a high share of steel or aluminium and are at a high risk of carbon leakage. In value terms, they already account for over half of CBAM-relevant imports.

Table 2: Potential CBAM product scope extension according to EU Commission’s proposal

Indicative CN Codes Product Category Examples of Products
8407–8409 Engines and Parts Diesel engines, engine components
8413–8419 Pumps, Burners, Refrigeration, Heat Exchange Pumps, burners, furnaces, refrigeration and freezing equipment, heat exchangers, cooling towers
8420–8431 Lifting, Conveying, Construction Machinery Cranes, hoists, winches, conveyors, elevators, lifting systems, construction machinery components
8479 Industrial Machinery & Automation Industrial robots, automated handling equipment, specialised industrial machines
8501–8504 Electrical Machinery Electric motors, generators, transformers containing steel or aluminium
8544 Electrical Conductors Electrical cables and conductors containing steel or aluminium
8701–8708 Vehicles and Vehicle Parts Trucks (all drivetrains), vehicle chassis, bodies, gearboxes, wheels, axles, selected vehicle parts
Chapter 90 Medical Instruments Tube needles and gas analysis instruments
Chapter 94 Metal Furniture & Structures Seats with metal frames, office furniture, shelving, prefabricated buildings containing steel or aluminium

The proposal also strengthens anti-circumvention rules by including pre-consumer steel and aluminium scrap as CBAM precursors, tightening controls on misdeclaration, and allowing the Commission to restrict the use of actual emissions values in high-risk scenarios.

Together, these updates confirm CBAM’s role as a cornerstone of the EU’s climate policy. The coming months, as well as the first reporting deadline on 30 September 2027 for imports during 2026, will show if and how the implementation of CBAM turns embedded emissions and emission intensity of materials and products into procurement-relevant factors. With obligations starting in 2026 and a significant scope extension on the horizon, CBAM is rapidly becoming a central compliance and cost factor for global industrial supply chains.

Download CBAM Default Values Benchmarks

Download CBAM Default Values & Benchmarks in Spreadsheet Format

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Complying with CBAM is challenging enough for everyone involved. Yet the recently published CBAM Default Values and Benchmarks are not available in a well‑formatted, machine‑readable structure. For project teams working among importers and producers of CBAM goods, this makes analysis slower, more time‑consuming, and unnecessarily frustrating.

The data is provided below in a more accessible spreadsheet format. Hopefully, this helps some teams navigate their CBAM work with greater ease and efficiency.  carboneer accepts no liability for the accuracy, completeness or topicality of the data, nor for any consequences of its use.

Download: CBAM Default Values and Benchmarks

If you’re also looking for an opportunity to have carboneer provide clarity on the latest CBAM updates, don’t forget to register for our upcoming webinar  on January 8th. Register here:

Webinar: Digesting the latest CBAM updates – Implications for stakeholders.

Hope to see you there!

CBAM Benchmarks and Default Values Leaked – How Actual CBAM Data Matters

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Alongside the leaked draft implementing regulation on CBAM verification (see our article on CBAM verification), new information vital for the definitive CBAM phase from 2026 has surfaced in recent days. Most notably, details have emerged regarding the calculation of free allocation adjustments that in part determine CBAM certificate purchase requirements, featuring preliminary CBAM benchmarks and a new set of country-specific default values. These default values will be essential for CBAM reporting when importers lack access to verified data from their suppliers.

This article explores the implications of these CBAM updates for importers’ cost exposure. The analysis is based on leaked documentation and should be considered preliminary.

Updates on CBAM Benchmarks

CBAM benchmarks are central to determining the costs associated with importing CBAM goods. They are grounded in benchmarks applied in the European Emission Trading System (EU ETS), reflecting the emission intensity of the most efficient EU facilities. EU ETS benchmarks are designed to ensure that producers covered by the EU ETS do not pay CO₂ costs for emissions up to benchmark levels. For CBAM, establishing a level playing field requires that this exemption be factored into the calculation of the CBAM surcharge applicable to imported goods.

