EU CBAM 2026: How to calculate your liability

EU CBAM 2026: how to calculate your liability, with a worked example

The EU Carbon Border Adjustment Mechanism ( EU CBAM 2026 ) entered its definitive phase on 1 January 2026. For UK companies exporting steel, cement, aluminium, fertilisers, hydrogen, or electricity into the EU, this is no longer a compliance horizon. It is a live cost.

Yet most UK exporters and their EU buyers are still using default values, meaning they are paying more than they need to. This guide explains how EU CBAM liability is calculated, walks through a worked example for a UK steel exporter, and shows why verified supplier emissions data is the single most effective way to reduce exposure.

What EU CBAM actually charges

Understanding what EU CBAM 2026 actually charges starts with the certificate price mechanism. EU CBAM is a carbon price applied to imported goods whose production generates greenhouse gas emissions. It is designed to ensure that goods imported into the EU face a comparable carbon cost to EU producers operating under the EU Emissions Trading System (ETS).

Under the CBAM Regulation (see the European Commission’s CBAM Questions and Answers, section 3.7), the number of certificates you must surrender for a given good is your imported quantity multiplied by embedded emissions minus a free allocation adjustment minus any carbon price already paid in the country of origin. The free allocation adjustment is calculated from the CBAM benchmark for your production route, not from your own actual emissions, and it shrinks each year as the EU ETS free-allocation phase-out schedule below reduces the free allocation still available to EU producers. Certificate cost is that net quantity of tCO2e multiplied by the EU ETS-linked certificate price.

The formula is:

Certificates to surrender = Quantity imported (t) x [Embedded emissions (tCO2e/t) minus Free allocation adjustment (tCO2e/t, benchmark-based) minus Carbon price already paid abroad (tCO2e/t equivalent)].

Certificate cost = Certificates to surrender x ETS price (EUR/tCO2e).

The ‘CBAM factor’ referred to throughout this article is the share of the CBAM benchmark not covered by EU ETS free allocation in a given year: 2.5% in 2026, rising to 5% in 2027, 10% in 2028, 22.5% in 2029, 48.5% in 2030, 61% in 2031, 73.5% in 2032, 86% in 2033, and 100% in 2034. Because free allocation is benchmark-based rather than tied to your actual emissions, an efficient producer’s real net obligation in the early years can be lower — sometimes zero — than a simple ‘emissions x CBAM factor’ calculation implies; see the worked example below. The Q1 2026 certificate price, the first official figure published by the European Commission (on 7 April 2026), was EUR 75.36 per tonne of CO2. This is a quarterly reference price for 2026 and will move each quarter — the Q2 2026 figure came in at EUR 75.28 — so treat it as illustrative of the Q1 2026 window rather than a fixed number, and check the CBAM Registry for the current quarter’s rate.

The cost in 2026 is deliberately low. That is the point of the phase-in. But the structure is permanent, the price trajectory is upward, and the data systems exporters build in 2026 will determine whether they are positioned to manage that cost or absorb it.

Default values vs actual values: the choice that determines your liability

For each CBAM-covered product, the European Commission publishes default embedded emission values, generally based on country-specific average intensity where reliable data exists, or on the average of the top 10 exporting countries where it doesn’t. If an exporter cannot provide verified actual emissions data, their EU buyer must use these defaults.

It is also worth being realistic about timing for the first declaration cycle. Accredited CBAM verifiers are not expected to be operating before around September 2026, and verification of an installation’s actual 2026 emissions cannot be completed before the first annual CBAM declaration is due on 30 September 2027. Exporters should start monitoring and documenting emissions now so they are ready as verification capacity comes online — but should plan their 2026/27 financial exposure on the assumption that default values may still apply for at least this first cycle.

Default values have two problems.

They overstate emissions for most modern producers. Default values are set at country-level average intensity, not installation-level performance. A UK steel mill running efficient processes will almost certainly have lower actual embedded emissions than the default assigned to UK steel production as a whole.

They carry a financial markup. Under Implementing Regulation (EU) 2025/2621, importers using default values pay a markup on top of the certificate cost: 10% in 2026, rising to 20% in 2027, and 30% from 2028 onward. Verified actual data eliminates the markup entirely.

