Subtraction, Not Percentage: What CBAM Actually Charges

MSE set out the principle behind this calculation in its April 2026 commentary, CBAM at Financial Phase. That piece named the mechanism. This note gives the formula, the schedule and the arithmetic, and is the calculation reference for the articles that cite it.

01The description that is usually wrong

CBAM is commonly described as a levy on a rising percentage of a cargo’s embedded emissions. That description produces the wrong number in every year of the schedule. Implementing Regulation (EU) 2025/2620 does not charge a share of emissions. It charges what is left after a deduction is subtracted from them, and it is the deduction that phases out, not the rate that phases in.

The distinction matters commercially. Under a percentage model, halving a supplier’s emissions halves the bill in every year. Under the actual model the value of better data is constant in absolute terms rather than proportional, which means it can be quoted once instead of re-forecast annually. Section 7 quantifies that.

02The formula

Everything in the bracket is expressed in tonnes of CO₂ per tonne of product. The bracket has a floor at zero: a supplier performing better than the effective deduction owes nothing, and receives no credit. One certificate equals one tonne of CO₂ equivalent.

03The CBAM factor

The CBAM factor is the share of EU free allocation still recognised as a deduction. It is set in Directive 2003/87/EC as amended and is the mirror image of the free allocation being withdrawn. Both rows are shown, because the two are routinely confused and quoting the wrong one inverts the result.

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CBAM factor per Directive 2003/87/EC as amended by the CBAM Regulation. From 2034 no CBAM factor applies.

04Inputs used here

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Benchmark and correction factor per IR (EU) 2025/2620. Default values per IR (EU) 2025/2621, as corrected by IR (EU) 2026/1740. Türkiye has no country row for cement or clinker, so Turkish cargoes without verified data fall to the other-countries table. Importers may use published default values without verification. An accredited verifier is required only where actual values are claimed.

05What a certificate costs

The price is not forecast. It is calculated and published under Implementing Regulation (EU) 2025/2548: for the 2026 compliance year, the quarterly average of EU ETS auction clearing prices, with each quarterly price applying to goods imported in that quarter. From 2027 the price is the weekly average of EU ETS auction closing prices.

The grid below is therefore run at three levels rather than one forecast. EUR 80 sits just above the first published price and is the conservative case. EUR 126 is the mid-point of a published market consensus for 2030 and EUR 147 its upper end. Holding one price across all three years is deliberate: it isolates the effect of the CBAM factor from price movement. Any cell can be re-run at the price of the day in the CBAM calculators.

06The full grid

The whole calculation for a 50,000 tonne clinker cargo. Certificate counts are unrounded, so any cell can be reproduced by multiplying the count by the price.

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Annual CBAM certificate liability, EUR, on the inputs in section 4 and the CBAM factor in section 3.

07Two constant differences

Read the grid down a price column and two distances repeat. From 2028, when the assigned default settles at 1.833, the distance between no verified data and a documented industry-average performance is 50,000 × (1.833 − 0.88) × price. At EUR 126 that is EUR 6.00m a year, in 2030 and in 2034 alike. The distance between industry average and the EU benchmark is 50,000 × (0.88 − 0.666) × price, or EUR 1.35m a year at the same price.

Both hold because the deduction is common to the rows being compared and cancels out of the difference. The CBAM factor therefore changes the absolute bill every year and never changes the value of moving a supplier from one row to the next.

One qualification. That constancy holds only while both rows sit above the floor in section 2. In 2026 the effective deduction is 0.64935 and in 2027 it is 0.6327, so a supplier performing better than roughly 0.65 owes nothing in the early years, and the difference between it and a worse supplier is smaller than the formula suggests. From 2029 the deduction falls below 0.52 and the question no longer arises for cement.

In 2027 the same data difference is EUR 5.12m rather than EUR 6.00m, because the assigned default that year is 1.692 rather than 1.833. And at the EU benchmark the 2034 bill is exactly twenty times the 2027 bill, since in the early years the charge is only the sliver the deduction no longer covers. That is a property of the schedule, not a forecast.

08Working capital, not tax

The obligation builds through the year and is discharged against a declaration, which makes it a working capital position. It has two stages, and the first is lighter than the second. From 2027, at the end of each quarter the declarant must hold certificates covering at least 50% of the embedded emissions in goods imported since 1 January, reduced from 80% by the Omnibus. That quarterly figure is calculated on default values without the mark-up, or on the certificates surrendered for the same goods in the preceding year by CN code and country of origin, and it takes the free allocation adjustment into account. The full 100% is settled at surrender.

Two structural consequences follow. The size of the position is set by the supplier’s verified emissions data rather than by the size of the shipment. And it sits with whoever holds authorised declarant status, which is not always the party holding title to the goods, a point existing documentary practice does not resolve.

09What the softening touches

Two changes are law, under Regulation (EU) 2025/2083. Certificate sales were postponed to February 2027, the declaration deadline moved from 31 May to 30 September, and an annual 50-tonne threshold exempts roughly 90% of importers by number, who together account for about 1% of embedded emissions. The remaining 99% is unaffected, and electricity and hydrogen are excluded from the threshold at any volume. A December 2025 proposal to extend the scope to downstream steel and aluminium products from 2028 has not been adopted. None of it alters the CBAM factor in section 3.

10Penalties

The standard penalty for failing to surrender is EUR 100 per tonne of CO₂ equivalent, indexed. An importer bringing in CBAM goods without authorised declarant status faces three to five times that rate, and the authorisation deadline of 31 March 2026 has passed. Penalties do not extinguish the underlying obligation to surrender.

11Calendar

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Dates per Regulation (EU) 2023/956 as amended by Regulation (EU) 2025/2083 and the implementing acts of December 2025. The wider EU calendar is set out in the Regulatory Horizon 2026-2034.

12Beyond clinker, and open items

The shape is identical for the other covered goods and only the scale changes, because each has its own benchmark and its own default values under IR (EU) 2025/2621. Clinker is used here because it carries high embedded emissions relative to its value, which makes the effect visible without a large tonnage. For context, the EU imported 14.2 million tonnes of cement and clinker in 2025, of which Türkiye supplied 42.9%. The sector view is set out under Building Materials.

The cost does not stop at the importer. In its own impact assessment the Commission expects downstream producers of goods such as household appliances, vehicles and food to face higher input prices, and anticipates a regressive effect. The OECD reaches the same conclusion. Nor is CBAM the only carbon charge entering the landed cost of an imported tonne: from January 2028 the second Emissions Trading System prices carbon in road transport fuel, collected upstream from fuel suppliers and passed into the haulage rate.