This is managed through the CBAM benchmark deduction: benchmarks are subtracted from embedded emissions to calculate the importer’s CBAM certificate obligations. More on the calculation methodology can be found in our article on Effective CBAM Cost Management. While the European Commission has yet to release the final CBAM benchmarks, the leaked values offer an early insight into what to expect from 2026:

  • Applicable CBAM benchmarks will depend on the production processes underlying each CBAM good. When suppliers report emissions, they will assemble a benchmark profile representing the entire process chain. For example, in the iron and steel sector, separate benchmarks exist for steps like melting, continuous casting, and rolling.
  • For some goods, CBAM benchmarks will change from 2028 due to adjustments in the methodology of the underlying EU ETS benchmarks.
  • Absent actual data, a country-specific ‘default’ benchmark will be applied, reflecting the primary production route in the country of production. For iron and steel, this means differentiated benchmarks for BF-BOF, DRI/EAF, and Scrap/EAF production. Similar distinctions, such as between primary and secondary aluminium, are intended to address issues like the aluminium scrap loophole. However, which production route and benchmark must be used for a specific country has not yet been disclosed.

All leaked CBAM benchmarks remain provisional and will be updated following the revision of the EU ETS benchmarks for 2026–2030. Early analysis suggests a significant decrease in CBAM benchmarks for some production routes compared to initial expectations. We take this expected decrease in EU ETS and consequently CBAM benchmarks into account for the example presented below.

Updates on Default Values

When importers cannot obtain verified (!) CBAM data from suppliers, default values must be used in CBAM declarations. These values are based on the average emission intensity for a product from a particular country and are further increased by a mark-up before use. To date, there is no official confirmation of the precise mark-up, which is expected to be set in a forthcoming regulation in Q4 2025. Based on communications with various sources, carboneer expects an average mark-up of 30 percent. If no country-specific default exists, importers apply the average value among the ten countries with the highest defaults for the product code in question.

In 2023, the JRC published average emission intensities for key trading partners, aiming to cover countries that cumulatively represent over 90% of EU imports per sector. The leak reveals a substantial expansion of country coverage, with values now available for 132 countries. However, not every country, sector, or CN code is included for each country.

 

CBAM Default Values - Country Coverage Comparison

Figure 1: Countries highlighted in green have available leaked default values for at least one CBAM sector. Source: JRC Report.

The new set of country-specific values show that the differences in CBAM cost for products from different countries can be large and the additional mark-up could potentially amplify these differences.

Impact on CBAM Costs: An Example

To illustrate the impact of the updates on CBAM Benchmarks and default values, consider the following scenario:

  • A company imports 10,000 tons per year of tubes and pipes from both China and India (CN category 7305) in 2026.
  • Lacking actual supplier data, the importer resorts to default values: 1.84 t CO₂/t for China and 4.32 t CO₂/t for India (before any mark-up). Applying a 30% uniform mark-up increases these figures.
  • The CBAM benchmark is 1.543 t CO₂/t, assuming the BF-BOF production route and a 6% reduction following the adjustment of EU ETS benchmarks in 2026.
  • CBAM certificate prices are forecast between €90 and €110 for 2026.

Model results indicate 2026 imports from China would generate CBAM certificate costs of approximately €800,000 to €975,000 (i.e., €80–97.5 per ton), and from India, €3,700,000 to €4,520,000 (or €370–452 per ton).​

The Value of Actual CBAM Data

With the leaked default values and benchmarks, the value of actual CBAM data from suppliers becomes more apparent. In this calculation, we assume that production processes in both countries correspond to those used to establish the default CBAM benchmark, meaning the same CBAM benchmark applies. If Chinese and Indian suppliers can provide verified emission data matching the country average (i.e., before the mark-up), CBAM costs on Chinese imports in 2026 drop to €300,000–€370,000, and on Indian imports to €2,530,000–€3,100,000.

Figure 2 presents a comparison of CBAM costs for imports in both 2026 and 2034, based on constant import volumes and projected certificate prices between €99 and €224 for 2034. Blue bars represent costs calculated using default values, while green bars illustrate outcomes with actual supplier data. The green scenarios highlight the relative savings achieved by avoiding the 30 percent mark-up.

CBAM Exposure - Actual Data and Default Values

Figure 2: Estimated CBAM certificate costs for imports of tubes and pipes (CN Code 7305) from China and India using default values (blue) and actual values at the country-specific emission intensity (green). Source: carboneer CBAMCC Model.

