Article 9 of Regulation (EU) 2023/956 gives EU importers one concrete way to reduce the number of CBAM certificates they must surrender: by deducting a carbon price already paid in the country of origin. Of the major exporting nations supplying CBAM-covered goods to the EU, only South Korea's K-ETS currently stands as the leading candidate for this deduction. China's ETS, Turkey's absent pricing scheme, and India's pilot mechanism do not qualify under the conditions the regulation sets out.
Understanding which schemes qualify, why most do not, and how to calculate and document the deduction correctly is the operational task this article covers in full.
Caption: The Article 9 carbon price deduction reduces CBAM certificate obligations only when the origin country's scheme meets three cumulative legal and technical conditions.
What the CBAM Carbon Price Deduction Actually Does
The Article 9 carbon price deduction reduces the number of CBAM certificates an authorized declarant must surrender, not the price of each certificate. This distinction carries significant practical consequences for how importers calculate their net liability.
CBAM certificates are priced at the weekly average of EU ETS auction closing prices (approximately €70 per tonne CO₂ as of late March 2026). If a non-EU producer has paid a legally binding carbon price equivalent to €20 per tonne CO₂ for the embedded emissions of the exported goods, the importer does not pay €70 minus €20. Instead, the importer surrenders fewer certificates, with the reduction calculated proportionally.
The deduction formula defined under Article 9 is: Reduction in certificates = (Carbon price effectively paid in €/tCO₂) / (CBAM certificate price in €/tCO₂) × (Specific embedded emissions in tCO₂). Applied to that example: if the CBAM certificate price is €70 and the foreign carbon price is €20, the proportional reduction is 20/70, meaning the importer surrenders approximately 28.6% fewer certificates for those goods.
How does this interact with the rest of the compliance cycle? The deduction is claimed at the annual CBAM declaration stage, filed via the CBAM Registry by September 30 of the year following import. For calendar year 2026 imports, the first deadline is September 30, 2027.
The EU carbon border adjustment mechanism was specifically designed to equalize the carbon cost of imported and domestically produced goods. Article 9 is the mechanism's acknowledgment that some trading partners already price carbon, and that double-charging those emissions would be economically unjust and politically counterproductive.
The Three Conditions a Carbon Pricing Scheme Must Meet
Three cumulative conditions determine whether a foreign carbon pricing scheme qualifies under Article 9, as established in Regulation (EU) 2023/956 and clarified in the Article 3(25) definition of "carbon price."
The three conditions are listed below. All three must be satisfied simultaneously; partial compliance does not qualify.
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Legal binding force. The carbon pricing scheme must be mandated and enforced by government law. Voluntary schemes, internal corporate carbon prices, and unilaterally applied industry agreements are explicitly excluded. The scheme must constitute a legally enforceable obligation on covered installations.
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Coverage of the same emissions. The foreign scheme must cover the same greenhouse gases and the same production processes as CBAM covers for the relevant goods. A scheme that prices only electricity-sector emissions does not qualify for goods produced in the steel sector, because the emissions covered are different. The coverage must map directly to the embedded emissions for which the Article 9 deduction is being claimed.
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No rebate at export. The carbon price paid must not be returned, rebated, or otherwise compensated when the goods leave the origin country. If a government imposes a carbon price domestically but refunds it at export (a so-called "export rebate"), the price has not been "effectively paid" in the sense Article 9 requires. The price must have genuinely reduced the producer's economic position.
Beyond these three structural conditions, the Commission is expected to publish an official list of recognized qualifying schemes from 2027 onward. Until that list is published and a specific scheme is included, importers claiming a deduction carry documentation risk during inspections by national competent authorities.
