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On 17th December, the European commission adopted a new package on its Carbon Border Adjustment Mechanism (CBAM), as the transitional 2023-2025 period of the carbon emissions control measure ends and its enters its definitive phase in January 2026. The long-awaited package covers emission calculations, default values, free allocations adjustments, CBAM certificate pricing, etc.
While the transitional period focus was on carbon intensive materials: cement, iron and steel, aluminium, fertilisers, electricity and hydrogen, this package adds some 180 downstream metal-intensive goods: most (94%) of these industrial goods such as vehicle components, equipment and machinery and only 6% domestic appliances such as washing machines, radiators or gardening tools.
EU importers or their indirect customs representatives importing more than 50 tonnes of CBAM goods into the EU will have to apply for the status of authorized CBAM declarants. They will need to buy CBAM certificates from the national authorities in their country of establishment (i.e. where their business is registered). The price of the certificates will be calculated based on €/tonne of CO2 emitted, as a quarterly average in 2026 and as a weekly average from 2027.
Production precursors and default values
The package contains a list of CBAM precursors for complex goods, including ferro-manganese, (CN 7202 1) ferro-chrome (CN 7202 4) and ferro-nickel (CN 7202 6), subject to carbon dioxide (CO2) emissions reporting. Scrap used in making aluminium or steel and pre-consumer metal scrap (i.e. surplus metal in the manufacturing process that does not reach the consumer in the finished good) is also now included as a CBAM precursor. The EU decided against including post-consumer scrap, so as not to disincentivise recycling.
The key development is the publication of default values— country- and product-specific embedded emission estimates, based on average emission intensity of a country’s energy grid. These should be used when an importer can’t submit exact emission calculations, e.g. for precursors such as ferro-alloys. These values are comparatively high, to discourage their use beyond the short term and to encourage exact reporting. They are further subject to mark ups at increasing rates of 10% in 2026 , 20% in 2027 and 30% in 2028. You can find the full list HERE Despite its calls to be exempt from EU CBAM, Ukraine is included, as the European Commission arguing that the industries covered by CBAM make up only 2% of its economy. The EU rules on monitoring and reporting will come in in 2026.
You can find the full list HERE Despite its calls to be exempt from EU CBAM, Ukraine is included, as the European Commission arguing that the industries covered by CBAM make up only 2% of its economy. The EU rules on monitoring and reporting will come in in 2026.
Decarbonisation fund
New in this package of measures is that a quarter of the funds raised by member states from authorised importers established on their territory as of 1 February 2027 will go into a decarbonisation fund that would help certain EU producers of CBAM goods in 2028-2029 mitigate against exposure to carbon leakage risks, i.e. the risk of energy-intensive industries relocating from the EU to countries with lower emission standards. The fund would reimburse these producers part of the EU emissions trading scheme (ETS) carbon cost. To qualify for this support, the importers will need to demonstrate that they are making efforts to decarbonise.
For full details, see:
CBAM Legislation and Guidance – Taxation and Customs Union
HOLD THE DATE: CBAM and Ferroalloys: What to expect in 2026-2027
Tuesday 13 January 2026 1pm GMT
Webinar by S & P Global Energy in associations with the MMTA
- CBAM mechanism explained and implementation phase
- Impact of CBAM on ferroalloys
- Market update Ferromanganese and Ferrochrome
With Téo Ngoma – S&P Global Energy
Price Reporter Ferroalloys
Register: https://www.eventbrite.co.uk/e/1977400356697
