The CBAM calculation determines how many certificates an EU importer must purchase and surrender for each tonne of carbon-intensive goods brought into the EU. The core formula is: CBAM obligation (€) = Specific Embedded Emissions (tCO₂e/t) × Quantity (tonnes) × EU ETS price (€/tCO₂e). In 2026, the EU ETS price stands at approximately €70/tCO₂, with the Q1 2026 range spanning €66–90/tCO₂. Six sectors fall within scope: iron and steel, cement, aluminium, fertilizers, electricity, and hydrogen. Understanding the CBAM calculation before the first declaration deadline of September 30, 2027 protects importers from a €100/tCO₂e penalty for every uncovered tonne.
This guide covers the six-step calculation process under Regulation (EU) 2023/956 as amended by Regulation (EU) 2025/2083, with worked examples for all six sectors, a cost reference table, and answers to the questions importers most commonly ask about EU CBAM compliance.
Caption: The CBAM calculation formula applied across all six covered sectors at the current EU ETS price of approximately €70/tCO₂.
What the CBAM Calculation Measures
CBAM calculation measures the embedded greenhouse gas emissions in imported goods and converts those emissions into a financial obligation priced at the EU ETS carbon price. The calculation does not produce a customs duty or a tax on revenue. It produces a certificate quantity: one CBAM certificate per tonne of CO₂e embedded in the goods.
The legal basis for the calculation methodology is Article 7 of Regulation (EU) 2023/956, supplemented in full technical detail by Implementing Regulation (EU) 2025/2547. Two quantities drive every CBAM calculation for CBAM embedded emissions: the specific embedded emissions (SEE) of the goods, expressed in tCO₂e per tonne of product, and the net mass of the import in tonnes.
Three types of emissions enter the calculation depending on the sector:
- Direct embedded emissions: Greenhouse gases from the production process itself, including heat and cooling consumed during production (Article 3(4), Regulation (EU) 2023/956). Priced in all six sectors.
- Indirect embedded emissions: Emissions from electricity consumed during production (Article 3(4)). Priced only for cement and fertilizers.
- Precursor embedded emissions: Embedded emissions carried forward from Annex I inputs used to produce complex goods. Relevant for steel pipes (using hot-rolled coil as precursor) and cement (using clinker as precursor).
The CBAM factor reduces gross certificates to reflect remaining EU ETS free allocation. In 2026, the CBAM factor is 2.5%, meaning 97.5% of free allocation remains. The net certificate obligation formula is: Net obligation = SEE × Quantity × (CBAM factor ÷ 100). The gross CBAM calculation still matters for planning: it establishes the ceiling cost as free allocation phases out to zero by January 1, 2034.
How to Calculate CBAM Obligations: 6 Steps
The six steps below follow the importer compliance chain established under Regulation (EU) 2023/956 and IR (EU) 2025/2547. Each step produces a specific output that feeds the next step. Completing all six steps produces the final CBAM certificate obligation for the annual declaration.
Step 1: Identify the CN Code and Covered Sector
Every CBAM calculation starts with the Combined Nomenclature (CN) code of the imported product. The CN code determines whether the good falls under Annex I of Regulation (EU) 2023/956 and which of the six sectors applies.
The six covered sectors and their primary CN code ranges are listed below. A good not listed in Annex I carries no CBAM obligation regardless of its carbon content.
| Sector | Primary CN Codes | Direct Emissions | Indirect Emissions |
|---|---|---|---|
| Iron and steel | Chapters 72–73 (7201, 7206–7217, 7301–7307) | Priced | Not priced |
| Cement | Chapter 25 (2523 10, 2523 21, 2523 29, 2523 30) | Priced | Priced |
| Aluminium | Chapter 76 (7601, 7604–7608, 7610, 7616) | Priced | Not priced |
| Fertilizers | Chapters 28, 31 (2814, 3102 10, 3102 30, 3105) | Priced | Priced |
| Electricity | 2716 00 00 only | Priced | N/A |
| Hydrogen | 2804 10 00 only | Priced | Not priced |
Two exemptions remove goods from scope even when the CN code matches. First, the 50-tonne de minimis threshold: importers whose total annual CBAM goods fall below 50 tonnes across all sectors (excluding electricity and hydrogen, which have no threshold) face no obligation. Second, goods originating in Annex III countries, specifically Iceland, Liechtenstein, Norway, and Switzerland, are exempt because their electricity markets integrate with the EU or equivalent carbon pricing applies.
Step 2: Determine the Production Route
The production route determines which emission factor and which calculation equation from IR (EU) 2025/2547 applies. Importers must identify the production route used at the specific installation that produced the goods, not a regional or national average.
Production routes with distinct emission profiles exist in all six sectors. The most important routes are listed below.