Which Countries Qualify for the Article 9 Deduction in 2026
The qualification status of the major CBAM-exporting countries as of April 2026 is presented in the table below. Status reflects the three conditions above and available Commission guidance.
| Country | Carbon Pricing Scheme | Legally Binding | Covers CBAM Sectors | No Export Rebate | Article 9 Status |
|---|---|---|---|---|---|
| South Korea | K-ETS (Korea Emissions Trading Scheme) | Yes | Yes (steel, cement, other manufacturing) | Yes | Likely qualifying (pending Commission list) |
| Switzerland | Swiss ETS (linked to EU ETS) | Yes | Yes | Yes | Largely exempt (Annex III territory) |
| UK | UK ETS | Yes | Yes | Under assessment | Pending Commission assessment |
| South Africa | South Africa Carbon Tax | Yes | Partial | Under review | Under assessment |
| China | CN-ETS | Yes (electricity sector only) | No (steel not covered; intensity-based) | N/A | Does not qualify currently |
| India | CCTS (pilot) | Partially | No (not nationally mandated) | N/A | Does not qualify currently |
| Turkey | None | No | No | N/A | Does not qualify |
| Russia | Token carbon levy | No effective enforcement | No | N/A | Does not qualify |
| Ukraine | No | No | No | N/A | Does not qualify |
| Brazil | No national scheme | No | No | N/A | Does not qualify |
South Korea's K-ETS is the only major CBAM-exporting nation with a scheme that meets all three structural conditions. Established in 2015, the K-ETS is a cap-and-trade system operating under legally binding national legislation, covers manufacturing sectors including steel, cement, and petrochemicals, and applies no export rebate. For EU importers sourcing CBAM goods from South Korean producers, the K-ETS carbon price paid at the installation level is deductible from the CBAM certificate obligation.
China's CN-ETS does not qualify for two independent reasons. First, as of 2026, the CN-ETS covers only the power generation sector. Steel plants, cement kilns, and aluminium smelters in China operate outside the CN-ETS. Second, the CN-ETS is intensity-based rather than absolute-cap, meaning it benchmarks against emission intensity per unit of production rather than capping total emissions. CBAM is calculated on absolute embedded emissions, creating a structural incompatibility in coverage mapping. Even if China expands its ETS to cover steel in the future, the intensity-versus-absolute-cap problem would need resolution before the scheme qualifies.
Turkey has no qualifying scheme. Turkey is the EU's largest steel supplier (approximately 6 million tonnes per year) and a significant cement and aluminium exporter. Turkish producers pay no domestic carbon price that CBAM can recognize, meaning EU importers sourcing from Turkey receive no Article 9 deduction and bear the full certificate obligation for those goods.
How to Calculate the Article 9 Deduction
Calculating the Article 9 carbon price deduction requires three verified inputs. The calculation process involves the steps described below.
The three required inputs are as follows.
- Specific embedded emissions of the goods, expressed in tCO₂e per tonne of product, as verified by an accredited third-party verifier under DR (EU) 2025/2551
- The carbon price effectively paid, denominated in EUR or converted to EUR at the applicable exchange rate, reduced by any free allocation, state compensation, or export rebates received by the producer
- The CBAM certificate price applicable to the import period (quarterly average of EU ETS auction prices for 2026 imports; weekly average from 2027)
Step 1: Obtain Verified Proof of Carbon Price Payment
Collect documentary evidence that the carbon price was paid at the production installation level. Acceptable documentation includes ETS compliance certificates showing allowances surrendered and quantities covered, carbon tax payment receipts issued by the relevant government authority, and third-country regulator confirmations of compliance status. The documentation must be installation-specific, not company-level or sector-level.
The Article 9 deduction applies to the carbon price "effectively paid." This means the gross price must be reduced by any free allowances the installation received at no cost, any state subsidies compensating for the carbon cost, and any export rebates returned by the government. For South Korean K-ETS participants in the steel sector, a portion of allowances is still allocated freely in the early compliance phases. The deductible amount is the net price paid after subtracting the value of free allocation received.