In absolute terms, switching from default values to actual data yields greater cost reductions for Indian imports. This is primarily because the uniform 30 percent mark-up leads to a higher penalty for countries with greater underlying emission intensities. However, in relative terms, the CBAM benchmark’s non-linear effect is key: actual supplier data reduces CBAM costs by 62% for Chinese imports and 32% for Indian imports. This potentially counter-intuitive result stems from the fact that the verified emission value for Chinese suppliers (1.84 tCO₂/t) is already close to the CBAM benchmark (1.543 tCO₂/t), meaning liabilities nearly disappear. In contrast, for Indian suppliers, the national average (4.32 tCO₂/t) remains well above the benchmark, so savings are significant but less dramatic as a share of total cost.

Summary and Next Steps

The leak of CBAM benchmarks provided some added transparency to the calculation rules for CBAM emissions and costs. While complexities increase, importers, traders and producers are now better positioned to estimate their CBAM exposure and prepare for the definitive phase starting from 2026.

The utilisation of default values might be highly punishing for imports of certain goods from some countries. A structured and clear overview of the cost implications under different scenarios is therefore required for importers to make strategic decisions on purchasing and supplier interaction. Cost-conscious importers should investigate the potential of reducing their CBAM exposure by supporting their suppliers to deliver verified CBAM data.

carboneer offers CBAM cost modelling and management services to help importers and exporters of CBAM goods navigate compliance and maximise cost efficiency. With hands-on experience supporting over 150 producers, carboneer assists companies in sourcing robust CBAM data and developing verification-ready monitoring systems throughout their supply chain. Thanks to this proactive approach, some importing clients now benefit from seamless access to actual emission data across their entire supply chain. For tailored strategies to reduce CBAM exposure and enhance your company’s long-term competitiveness, reach out to discover how carboneer can support your business.

Verification of CBAM Emissions

Leaked Document: Draft for Verification Principles under CBAM

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Verification represents a cornerstone of the EU Carbon Border Adjustment Mechanism (CBAM) and is vital to ensuring full regulatory compliance. Accredited third-party verifiers validate emissions data provided by producers, enabling EU importers to base their annual CBAM declarations and related CBAM cost calculations on actual data instead of costly default values.

This article summarises the verification principles and methods outlined in a leaked draft by the EU Commission of an upcoming implementing regulation. While closely aligned with practices under the EU Emissions Trading System (EU ETS) and current CBAM rules, the draft remains provisional and subject to refinement during the ongoing legislative process.

Two Key CBAM Regulations Still Pending

Two key implementing regulations for CBAM verification remain pending, and their adoption is central for operationalising CBAM. The first act will formalize who can serve as an accredited verifier, setting requirements for their approval and registration. The second, a draft of which has now been leaked, will establish the detailed verification principles, procedures, and workflow. These acts were originally expected by late 2024 but have been delayed. Clarity on these rules is crucial for importers, producers, and compliance teams, as they underpin eligibility, risk management, and the operational structure of CBAM verification.

General Verification Procedure

CBAM verification procedures largely mirror those under the EU ETS, fostering a level playing field between EU and non-EU producers in carbon pricing:

  • Non-EU producers monitor and report emissions following standardized CBAM methodologies
  • Verifiers conduct risk assessments, on-site or virtual plant visits, and detailed data reviews
  • Material misstatements or non-conformities result in failed verification, excluding the data from importers’ CBAM declarations
  • Non-material issues must be corrected before the final verification report is issued

Verification is required each reporting period, typically on an annual basis. Positive reports or those with minor rectified issues can be relied upon by importers for their annual submission of CBAM declarations.

On-Site and Virtual Site Visits

For the first reporting period of the definitive CBAM application in 2026, each installation producing CBAM goods requires a physical site visit from an accredited verifier. From the second reporting period onward, physical site visits must occur at least every other reporting period. Between these, site visits may be conducted virtually or even waived if strict criteria are met: negligible risk, no major changes at the site or monitoring procedure, and comprehensive remote documentation are required for this flexibility.

​Physical visits can never be skipped for two consecutive reporting periods. However, serious, extraordinary, and unforeseeable events (such as disasters or border closures) allow for a virtual site visit as a substitute in these cases, provided the verifier’s risk analysis supports this approach and remote records are adequate.

