Transitional Period in the Final Stretch: Commission Launches Consultation on Emission Methodology, CBAM Benchmarks, and CO₂ Price Credits
CBAM Weekly – Issue 59
Step by step into the final CBAM phase
The European Commission has launched a public consultation on three key implementing regulations that will shape the operational phase of the Carbon Border Adjustment Mechanism starting January 1, 2026. With this, the mechanism continues to take clearer form. Until now, CBAM was limited to reporting obligations; in the future, it will also bring real payment obligations for CBAM certificates. The goal is to finally provide companies and authorities with legal certainty and predictability.
New methodology for emission calculation
The first implementing regulation concerns the methodology for calculating emissions embedded in CBAM goods. Building on the experience from the transitional phase, a clearer yet simpler procedure is to be established. In the future, it will be clearly defined how direct, indirect, and electricity-related emissions must be recorded and under which conditions default values may be used instead of actual emissions data. The focus is on striking a balance between practical feasibility and ecological effectiveness. A simplification of emission calculations has already been raised in the context of the Omnibus Initiative. It has become evident that the majority of emissions stem from precursor products.
Adjustment to free EU ETS allowances
The second implementing regulation addresses the adjustment of the number of CBAM certificates that companies must surrender, taking into account the continued free allocation under the EU Emissions Trading System. Since EU producers still partly benefit from free allocation, this reality is to be mirrored for imports as well. The so-called CBAM factor, which will be gradually reduced over the years, is the central mechanism for aligning both systems. For CBAM, it will be linked to the so-called CBAM benchmarks. The CBAM benchmarks represent a portion of free emissions and are designed to mirror the free allocation for European producers. Through the CBAM factor, the share of the CBAM benchmarks that may be deducted as free emissions from imported emissions will decrease year by year, in line with the reduction of free allocations for European producers. The significance of this regulation for affected companies cannot be overstated. It is fundamental for reliable cost forecasting in the coming year and crucial for ensuring fair competition between European and non-European producers.
Credit for CO₂ prices paid in third countries
Another component of the consultation is how CO₂ prices already paid in the country of origin can be credited against CBAM obligations. The Commission is currently developing clear rules for converting these prices into deductible CBAM certificates, including provisions for currency conversion and the necessary proof. This is particularly relevant for imports from countries with their own CO₂ pricing systems, such as the United Kingdom or South Korea. Given the diversity of pricing instruments, conversion is not always straightforward. What matters is that the CO₂ price was effectively borne by the producer and not offset by any rebates or free allocations. This mechanism is intended to prevent double charging of companies and to strengthen international climate policy. It also provides third countries with an incentive to introduce their own climate instruments.
What companies should know and do now
These three consultations are not just about technical details; they form the foundation for the practical implementation of CBAM starting in 2026. For companies, this means: anyone seeking early clarity on their future certificate obligations should review the proposals and provide feedback. This is a chance for companies to share their practical experiences with the European Commission. Ultimately, this will be decisive in ensuring the mechanism remains workable in practice. The final regulations are expected during 2025. Especially with regard to the CBAM benchmarks, this is a very late timeline and certainly reason for critical feedback within the consultation.
Support with implementation
If you would like to assess how these developments will specifically impact your reporting, cost planning, or strategy, please feel free to reach out to us directly at helge@kolum.earth. We will support you on the path to the final CBAM phase.