Step 2: Convert the Foreign Carbon Price to EUR
The foreign carbon price must be expressed in EUR for the deduction calculation. The regulation does not specify which exchange rate date applies, which is one of the open questions noted in grey-areas guidance as of April 2026. Importers should document the exchange rate used (rate on date of payment is the most defensible position), apply it consistently across all transactions within the declaration year, and retain conversion records for the 4-year record-keeping period required under Article 6(6).
Step 3: Apply the Deduction Formula
Using the verified embedded emissions, the effective foreign carbon price in EUR, and the CBAM certificate price, calculate the certificate reduction as follows.
Example calculation for South Korean steel:
- Imported: 1,000 tonnes of BF-BOF steel from a K-ETS covered installation
- Specific embedded emissions: 2.0 tCO₂/t (verified)
- Total embedded emissions: 2,000 tCO₂
- K-ETS effective carbon price paid (net of free allocation): €18/tCO₂ (converted from KRW at date of payment)
- CBAM certificate price (Q3 2026 average): €68/tCO₂
- Certificate reduction: (18/68) × 2,000 = 529 certificates
- Certificates required without deduction: 2,000
- Certificates required after deduction: 1,471
The 2026 CBAM factor is 2.5% (free allocation remaining at 97.5%). The net certificate obligation before the Article 9 deduction already accounts for this via the SEFA methodology. The Article 9 deduction then reduces the post-SEFA certificate obligation further.
Step 4: Document and Submit the Deduction in the Annual Declaration
The annual CBAM declaration, submitted via the CBAM Registry by September 30, 2027 for calendar year 2026 imports, must include under Article 6: the carbon price claimed per tonne of CO₂e, the specific installation and goods to which it applies, and supporting documentation. The competent authority retains the right to inspect all Article 9 deduction claims, and the record-keeping obligation runs to the end of the 4th year after the declaration year.
The role of CBAM certificates is central here: the deduction reduces the certificate count to surrender, but each certificate still corresponds to one tonne CO₂e. The mathematics of the deduction formula reflect this direct tonne-for-tonne logic.
Caption: The Article 9 CBAM deduction calculation proceeds from verified embedded emissions through effective carbon price conversion to the final reduction in certificates surrendered.
Why China's ETS Does Not Yet Qualify
China's ETS disqualification under Article 9 is a compound problem. Two separate, independent reasons each independently prevent qualification, and both must be resolved before Chinese producers can generate a deductible carbon price.
The first reason is sector coverage. The CN-ETS, launched nationally in 2021, covers the power generation sector only. Steel, cement, aluminium, and fertilizer production facilities in China operate outside the CN-ETS. When a Chinese steel mill exports to the EU, the embedded emissions of that steel were produced by a facility not subject to any ETS obligation. No carbon price was paid on those emissions, so there is no price to deduct.
The second reason is the intensity-versus-absolute-cap structural mismatch. The CN-ETS allocates allowances based on emission intensity benchmarks (tCO₂ per MWh generated), not on absolute emission caps. A power plant that improves its intensity while increasing total output can expand production with no additional allowance cost. CBAM measures absolute embedded emissions per tonne of product. Reconciling an intensity-based foreign system with CBAM's absolute measurement system requires technical conversion rules that do not yet exist in any EU implementing regulation.
China has announced plans to expand the CN-ETS to cover steel, cement, aluminium, and other sectors progressively through 2025 to 2027. If and when steel is included under an absolute-cap system with a genuine carbon price, Chinese steel producers could generate a deductible carbon price under Article 9. As of April 2026, that expansion has not completed, and no Commission recognition of a Chinese qualifying scheme exists.
The financial consequence of non-qualification is significant. At a CBAM certificate price of €70/tCO₂ and the 2.5% CBAM factor in 2026, the net certificate cost is small. By 2030, when free allocation falls to 51.5% and the CBAM factor reaches 48.5%, the absence of an Article 9 deduction will materially increase the cost for EU importers sourcing Chinese-origin goods compared to importers sourcing from qualifying-scheme countries.