​Materiality Levels

Materiality thresholds define the boundaries for tolerable errors in emissions data. The standard is a 5% threshold per CN code, either for total specific embedded emissions or for specific free allocation. Minor inaccuracies below these levels are not considered reason for verification failure, though verifiers can use expert judgement to identify non-material issues that compound together to a material issue.

Default Values and Reporting Chains

According to the draft regulation, verification is possible even if default values are used for part of the CBAM supply chain, notably for precursors when actual data cannot be supplied. The verifier’s report must document all relevant details, including CN codes, country of origin, and default emissions, preserving the chain of verification. Thus, the use of default values does not break eligibility for using the verified emissions data in CBAM declarations, provided information requirements are met.

​What Must Be Included in a CBAM Verification Report?

The CBAM verification report is standardized and comprehensive, containing all data points needed for declaring actual emission figures in importers’ annual CBAM declarations. The verification reports cover:

  • Operator and verifier identification
  • Site visit logs and monitoring summaries
  • Direct and indirect emissions calculations
  • Detailed product, process, and CN code data
  • Origin and CBAM benchmark determinations

Additionally, the report must disclose material misstatements and non-conformities, corrective actions taken, unresolved issues, and recommendations to improve future data quality. This facilitates regulatory assurance as well as continuous improvement.

All verification reports must be submitted using a forthcoming, standardized electronic template that will be provided by the European Commission and accessed through the CBAM Registry. This digital format will allow automated solutions such as carboneer’s cbam.hub to seamlessly query verified CBAM data directly from the supply chains of importers, streamlining compliance and the submission of CBAM declarations by the importers.

​Outlook

While the above rules are drawn from a leaked draft and will likely be revised, they indicate the current direction and meet the expectations of CBAM and EU ETS experts. The pressure is now on the Commission to adopt overdue implementing regulations regarding emissions monitoring, reporting and verification to further operationalize CBAM:

  • one for the calculation of embedded emissions during the definitive period (from 2026),
  • one for verifier accreditation,
  • one for verification principles and procedures.

Final adoption will enable verifiers and producers to prepare effectively and avert bottlenecks that would force importers to rely on default data, increasing their CBAM costs unnecessarily.

CBAM-Vereinfachungen rechtskräftig

CBAM simplifications in force: What companies need to know now

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Since 20 October 2025, the new EU regulation (2025/2083) on the simplification of the CBAM system has been in force. In this article, we explain the most important changes for importers and producers of CBAM goods.

Key Amendments at a Glance

  • De Minimis Exemption: Companies importing less than 50 tonnes of CBAM goods annually into the EU during 2026 are fully exempt from CBAM reporting obligations. This exemption does not apply to imports of hydrogen and electricity. In 2025, the de minimis rule of 150 euros per delivery continues to apply.
  • Mandatory Authorization from 2026: Starting in 2026, companies intending to import more than 50 tonnes of CBAM goods annually into the EU must obtain the status of “Authorized CBAM Declarant.” Applications must be submitted no later than 31 March 2026 to avoid penalties and import restrictions.
  • Commencement of Certificate Trading: Trading of CBAM certificates via the Common Central Platform (CCP) will begin on 1 February 2027. However, certificates must already be acquired for imports made in 2026 and submitted in 2027.

Below, we present the key changes in detail. You may find all changes in the CBAM Omnibus regulation when compared to the original CBAM regulation, which has been amended by the simplifications.

New Threshold: Single-Mass-Based Threshold

To determine CBAM obligations, the newly introduced Single Mass-Based Threshold (MBS) now applies. Companies whose annual CBAM goods imports fall below this threshold are fully exempt from CBAM requirements. The MBS is calibrated to capture at least 99% of imported grey emissions in CBAM goods (based on standard values). The European Commission will review and, if necessary, adjust the threshold annually. Any changes apply from the following year, provided the adjustment amounts to at least 15 tonnes. For 2026, the MBS is set at 50 tonnes of CBAM goods. If the threshold is exceeded during a calendar year, CBAM obligations apply retroactively to all imports of that year, including those below the threshold. In 2025, the de minimis rule of 150 euros per delivery continues to apply. We recommend that EU importers contact the national authorities in their respective countries to obtain detailed information on the reporting requirements for the remaining time of the transitional period.

