or purchased from a separate supplier makes no difference to the obligation. This is where the data chain becomes demanding in practice. For complex goods with multiple precursors, the importer must trace emissions not just through the final production step but through every upstream precursor.
The five variables that determine your CBAM cost Once the embedded emissions figure is established, it feeds into a formula with four further variables. Together, these five inputs determine the actual cost. Understanding each one is essential for any company trying to budget or plan around CBAM exposure.
1. Embedded emissions Described in Figure 2.
2. CBAM Benchmark Not all embedded emissions are charged. Only those above the
CBAM Benchmark attract a cost. The benchmark is a product-specific reference value derived from EU ETS benchmarks, set at the emissions intensity of the 10 % most efficient installations for each production process in Europe. vi Importers are allowed to deduct a portion of this benchmark, the deduction is based on the CBAM factor.
3. CBAM Factor: the phase-in multiplier The CBAM Factor mirrors the phase-out of free EU ETS allowances. In 2026, the factor is 97.5 %, declining to 51.5 % in 2030 and reaching 0 % in 2034, at which point domestic producers have no more free allocations and CBAM reflects full cost parity. vii Even with constant ETS prices and emissions, CBAM costs grow every year simply because the factor ratchets down the benefit of free allocations.
4. EU ETS price The ETS price is the most volatile input. In 2026, the certificate price is the quarterly average of EU ETS auction clearing prices, which from 2027 will switch to a weekly average. viii Currently approximately EUR 75 per tonne of CO 2 e, it is the primary long-run cost driver and the most difficult variable to hedge.
5. Foreign carbon price deduction Carbon prices paid in the country of origin may in principle be deducted. However, the implementing regulation defining which foreign prices qualify is still pending. No deduction is currently available for any country of origin. ix
The formula and what it looks like in practice Under Regulation( EU) 2023 / 956, the five variables combine as follows: embedded emissions minus the CBAM Benchmark, multiplied by the CBAM Factor, multiplied by the EU ETS certificate price, minus any approved foreign carbon price. The result is the CBAM cost per tonne of goods. v To provide a practical example, assume embedded emissions of 2,0 t CO 2 e per tonne and a benchmark of approximately 1.46 t CO 2 e per tonne. In 2026, at approximately EUR 75 / t CO 2 e and a CBAM Factor of 97.5 %, the cost is around EUR 43 per tonne of product. By 2030 as the CBAM factor is reduced while the EU ETS prices rise, the costs could push up to EUR 100 – 200 per tonne. By 2034, with no remaining free allocations, cost is determined entirely by the prevailing ETS price.
Default values: the expensive shortcut Due to the lack of data availability and the complexity of calculations, many
Figure 2. The five variables driving CBAM cost.
30 Stainless Steel World May 2026 www. stainless-steel-world. net