- Steel: blast furnace and basic oxygen furnace (BF-BOF) at approximately 2.0 tCO₂/t; electric arc furnace with scrap (EAF scrap) at approximately 0.5 tCO₂/t; direct reduced iron with EAF (DRI-EAF) at approximately 0.9–1.4 tCO₂/t
- Cement: Portland cement at approximately 0.83 tCO₂/t; clinker at approximately 0.83–0.87 tCO₂/t; blended cement (with slag or fly ash) at approximately 0.40–0.65 tCO₂/t
- Aluminium: primary Hall-Héroult process at approximately 1.5 tCO₂/t (direct only); secondary (recycled) aluminium at approximately 0.05–0.10 tCO₂/t
- Fertilizers: urea (Haber-Bosch, SMR natural gas feedstock) at approximately 2.3–2.6 tCO₂e/t; ammonium nitrate at approximately 1.5–2.0 tCO₂e/t
- Hydrogen: grey (SMR, no carbon capture) at approximately 9–12 tCO₂/t; blue (SMR with CCS) at approximately 1–3 tCO₂/t; green (electrolysis, renewable electricity) at approximately 0–0.3 tCO₂/t
- Electricity: country-specific grid emission factor at the time of export (tCO₂/MWh)
The production route is provided by the non-EU producer in their emissions declaration. When the producer cannot confirm the route, the importer falls back to default values in Step 3.
Step 3: Obtain Specific Embedded Emissions (Actual or Default)
Specific embedded emissions (SEE) are expressed in tCO₂e per tonne of goods and represent the denominator of the CBAM certificate calculation. Importers obtain SEE data through one of two paths.
Path A: Actual verified emissions arrive from the non-EU production installation. The producer prepares a monitoring plan, measures or calculates emissions per IR (EU) 2025/2547, and provides the SEE figure alongside supporting documentation. This data must be verified by an accredited verifier under DR (EU) 2025/2551. Verified actual emissions are the preferred path because default values carry a punitive mark-up.
Path B: Default values from IR (EU) 2025/2621 apply when actual data is unavailable. Default values represent the average emission intensity for the product type in the country of origin, with a mark-up of 10% in 2026, 20% in 2027, and 30% from 2028 onward. Fertilizers receive a lower mark-up of 1%, reflecting agricultural price sensitivity. Importers using defaults in 2028 and beyond pay at least 30% more per certificate than importers with actual verified data.
One important planning note: in 2026 specifically, the interaction between the SEFA (Specific Embedded Free Allocation) methodology and default benchmarks can in some product and country combinations produce a default-based CBAM liability lower than the actual verified liability. This reverses from 2027 as mark-ups rise. Importers should model both paths before deciding.
Step 4: Apply the CBAM Formula
The CBAM calculation formula under Article 7 of Regulation (EU) 2023/956 is:
CBAM obligation (€) = Specific Embedded Emissions (tCO₂e/t) × Quantity (tonnes) × EU ETS price (€/tCO₂e)
This formula produces the gross certificate cost. The EU ETS price used is the quarterly average of EU ETS auction clearing prices for 2026 (per IR (EU) 2025/2548), switching to the weekly average of auction closing prices from 2027 onward. The current reference price is approximately €70/tCO₂ as of late March 2026.
The table below shows gross CBAM costs per tonne of product at three ETS price scenarios for all six sectors.
| Product | Emission Factor (tCO₂e/t) | Gross Cost @ €50/tCO₂ | Gross Cost @ €70/tCO₂ | Gross Cost @ €100/tCO₂ |
|---|---|---|---|---|
| Steel (BF-BOF) | ~2.0 | €100/t | €140/t | €200/t |
| Steel (EAF scrap) | ~0.5 | €25/t | €35/t | €50/t |
| Cement (Portland) | ~0.83 | €41.50/t | €58.10/t | €83/t |
| Primary aluminium | ~1.5 | €75/t | €105/t | €150/t |
| Urea fertilizer | ~2.5 | €125/t | €175/t | €250/t |
| Grey hydrogen (SMR) | ~9–12 | €450–600/t | €630–840/t | €900–1,200/t |
| Green hydrogen | ~0 | €0/t | €0/t | €0/t |
Gross costs are before the free allocation adjustment. Net 2026 cost = gross cost × 2.5% CBAM factor. Example: BF-BOF steel at €70 ETS produces a gross cost of €140/t but a net 2026 cost of €3.50/t.
Worked example for a Turkish BF-BOF steel import:
- SEE: 2.0 tCO₂/t (verified actual)
- Quantity: 500 tonnes
- EU ETS price: €70/tCO₂
- Gross CBAM obligation: 2.0 × 500 × €70 = €70,000
- Net 2026 obligation (× 2.5% CBAM factor): €70,000 × 0.025 = €1,750
This net figure rises to €33,950 at the 2030 CBAM factor of 48.5%, with no change in emissions or price. Planning for the 2029–2030 free allocation cliff is the most important financial decision EU importers of steel face today.