Application Process: Authorized CBAM Declarant

Importers may import CBAM goods in 2026 without having obtained Authorized CBAM Declarant status, provided the application is duly submitted by 31 March 2026. If the application is rejected and CBAM goods exceeding the MBS were imported, penalties will apply to all imports made in 2026 (see section on Sanctions).

Updates to Certificate Management

CBAM certificates may only be acquired from 1 February 2027 via the Common Central Platform (CCP). No acquisition will be possible prior to this date. Nonetheless, certificates must be obtained for 2026 imports and submitted in 2027. Thus, procurement of certificates for 2026 imports will occur retroactively in 2027. Certificate prices for 2026 imports will be based on the average quarterly prices in the EU Emissions Trading System 1 (EU ETS 1) during that year. From 2027 onward, importers must demonstrate, on a quarterly basis, a security reserve of CBAM certificates equivalent to 50% of the grey emissions imported during the current calendar year.

Revised Deadlines

The regulation introduces the following changes to deadlines:

  • Submission of CBAM Declarations and Certificates: No later than 30 September of the following year.
  • Buyback Requests for CBAM Certificates: Must be submitted by 31 October, provided any certificates were submitted during the current year. A maximum of certificates equivalent to the 50% security reserve may be returned. If the MBS was not exceeded, full return is permitted.
  • Certificate Expiry: Certificates from the penultimate calendar year will expire on 1 November, thereby significantly extending their validity period.

Emissions Calculation and Paid CO₂ Prices

Beginning in 2026, importers will have the flexibility to either report actual and verified CBAM data from their supply chains or rely on default values. Unverified actual data is must not be used in CBAM declarations. The European Commission is expected to publish the applicable default values for the definitive period, covering multiple countries. These values will include a penalizing mark-up designed to incentivize the use of verified actual data. In cases where no default value is available for a specific CN code and country, importers must apply the average default value of the ten worst-performing exporting countries.

Precursors originating from the EU are considered emission-free and are no longer included in CBAM emissions calculations. Effectively paid CO₂ prices along the supply chain (less any refunds or discounts) may still be credited. The EU will introduce country-specific standard values for effectively paid CO₂ prices, which may be used in the absence of verifiable actual data.

Sanctions

Sanctions continue to be aligned with the EU ETS 1 regulations (currently approx. €135 per tonne of CO₂ not reported or incorrectly reported). National authorities may reduce penalties if the error is demonstrably attributable to external auditors or foreign authorities. Payment of a penalty does not exempt the importer from submitting the required CBAM certificates.

Companies importing CBAM goods without Authorized CBAM Declarant status face significantly higher penalties: three to five times the standard rate. In such cases, the obligation to submit CBAM certificates retroactively is waived. A reduction in penalties is possible if the MBS was exceeded by less than 10%.

Conclusions

The so-called CBAM simplifications do not genuinely make the rules easier for affected importers. However, a large part of those previously affected will no longer fall under CBAM, which especially relieves smaller importers and SMEs. For producers, emission calculations become less demanding when using CBAM goods from the EU as input. Companies that remain subject to CBAM continue to face uncertainties due to the pending CBAM benchmarks, verification rules for actual data, and the yet-to-be-defined default values valid from 2026. The EU Commission is now required to clarify these issues swiftly to provide planning security and a smoother transition to the regular phase. In our blog post on CBAM cost management, you can read about options for limiting cost risks in advance.

Emission trading in Germany: Revenue, key developments and prospects

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Germany’s emissions trading systems are undergoing fundamental changes. The EU emission trading system (EU ETS 1) faced declining revenues, while the national system (nEHS) sets new revenue records. What drives these developments, and how will upcoming regulatory shifts – from CBAM to the EU ETS 2 – shape Germany’s carbon pricing landscape?

EU ETS 1: Declining revenue with potential upside

The EU ETS 1, which regulates emissions from energy-intensive industrial plants, intra-European aviation, and maritime transport, saw a significant decline in German auction revenue in 2024. The total revenue from auctioning the EU ETS 1 emission allowances (EUA) amounted to approximately EUR 5.5 billion marking a 28% decrease from the EUR 7.7 billion recorded in 2023 (Figure 1). This decline was driven by two main factors: a reduction in the number of EUAs auctioned and a fall in the average EUA price in 2024 compared to 2023 (UBA, 2025).