Contextual Border: How Article 9 Fits into the Full CBAM Compliance Cycle
The Article 9 carbon price deduction is one adjustment among three that can reduce an authorized declarant's final certificate surrender obligation. Understanding how they interact prevents both over- and under-compliance.
The three adjustments applied to the gross certificate obligation are listed below.
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SEFA adjustment (free allocation reduction). Under IR (EU) 2025/2620, the CBAM certificate obligation is reduced proportionally to account for EU ETS free allocation still received by competing EU domestic producers. In 2026, with 97.5% free allocation remaining, the CBAM factor is 2.5%, meaning the gross embedded emissions obligation is multiplied by 2.5% before certificates are calculated.
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Article 9 deduction (foreign carbon price). Applied after the SEFA adjustment, the Article 9 deduction reduces the remaining post-SEFA certificate count based on the foreign carbon price effectively paid, as calculated above.
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Buyback provision (excess certificates). Under Article 23 as amended, importers can sell back up to 50% of certificates purchased in a given year at the original purchase price, by October 31 of the surrender year. This is a risk management tool, not an emissions-based adjustment.
The CBAM regulation details are fully set out in the CBAM regulation, including the interaction between these three adjustment mechanisms and the implementing regulations that govern each.
Does the Article 9 Deduction Apply to Default Values?
The Article 9 deduction does not apply when an importer uses default values for embedded emissions. Default values are published by the Commission in IR (EU) 2025/2621 and are used when verified actual emissions data from the production installation cannot be obtained. Default values already account for country-level average emission intensities; they do not reflect the actual carbon price paid by any specific installation.
To claim an Article 9 deduction, the importer must use verified actual emissions data, not defaults. This creates a link between the investment in third-party verification and the financial benefit of the deduction. An importer sourcing from a South Korean K-ETS-covered installation who uses defaults loses the deduction entitlement entirely for that declaration period.
Does the K-ETS Qualify for All CBAM Sectors?
The K-ETS covers 684 entities across power generation, industrial manufacturing, buildings, waste, and transportation as of 2026. For CBAM purposes, the relevant coverage is manufacturing: steel producers, cement manufacturers, and other industrial installations covered by K-ETS generate a carbon price that satisfies the coverage condition. The precise qualification assessment at the installation level remains subject to Commission recognition on the upcoming qualifying schemes list.
EU importers sourcing from South Korea across steel, cement, and aluminium sectors should review whether their specific supply installations are enrolled in K-ETS and obtain installation-level compliance records before claiming the deduction. Coverage at the sector level does not automatically mean coverage at every installation.
What Happens if the Commission Does Not Recognize a Scheme Before the September 2027 Deadline?
The first CBAM declaration deadline is September 30, 2027. The Commission has committed to publishing a list of recognized carbon pricing schemes, but as of April 2026 no final list exists. Importers face a documentation risk: claiming an Article 9 deduction for a scheme not yet formally recognized by the Commission creates exposure to inspection challenges by the national competent authority.
Importers with South Korean suppliers are advised to prepare all documentation now, maintain installation-level K-ETS compliance records, and monitor Commission publications through 2026 and 2027. If the recognition list is not published before the September 2027 deadline, legal advisers in the relevant member state's jurisdiction should be consulted on whether the deduction can be claimed provisionally with full supporting documentation.
For more detail on how the CBAM South Korea compliance picture unfolds, including K-ETS price levels and installation-level verification requirements, the country-specific guidance covers those operational specifics.
Is the Article 9 Deduction Available for Electricity Imports?
The Article 9 deduction applies to CBAM goods across all six covered sectors: iron and steel, cement, aluminium, fertilizers, electricity, and hydrogen. For electricity imports, the embedded emissions are the CO₂ intensity of the electricity generated, and the carbon price paid at the generation installation is the deductible amount.