Worked example: UK steel exporter, BF-BOF route

This worked example shows exactly how EU CBAM 2026 liability is calculated in practice. Take a UK company exporting 5,000 tonnes of hot-rolled steel coil (CN code 7208) produced via the blast furnace, basic oxygen furnace (BF-BOF) route to an EU buyer per year.

Using default values

The official BF-BOF benchmark under Implementing Regulation (EU) 2025/2621 is 1.370 tCO2e per tonne of steel.

At the 2026 phase-in factor of 2.5%, the net annual certificate cost is approximately EUR 14,196. That appears manageable. But two things escalate together as the years pass: the CBAM factor rises, and the default-value markup itself rises (to 20% in 2027, then 30% from 2028 onward). At the 2030 factor of 48.5%, applying the 30% markup that will be in force by then, the same shipment under default values costs approximately EUR 325,474 per year. At full phase-out in 2034, applying the same 30% markup, it is approximately EUR 671,081.

Using verified actual data

Suppose this UK mill has an actual embedded emissions intensity of 1.05 tCO2e per tonne, verified by an accredited CBAM verifier, and has paid a carbon cost under the UK ETS equivalent to EUR 20 per tonne CO2 on production, with no offsetting free UK ETS allocation on that output.

To illustrate the commercial impact of moving from default values to verified actual data, the simplified example below uses a shorthand calculation. In practice, the legal calculation for complex goods is product-specific and should be confirmed using the CBAM Registry methodology.

Using actual values

The difference in 2026 is approximately EUR 6,930 per year in favour of verified actual data, a saving of nearly 49% against the default scenario. At the 2030 CBAM factor of 48.5%, that same gap (now widened further by the default markup rising to 30%) becomes approximately EUR 184,500 per year. By 2034, the gap is approximately EUR 380,400 — structural and permanent.

Treat the specific figures above as directional rather than exact. Because free allocation for a complex good is calculated from the CBAM benchmark for the production process plus a separate precursor-level calculation — not from a single benchmark applied to the mill’s own reported emissions — the real net liability in the early years could be materially lower than shown here, potentially zero for some years depending on the precursor mass balance. The qualitative conclusion holds regardless: verified actual data below benchmark reduces CBAM liability by more than the embedded-emissions difference alone, and the benefit is front-loaded into the early years of the phase-in rather than spread evenly. Exporters and buyers should get an exact figure from their CBAM verifier rather than relying on a generic worked example.

A note for UK exporters specifically: Article 9 of the CBAM Regulation allows EU importers to deduct a carbon price that has genuinely been paid on embedded emissions in the country of origin, and UK ETS costs are a plausible candidate for this. However, two things are worth flagging before relying on the numbers above as a firm planning basis:

• The detailed implementing rules setting out exactly how a third-country carbon price is calculated, certified, and deducted were only published in draft form by the European Commission on 13 May 2026, with consultation running to 10 June 2026. Exporters and buyers should confirm the finalised rules with their CBAM verifier or the CBAM Registry before locking in a deduction figure.
• Any free allocation a UK producer receives under the UK ETS reduces the qualifying deduction — only the emissions for which a carbon price was actually paid count. The EUR 105,000 deduction in the example above assumes no offsetting free allocation on this output; mills that still receive free UK ETS allowances will see a smaller deduction than this illustration shows.

Exporters who cannot demonstrate verified actual emissions data and documented, qualifying UK ETS costs cannot access this deduction at all.

The three things that determine your CBAM exposure

1. Your production route

   BF-BOF steel carries a benchmark of 1.370 tCO2e per tonne. EAF (electric arc furnace) steel produced from scrap carries 0.072 tCO2e per tonne. DRI-EAF carries 0.481 tCO2e per tonne. If your production uses more than 50% scrap by mass, the EAF benchmark applies regardless of furnace type. The route classification matters enormously for certificate costs.

2. Whether you use default or actual values

   As the worked example above shows, the gap between default and actual values is not just the embedded emissions difference. It is the markup applied to defaults on top — 10% today, rising to 30% by 2028. Actual data eliminates both the overstated emissions and the surcharge.