Figure 1: Auction revenues from the EU ETS 1 in Germany 2023-2025 (source: DEHSt, 2025a)

To reinforce climate goals, the EU continues to reduce the quantity of available EUAs. In 2024, the auctioned amount for Germany dropped to 85 million, down from 92 million in 2023. Additionally, the average price per EUA decreased from 83.66 EUR/tCO2 in 2023 to 65.00 EUR/tCO2 in 2024, reflecting lower demand from the energy and industrial sectors due to higher shares of renewables in the electricity grid and weaker economic conditions. Despite this, the 2024 average price remained 24% higher than the 2021 level, showcasing the long-term strengthening of emissions pricing.

Since the end of 2024, the allowance price in the EU ETS 1 has rallied amid the expectations of lower supply of allowances and thus higher prices during 2025. While the price stood at 65 EUR/tCO2 mid December 2024, it has risen by almost 25% and sometimes traded at above 80 EUR/tCO2 in February 2025. The EUA price expectations for the year 2025 ranges between 80-90 EUR/tCO2 indicating both a tightening of supply and thus likely higher auction revenues again this year.

Record revenues in Germany’s national emission trading system

Unlike the EU ETS 1, the German national emissions trading system (nEHS), which covers emissions from heating and transport, witnessed an increase in revenue. In 2024, revenue from the nEHS reached EUR 13 billion, up 21% from the EUR 10.7 billion recorded in 2023 as Figure 2 shows. This increase was primarily due to a rise in the fixed price of nEHS certificates from €30 per tonne in 2023 to €45 per tonne in 2024 (UBA, 2025).

Figure 2: Sales revenues from the nEHS in Germany 2023-2025 (source: DEHSt, 2025b)

A total of 278 million nEHS certificates were sold on the European Energy Exchange (EEX) in Leipzig in 2024 at the new fixed price, generating approximately EUR 12.5 billion. An additional 17 million certificates for 2023 were sold at the previous year’s price of 30 EUR/tCO2, adding another €500 million to the total revenue. Despite a lower number of certificates sold compared to 2023 (which saw 358 million certificates sold), the revenue increase was sustained by the price hike.

Total revenues from emission pricing at record high

Germany’s combined revenue from the EU ETS 1 and nEHS reached EUR 18.5 billion in 2024, surpassing the EUR 18.4 billion in 2023 and significantly exceeding the EUR 13 billion in 2022. These funds are allocated to the Climate and Transformation Fund (KTF), which finances initiatives supporting Germany’s energy transition and decarbonisation goals.

Dirk Messner, President of the German Environment Agency (UBA), emphasized that emissions trading must continue to be a driving force for climate protection, economic competitiveness, and social sustainability. He advocates for a climate bonus to support households affected by rising carbon prices, alongside targeted subsidies to assist vulnerable groups in transitioning to climate-friendly alternatives (UBA, 2025).

Regulatory developments: Aligning national legislation

The German Bundestag passed the TEHG-Europarechtsanpassungsgesetz 2024 in the end of January 2025, aligning national regulations with the reformed emission trading rules of the EU. Key aspects of this reform include (BMWK, 2025):

  • Inclusion of maritime transport: From 2024, 40% of emissions from shipping are covered under EU ETS 1, increasing to 70% in 2025 and 100% in 2026.
  • Stricter emission caps in aviation: Starting 2024, airlines face lower emission limits, and for the first time, they must report non-CO2 climate effects such as contrail formation.
  • Transition to the EU ETS 2 in 2027: The new European emissions trading system for transport and heating will replace the German nEHS and other national carbon pricing schemes of EU Member States.
  • Implementation of the Carbon Border Adjustment Mechanism (CBAM): CBAM introduces carbon pricing for imports of energy-intensive products such as steel, cement, and aluminum, ensuring fair competition within the EU market. A transition phase is underway, with full financial obligations beginning in 2026.

At the start of 2025, the fixed CO2 price in the nEHS rose from 45 to 55 EUR/tCO2 (compare Table 1), a step that has been planned since the introduction of the system in 2021. This gradual increase allows citizens and businesses time to transition to greener alternatives and will also likely lead to higher sales revenues during 2025 again. With the nEHS being absorbed into the EU ETS 2 from 2027, price for emissions in those sectors will be based on free auction prices.

