Search Icon for Searching
Credit Form
Portal Login

Navigating EU Carbon Border Adjustment Mechanism (CBAM) Compliance

With the EU’s implementation of the Carbon Border Adjustment Mechanism (CBAM), UK exporters selling products such as steel, cement, aluminium, fertilizers, and electricity generation on a Delivered Duty Paid (DDP) basis to European buyers are required to report on their products carbon emissions – a new single mass-based threshold exempts importers that bring in 50 tons or less (cumulative net mass) of CBAM-covered goods into the EU per year. Hydrogen and electricity are excluded from this “de minimis” exemption.

From 2026 onwards, there will be two permitted approaches for submitting CBAM declarations and purchasing CBAM certificates:

1. Use of Default Values

Under this option, CBAM liability is calculated using default emission values published by the European Commission.

  • This approach generally results in a higher CBAM cost.
  • No certification of emissions data is required.
  • Default values will ultimately be certified by EU-appointed certification bodies, which have not yet been formally designated.

2. Use of Actual (Real) Values

This option allows importers to declare actual embedded emissions.

  • Emissions data must be independently certified, which will carry an additional cost.
  • At present, this option is not practically available, as the EU has not yet appointed authorised certification bodies.
  • As a result, the “real values” used during 2025 are likely no longer considered valid going forward.

When the European Commission was asked why companies were required to report real values in earlier phases despite the lack of certification infrastructure, the stated rationale was to gather more accurate statistical data. This data has been used to refine and improve the default values now being introduced.

Basis of our CBAM Estimates

Our CBAM estimate is based on the following assumptions and limitations:

  • The calculation uses default values published by the European Commission in September 2025.
  • Country of origin has not been factored into this initial calculation, although this may materially impact the final CBAM cost.
  • The CBAM certificate price remains entirely uncertain; a reasonable estimated price has been used based on current market understanding.

To produce the estimate, a wide range of inputs were considered, including but not limited to:

  • HS codes
  • Imported quantities
  • Direct and indirect emissions
  • Mark-ups applied when using default values
  • Tax-free volumes
  • An assumed CBAM certificate price

In total, approximately 15 separate variables are used within the calculation.

Regulatory Changes

A second set of default values was published by the European Commission in December 2025. At the same time, the CBAM calculation methodology itself was amended, significantly increasing complexity. Key changes include:

  • Default values, mark-ups, and EU benchmarks are now defined by country of production.
  • Additional factors such as production method and year of production influence the calculation.
  • The overall process has become materially more complex than before.

CBAM Certificate Cost Estimation – Service Overview

We can support customers with the preparation of estimated CBAM certificate cost calculations using the latest applicable methodology and guidance.

Due to recent methodological changes:

  • Previously developed automation tools are no longer fully applicable.
  • CBAM certificate calculations currently require a manual analytical component, and full automation is not expected in the short term.
  • Estimates are therefore produced using a case-by-case review of product data, volumes, and embedded emissions assumptions.

Commercial terms:

  • CBAM certificate cost estimation is offered as a professional service.
  • Work is charged on a time basis through our partner RMB France.

This approach ensures that CBAM estimates remain accurate, defensible, and aligned with the most up-to-date regulatory framework.

Forward-Looking UK/EU CBAM Interaction

There is also some positive news emerging. Current discussions indicate that UK CBAM is expected to be deductible against EU CBAM in the future.

In practical terms, this would mean:

  • If goods are imported into the UK, UK CBAM is paid, and the goods are subsequently re-exported to the EU,
  • Only the difference between UK and EU CBAM (if any) would be payable, rather than the full EU CBAM amount again.

While this position has not yet been formally confirmed in binding EU guidance, it aligns with the direction indicated in recent regulatory discussions. More information from the European Commission website can be found here.

Contact: CBAM@Simarco.com