3. The carbon cost you can document in the country of origin

   The EU CBAM regulation allows exporters to deduct carbon costs already paid in the country of origin, subject to verification and the finalised implementing rules referenced above. For UK exporters, this means documented, qualifying UK ETS costs can potentially offset part of the certificate obligation for your EU buyer. Without documented actual production emissions and documented carbon costs, your buyer cannot claim this deduction.

What this means for your data systems

EU CBAM 2026 compliance means your data systems need to capture actual emissions, not estimates. The practical implication is that your CBAM liability is not fixed. It is a function of the quality of the emissions data you can provide to your EU buyer.

Most UK exporters currently provide no verified data, leaving their EU buyers to use default values with the associated markup. The exporters who will manage CBAM costs most effectively between now and 2034 are those who build verified, installation-level emissions data into their production reporting now, not those who retrofit it under cost pressure in 2028 when the markup rises to 30%.

For EU buyers, the incentive to request verified data from their UK suppliers is equally clear. The difference between buying from a supplier using defaults and buying from one who can provide verified actual emissions is a directly measurable reduction in their certificate obligation. Verified supplier data is increasingly a procurement criterion, not a sustainability nicety.

For procurement heads and CFOs managing supply chains that include CBAM-covered goods, the embedded emissions data your suppliers can provide sits at the intersection of regulatory compliance and commercial negotiation. Getting it right is a supply chain emissions data problem before it is a carbon accounting problem. See our guide to spend-based versus supplier-specific emissions data for the broader context on why verified supplier data matters across Scope 3 reporting.

The EU CBAM 2026 escalation timeline

The 2026 net costs are low. They are designed to be. The mechanism is structured to escalate predictably as EU ETS free allocation phases out — and for goods on default values, the markup on those defaults escalates at the same time.

The ‘Default’ column below follows directly from the published CBAM benchmarks and markup schedule and can be relied on. The ‘Net cost (actual + UK ETS)’ column uses the same simplified shortcut as the worked example above and should be treated as an upper-bound estimate for a complex good like this one — the true figure in the early years is likely lower, and could be zero, once the precursor-level free allocation calculation is applied.

Based on Q1 2026 ETS price of EUR 75.36/tCO2e held constant for illustration. Actual ETS prices, and the UK ETS carbon price used in the deduction, will vary year to year.

The companies treating 2026 as a low-stakes year are not wrong about the current cost. They are wrong about the trajectory.

How eco-shaper helps

eco-shaper automates the data collection that EU CBAM 2026 compliance depends on. The verified supplier emissions data that reduces CBAM liability is the same data required for Scope 3 Category 1 disclosures under CSRD and UK SRS. The two obligations share a data foundation.

eco-shaper’s Supply Chain Engagement feature enables procurement teams to collect verified, activity-based emissions data from suppliers at scale. Suppliers receive their own carbon calculator, submit their production emissions data once, and allocate their footprint across all their customers in one submission. The data is regionally accurate, drawn from a database of 120,000 annually updated emission factors, and audit-ready under both CBAM and CSRD requirements.

For procurement heads managing UK supply chains with EU export exposure, the same supplier engagement programme that builds your CSRD Scope 3 inventory simultaneously builds the verified emissions data your EU buyers need to reduce their CBAM certificate costs.

For further reading on emissions factor accuracy, which is directly relevant to CBAM embedded emissions calculations, see our emissions factor database guide.

The bottom line on EU CBAM 2026

EU CBAM liability is not fixed. It is determined by three variables: your production route, whether you use default or actual values, and the carbon costs you can document. For UK steel exporters, the case for building verified emissions data systems in 2026 is not primarily about this year’s cost. It is about the cost structure that compounds through to 2034.

The difference between default and actual data grows from thousands of euros per year today to hundreds of thousands by 2030. The data infrastructure cost is a one-time investment. The savings are permanent.

eco-shaper is a carbon accounting and sustainability reporting platform used by organisations across the UK, EU, Australia, and beyond. Our Supply Chain Engagement feature helps procurement teams collect verified, audit-ready supplier emissions data for both CBAM and Scope 3 reporting. Speak to our team to learn more.