Year Price EUR/tCO2 Mechanism
2021 25     Fixed price  
2022 30
2023 30
2024 45
2025 55
2026 55-65 Auction with price corridor
From 2027 45-100 (estimates) Auction with free market price (EU ETS 2)
Table 1: Development of emission pricing in the sectors covered by the nEHS

The 2025 price hike in the nEHS is expected to have only moderate impact on fuel costs. The price per liter of gasoline and diesel may rise by around 3 cents. However, fuel prices fluctuate due to external factors such as global oil prices, which often cause greater price variability than carbon pricing alone. For an individual driving 15,000 km annually, the expected cost increase will be around EUR 50 per year (Bundesregierung, 2025).

Conclusion and future trajectory

As the EU emission trading framework expands, carbon pricing evolves as central mechanisms for climate policy. While the EU ETS 1 faced revenue declines due to economic fluctuations and market adjustments, the nEHS saw record revenues driven by increased carbon pricing. Germany’s total revenue from emissions trading reached an all-time high, reinforcing the importance of dedicating these funds to climate mitigation and social equity initiatives.

The price increase in the nEHS, the expected higher prices in the EU ETS 1, the introduction of CBAM and the launch of the EU ETS 2 in 2027 mark significant milestones in the transition towards a carbon-neutral economy. As Europe moves towards its 2050 net-zero target, emissions trading will remain a cornerstone of environmental and economic policy.

Sources

BMWK, 2025, Bundestag beschließt umfassende Reform des Emissionshandels, URL: https://www.bmwk.de/Redaktion/DE/Pressemitteilungen/2025/20250131-bundestag-emissionshandel.html

Bundesregierung, 2025, CO2-Preis beträgt jetzt 55 Euro, URL: https://www.bundesregierung.de/breg-de/aktuelles/co2-preis-kohle-abfallbrennstoffe-2061622

DEHSt, 2025a, Auctioning report: Fourth Quarter 2024, URL: https://www.dehst.de/SharedDocs/downloads/EN/auctioning/2024/2024_report_Q4.pdf?__blob=publicationFile&v=3

DEHSt, 2025b, Sales report: Fourth Quarter and entire year 2024, URL: https://www.dehst.de/SharedDocs/downloads/EN/nehs/sales-reports-nehs/2024/2024-Q4_sales-report.pdf?__blob=publicationFile&v=3

UBA, 2025, Revenue from emission trading one again at record level, URL: https://www.umweltbundesamt.de/en/press/pressinformation/revenue-from-emissions-trading-once-again-at-record

 

EU ETS Maritime

Effective CBAM Cost Management (Part 2): Cost-Mark Ups, Procurement Strategies and Hedging

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In our first article in this series, we derived the demand for CBAM certificates to be submitted annually and the associated explicit CBAM costs based on a specific case study. To effectively manage the strategic and financial impact of CBAM, this article presents CBAM cost mark-ups at product level as well as strategies for procuring CBAM certificates and hedging options.

CBAM cost mark-ups and contractual adjustments

Our fictitious importer of 100,000 tonnes of steel ingots has an initial indication of the liquidity required for imports in 2026 by estimating the need for CBAM certificates and the associated costs. To manage these additional costs of around EUR 10 million at the company level and integrate them into supplier or customer contracts, it is necessary to determine the additional CBAM costs per supplier or per product group and import process. This allows for the consideration of the CBAM costs per product or the influence on gross margins per product during pricing.

The additional CBAM costs should be included in the risk analysis. It is particularly relevant whether real emission values are available or whether an authorised CBAM applicant must use default values in the CBAM declarations. The latter are subject to a penalising mark-up, which means higher CBAM costs.

Our analyses show that the cost differences between the two options are often immense. For example, some of our customers do not incur any CBAM costs in the first years of the CBAM definitive phase when using real emission values. If the importer were to import the same CBAM goods and (must) use default values for reporting, price increases of over 40% could occur as early as of imports in 2026 (see examples in Figure 1).

Additional CBAM costs per product level depending on verified vs default emission values (source: carboneer CBAMCC model)

Figure 1: Additional CBAM costs at commodity level depending on real or default values for emissions (source: CBAMCC model by carboneer)

In many cases, CBAM requires a change to supply or sales contracts. A risk and cost analysis as described above should be taken into account, for example by:

  • Requiring guaranteed and verified emission values from suppliers,
  • Setting price discounts in the event of missing data,
  • Adjusting the purchase or sales prices of goods depending on the CBAM emissions.

