European companies importing steel, aluminium, fertilisers and other goods covered by the Carbon Border Adjustment Mechanism (CBAM) must account for two distinct sources of uncertainty when forecasting future compliance costs: fluctuations in EU carbon prices and potential changes to the phase-out of free emissions allowances for European industry.
The European Commission’s published CBAM certificate price reached €82.32 per tonne of CO₂ equivalent (tCO₂e) for the third quarter of 2026, up from €75.28 in the second quarter. The increase was approximately 9.4%. At the same time, a separate Commission proposal could slow the withdrawal of free allocation under the EU Emissions Trading System (EU ETS), changing the adjustment used to calculate importers’ carbon liabilities if the proposal becomes law.
The two developments operate through different mechanisms. Certificate prices determine the monetary value of chargeable emissions, while the free-allocation adjustment affects the calculation of the emissions liability. Importers must therefore distinguish existing legal requirements from proposed regulatory changes when negotiating supply contracts and forecasting expenditure.
Certificate pricing shifts from quarterly to weekly calculations
The Commission published the third-quarter 2026 certificate price on October 5, 2026. Under the applicable pricing framework, the relevant quarterly price corresponds to the quarter in which the goods entered the EU.
The pricing frequency is scheduled to change in 2027, when certificate prices will be calculated weekly rather than quarterly. This will alter the timing considerations for importers managing the relationship between customs clearance, certificate purchases and financial settlement.
The first purchases of CBAM certificates are scheduled to begin in February 2027. The first annual declaration and certificate surrender covering imports made during 2026 must be completed by September 30, 2027.
The interval between importing goods and purchasing certificates creates a working-capital and accounting consideration for businesses. Commercial invoices may be paid months before the corresponding carbon certificates are acquired, requiring importers to estimate and manage liabilities before final settlement.
Proposed EU ETS reforms would change the free-allocation adjustment
Under legislation currently in force, the CBAM factor used in the free-allocation adjustment is 97.5% for 2026, falling to 95% in 2027, 90% in 2028 and 51.5% in 2030. The existing phase-out schedule provides for the complete withdrawal of free allocation in 2034.
The European Commission’s broader EU ETS revision proposal, COM(2026)616, published in July 2026, would alter this trajectory. The proposed CBAM factors are 91.5% in 2028, 81% in 2029 and 59% in 2030. Under the proposal, the complete removal of free allocation would be extended until 2038.
These figures remain proposed changes rather than rules already in force. Importers preparing commercial agreements must therefore distinguish the existing legislative baseline from a separate scenario reflecting the Commission’s proposal.
The annual CBAM factor alone does not determine the number of certificates required for an imported product. Product-specific benchmark calculations, the relevant production route and eligible deductions also affect the final obligation. Applying an annual phase-in percentage directly to total embedded emissions without accounting for the applicable methodology can produce an incorrect liability estimate.
Emissions calculations determine the certificate requirement
The relationship between emissions and certificate prices can be illustrated using two hypothetical shipments. If the applicable CBAM methodology produces 1.0 tonne of net chargeable emissions per tonne of imported goods, the gross certificate exposure at the third-quarter 2026 price of €82.32/tCO₂e would be €82.32 per tonne of goods.
If the calculated net chargeable emissions were instead 0.4 tCO₂e per tonne of goods, the corresponding exposure would be €32.93 per tonne of goods.
Neither example establishes a standard emissions factor for steel or aluminium. Both are illustrations of how the calculated chargeable emissions determine the gross certificate cost at a given price.
The final obligation must reflect the applicable emissions methodology and adjustments. A change in the benchmark calculation or the quantity of chargeable emissions can alter the certificate requirement even when the market price remains unchanged.
Default-value markups differ by product category
Country-level default values published under CBAM implementing rules were corrected in July 2026. For many goods other than electricity, a 10% markup applies in 2026, rising to 20% in 2027 and 30% from 2028. Fertilisers are subject to a different markup of 1%.
These markups must be distinguished from the certificate price, the CBAM factor used in the free-allocation adjustment and customs duties. Electricity is subject to separate rules governing default values and actual emissions.
For importers, the distinction between default and verified actual emissions can affect the calculation used for compliance. Establishing the relevant production installation and obtaining the necessary verification evidence are therefore important elements of the emissions assessment.
Supply contracts must allocate emissions-data and pricing risks
CBAM exposure begins with the classification of the imported goods, which determines whether the mechanism applies. The production installation and verified emissions calculation then establish whether actual emissions can be used instead of a published default value.
The timing of customs release determines the relevant import period, while the declarant remains responsible for purchasing and surrendering the required certificates and substantiating any eligible deduction for a carbon price paid abroad.
Trading intermediaries and freight forwarders cannot replace missing production records or factory verification evidence simply by changing commercial invoices. Responsibility for providing accurate emissions information and completing the formal compliance process must be addressed separately in the commercial arrangements.
Contracts can specify the applicable Combined Nomenclature (CN) classification, production site, reporting year, verifier, deadlines for supplying and correcting emissions evidence, and the treatment of revised carbon prices. Pricing clauses may allocate the financial liability to the EU buyer while requiring the supplier to provide compliant documentation and compensate for deficiencies in the required evidence.
Banks evaluating credit facilities can also test potential certificate cash outflows against scenarios combining higher carbon prices with higher emissions. Such assessments provide a more detailed view of potential liabilities than reliance on a supplier’s stated environmental credentials alone.
Import timing can create differences between commercial and legal liabilities
Manufacturing, inventory and sales periods do not necessarily coincide. A producer may manufacture goods in one period, hold them in stock and export them to the EU in another.
The importer must establish the correct reporting period and retain the supporting documentation required by the applicable rules. For goods imported in 2026, the relevant CBAM certificate price follows the applicable quarterly pricing arrangement.
A commercial agreement based solely on a floating monthly carbon surcharge may therefore fail to reflect the actual statutory obligation. Buyers and suppliers can instead agree to reconcile the commercial charge after the official certificate price and the verified emissions result become available.
The reconciliation process needs to account for the relationship between the commercial calculation and the final compliance requirement. This is particularly relevant when the initial emissions estimate or the applicable price differs from the values used in the final declaration.
Auditors and lenders require a traceable calculation of liabilities
Auditors and bank credit teams can assess CBAM exposure by requesting a documented reconciliation between the commercial estimate and the formal certificate surrender figure.
The calculation should identify the tonnes of goods imported or megawatt-hours of electricity, the production route, embedded emissions, benchmark adjustment, qualifying carbon-price deduction and resulting certificate requirement.
Each element can affect the final obligation independently. Consequently, an unchanged carbon-market price does not guarantee an unchanged CBAM liability when the underlying emissions data or applicable adjustments change.
Suppliers able to provide a complete calculation and supporting documentation early in the process may reduce the risk of disputes at year-end. Businesses relying only on national average values or unverified sustainability reports may face more conservative estimates of their potential liabilities from EU customers.
For manufacturers in the Western Balkans, credible emissions records can also strengthen their position in commercial negotiations when EU purchasers seek discounts to compensate for uncertainty surrounding carbon costs. The distinction between imported product volumes, embedded tonnes of CO₂e and the certificates ultimately required remains central to reconciling commercial pricing with CBAM compliance.