Electricity imports into the EU traverse physical interconnectors and are subject to separate calculation rules under Article 7 of Regulation (EU) 2023/956. For the Article 9 deduction to apply to electricity, the electricity generator must operate under a legally binding carbon price scheme covering power generation, the price must be effectively paid at the generator level, and no export rebate applies. These conditions are easier to assess for electricity from the UK (where the UK ETS covers power generation directly) than from countries with no generation-sector carbon pricing.
Does South Africa's Carbon Tax Qualify Under Article 9?
South Africa's Carbon Tax, established under the Carbon Tax Act 15 of 2019, imposes a charge on greenhouse gas emissions from industrial installations above a threshold. As of April 2026, the Commission has South Africa's scheme under assessment for Article 9 recognition. The carbon tax is legally binding and nationally mandated, satisfying condition one. Coverage extends to iron and steel, cement, and other manufacturing sectors, satisfying condition two in principle.
The open question is whether the carbon price is "effectively paid" given the tax-free allowances and offsets that reduce the effective rate substantially. South Africa's basic tax-free allowance structure means the net effective carbon price per tonne of CO₂ paid by most industrial installations is significantly below the headline rate. The Commission's assessment is expected to weigh whether the net effective rate, after allowances, constitutes a qualifying carbon price for Article 9 purposes. CBAM China and how embedded emissions are calculated provide comparative context for how coverage mapping decisions affect deduction eligibility across different country scenarios.
Frequently Asked Questions on CBAM Article 9
What is the CBAM Article 9 carbon price deduction?
The Article 9 carbon price deduction is a provision in Regulation (EU) 2023/956 that allows authorized EU importers to reduce the number of CBAM certificates they must surrender when the production installation in the country of origin has paid a legally binding carbon price on the embedded emissions of the exported goods. The deduction is proportional to the foreign carbon price relative to the CBAM certificate price and the verified embedded emissions.
Which countries qualify for the Article 9 CBAM deduction in 2026?
South Korea's K-ETS is the only major CBAM-supplying country with a scheme that meets all three qualification conditions: legally binding, covering the same sectors and emissions as CBAM, and without export rebates. Switzerland is largely exempt from CBAM through Annex III. The UK, South Africa, and Japan are under Commission assessment. China, Turkey, Russia, and India do not currently qualify.
Does China's ETS qualify for the CBAM Article 9 deduction?
China's ETS does not qualify as of 2026 for two independent reasons. The CN-ETS covers only the power generation sector, not steel, cement, or aluminium production. Additionally, the CN-ETS is intensity-based, not absolute-cap, creating a structural mismatch with CBAM's absolute emissions measurement. China has announced ETS expansion to cover manufacturing sectors, but no qualifying status has been confirmed by the Commission.
Can importers claim the Article 9 deduction using default emission values?
No. The Article 9 deduction requires verified actual embedded emissions from the specific production installation. Importers using default values published in IR (EU) 2025/2621 cannot claim the Article 9 deduction for those goods in that declaration period. To access the deduction, third-party verification of actual emissions is required under DR (EU) 2025/2551.
How is the Article 9 deduction calculated?
The deduction in certificates equals the carbon price effectively paid in EUR per tCO₂, divided by the CBAM certificate price in EUR per tCO₂, multiplied by the specific embedded emissions in tCO₂. The result is the reduction in the number of certificates to surrender. The deduction is applied after the SEFA free allocation adjustment.
Is the Article 9 deduction the same as a carbon price exemption?
No. The Article 9 deduction reduces the number of CBAM certificates surrendered proportionally to the foreign carbon price relative to the EU ETS price. A full exemption would apply if the foreign carbon price equals the EU ETS price, making the certificate obligation zero. A partial deduction applies when the foreign carbon price is lower than the EU ETS price, which is the case for all currently qualifying schemes. Full exemption occurs only when the origin country is listed in Annex III (Iceland, Liechtenstein, Norway, Switzerland), where no CBAM obligation applies at all.