In addition, CBAM certificates for imports in 2026 will not be issued until February 2027. This means that costs that will only be incurred in 2027 will already have to be taken into account for contracts and budget planning in 2026. Without the explicit inclusion of additional CBAM costs today, affected companies would have to bear the costs incurred in 2027 due to the purchase of CBAM certificates alone.

Cost management through CBAM certificate procurement strategies

The limited validity and the 50% holding obligation during the year (final decision still pending) of CBAM certificates requires ongoing CBAM certificate management. Obligated companies should therefore develop a procurement strategy for CBAM certificates that covers the following, tailored to the respective risk and company profile:

  • Liquidity constraints and risk profile
  • Potential for cost pass-through in the supply chain
  • Planning and purchasing processes and timeframes
  • Price volatility in the EU ETS

An optimal procurement strategy for CBAM certificates should take the above-mentioned boundary conditions into account individually and must also be statistically superior. To illustrate the differences between procurement strategies, Figure 2 compares the procurement of CBAM allowances at the end of each quarter with a strategy that uses technical analyses of prices in the EU Emissions Trading System (EU ETS). The fictitious CBAM certificate prices are based on the auction prices in the EU ETS in 2022-2024.

Comparison of CBAM certificate procurement strategies showing cost differences between regulation-driven and SMART import-based approaches (source: carboneer CBAMCC model)

Figure 2: Comparison of two procurement strategies for CBAM certificates (regulation-driven strategy in green, SMART import-based strategy in blue) based on fictitious CBAM certificate prices in the years 2022-2024 (source: carboneer CBAMCC model)

Depending on the timing and quantity of CBAM certificate purchases, large price differences can occur, as prices in the EU ETS are subject to fluctuations and therefore have a direct influence on the prices for CBAM certificates. However, cost advantages can be achieved with the help of intelligent procurement strategies. The SMART import-based strategy of Figure 2 was particularly successful when analysed over several years and enabled the importer in the case study to make savings in the millions. Over an observation period of 10 years, the strategy developed by carboneer allows for almost 20% cost savings compared to a purely regulation-driven procurement of CBAM certificates. Active procurement can therefore reduce the explicit costs of CBAM certificates, thereby reducing financial risk, conserving liquidity and providing a competitive advantage.

Hedging of CBAM costs via the EU ETS

As purchased and unused CBAM certificates will be cancelled on 1 October of the second year after purchase (final decision still pending), they cannot be used for the submission obligation in the long term. However, for orders whose actual import date is further in the future or for longer-term cost certainty, an importer can take a further step to minimise risk.

As CBAM certificate prices are based on the prices of emission allowances (EUAs) in the EU ETS, the EU ETS provides a market that enables a hedging transaction. An importer can therefore hedge in advance the maximum CBAM certificate costs during an order or for future planned imports, at least in good approximation. The same principle also applies to the producer or supplier of a CBAM product, as they can guarantee the buyer in the EU maximum CBAM costs through a hedging transaction. This price fixing enables negotiations with suppliers, the calculation, adjustment or passing on of CBAM costs to downstream customers and better budgeting of CBAM certificate costs. Hedging can be used by purchasing physical EUAs or derivative market products on EUAs.

Medium to long-term hedging of CBAM certificate costs based on physical EUAs or futures market contracts purchased in 2025 (currently at EUR 70/tCO2) enables price fixing at the lower end of the expected CBAM costs for the future and, in our case study, savings of several million euros per year. Price hedging as outlined requires integration into the corporate strategy due to its complexity.

Forecast of CBAM certificate costs with and without hedging strategies via EU ETS (source: carboneer CBAMCC model)

Figure 3: Cost forecast for CBAM certificates of the importer in the case study without hedging (green) and with hedging (blue). (Source: carboneer CBAMCC model)

To manage CBAM costs effectively, minimise risks and enable planning security, it is essential to analyse exposure at an early stage. The cost of CBAM certificates is likely to be higher than many market participants and prospective CBAM declarants currently realise. Although there are some uncertainties with regard to CBAM costs, tools such as CBAMCC can already be used today to develop customised scenarios and, based on these, strategies for procuring and hedging CBAM certificate costs.