The planned introduction of default foreign carbon prices under the EU’s Carbon Border Adjustment Mechanism is highlighting an unresolved budgeting issue for importers: how much carbon pricing paid outside the EU can ultimately be recognised in a CBAM calculation.
Carbon Pulse reported on 15 September that a Brussels-based think tank had called on the European Commission to publish the relevant methodology and values before the end of the year. The recommendation concerns implementation clarity and does not represent the adoption of a new schedule of deductible carbon prices.
Default prices differ from emissions values
Under the amended CBAM regulation, the Commission can establish, from 2027, default carbon prices for countries that have carbon-pricing legislation. The mechanism is intended to provide a prescribed method for recognising an effective carbon price incurred under another jurisdiction’s system.
The concept should be distinguished from default emissions values. An emissions value estimates the carbon embedded in a tonne of imported goods, while a foreign carbon-price value represents the monetary price attributed to those emissions under another country’s carbon-pricing framework.
The amount relevant for CBAM also depends on whether the foreign carbon cost was effectively borne. Rebates and other forms of compensation can affect the amount that can be recognised, meaning a scheme’s headline carbon price may not correspond to the value ultimately relevant for a deduction.
Impact on importer cost forecasts
The distinction has direct implications for importers preparing commercial contracts and CBAM budgets. An expected deduction treated as though it were already established could lead to an understatement of exposure, while excluding a documented and eligible foreign carbon cost could produce an unnecessarily high estimate.
The eventual default methodology will also need to be assessed against its scope, reference period and evidentiary requirements. A published country-level value would not automatically mean that the same figure could be applied to every installation or product covered by the scheme.
For businesses planning future imports, the key distinction is therefore between a documented carbon-price deduction and a policy assumption about a future default value. The two may generate similar figures in preliminary forecasts, but only an eligible and substantiated carbon price can support a CBAM compliance claim.