Step 5: Calculate the Quarterly Holding Requirement
The quarterly holding requirement under Article 22(2) of Regulation (EU) 2023/956, as amended by Regulation (EU) 2025/2083, is: at the end of each calendar quarter, importers must hold CBAM certificates equal to at least 50% of cumulative embedded emissions imported since January 1 of that year.
This requirement prevents importers from deferring all purchases to the annual declaration deadline. Importers who under-hold at a quarterly check face risk of inspection by the national competent authority.
Calculation method for quarterly holding:
- Sum all embedded emissions from CBAM goods imported from January 1 to the end of the relevant quarter (Q1, Q2, Q3, or Q4)
- Multiply by 0.50 to obtain the 50% threshold
- Compare that figure to current certificate holdings in the CBAM Registry account
- Purchase certificates to cover any shortfall before quarter-end
Example: An importer of Portland cement imports 1,000 tonnes in Q1 and 800 tonnes in Q2 2027. Portland cement SEE = 0.83 tCO₂/t. By end of Q2, cumulative embedded emissions = (1,000 + 800) × 0.83 = 1,494 tCO₂. The 50% holding requirement = 747 CBAM certificates by June 30, 2027.
Step 6: Purchase Certificates and Surrender at Declaration
CBAM certificate sales open February 1, 2027 through the national competent authority. Certificates are not traded on an exchange. Each certificate corresponds to one tonne of CO₂e and carries the EU ETS auction price at the time of purchase.
The annual CBAM declaration, due September 30, 2027 for calendar year 2026 imports, requires surrender of certificates equal to total verified embedded emissions for the year. The six inputs for the declaration under Article 6 of Regulation (EU) 2023/956 are listed below.
- Total quantity of CBAM goods imported during the calendar year, broken down by CN code and country of origin
- Total embedded emissions (tCO₂e), verified and broken down by goods type and origin country
- Total CBAM certificates being surrendered
- Carbon price paid in any country of origin where an Article 9 deduction is claimed
- Reference numbers of verification reports supporting the embedded emissions figures
- Evidence supporting any SEFA adjustment for free allocation received by competing EU domestic producers
The buyback provision allows importers to resell up to 50% of certificates purchased in a given year at the original purchase price, by October 31 of the surrender year. This provides a hedge against over-purchasing when import volumes fall short of projections.
CBAM Calculation Examples for All 6 Sectors
The six worked examples below apply the formula to a 1,000-tonne import shipment at the current EU ETS price of €70/tCO₂, showing both gross and net 2026 costs.
Steel (BF-BOF): SEE = 2.0 tCO₂/t. Gross obligation = 2.0 × 1,000 × €70 = €140,000. Net 2026 obligation (× 2.5%) = €3,500.
Cement (Portland): SEE = 0.83 tCO₂/t. Both direct and indirect emissions are priced. Gross obligation = 0.83 × 1,000 × €70 = €58,100. Net 2026 = €1,452.50.
Aluminium (primary): SEE = 1.5 tCO₂/t (direct emissions only; indirect electricity emissions are not priced by CBAM for aluminium). Gross obligation = 1.5 × 1,000 × €70 = €105,000. Net 2026 = €2,625.
Fertilizers (urea): SEE = 2.5 tCO₂e/t. Both direct and indirect emissions are priced. Gross obligation = 2.5 × 1,000 × €70 = €175,000. Net 2026 = €4,375.
Electricity: Obligation is expressed per MWh, not per tonne, using the carbon intensity of the exporting country's grid at the time of generation. For 1,000 MWh imported from a grid with 0.5 tCO₂/MWh, gross obligation = 0.5 × 1,000 × €70 = €35,000.
Hydrogen (grey): SEE = approximately 10.5 tCO₂/t (midpoint of 9–12 range). Gross obligation = 10.5 × 1,000 × €70 = €735,000. Net 2026 = €18,375. Green hydrogen SEE approaches zero and produces near-zero CBAM cost at any ETS price.
What Happens When Calculation Data Is Unavailable
Importers who cannot obtain actual embedded emissions data from their non-EU suppliers fall back on the default value system established in IR (EU) 2025/2621. The CBAM default values system provides country-specific and product-specific emission intensity figures that serve as the SEE in the formula when verified actual data is absent.
Default values are set at the average emission intensity for the product in the country of origin, then marked up. The mark-up schedule increases the punitive element over time: 10% in 2026, 20% in 2027, and 30% from 2028 onward. Fertilizer defaults carry only a 1% mark-up due to agricultural price sensitivity. The practical effect is that importers paying default-based CBAM costs pay progressively more than importers with actual verified data as the years advance.
Exporters whose actual emissions fall below the country default face a strong financial incentive to invest in monitoring systems, provide verified data to their EU customers, and reduce their embedded emissions. At €70 ETS and a 30% mark-up, an exporter whose actual steel BF-BOF emissions are 1.7 tCO₂/t (below the 2.0 tCO₂/t default) saves their EU customer approximately €21/t gross on the CBAM calculation, growing to approximately €408/t gross by 2030 as free allocation disappears.
How CBAM Calculation Interacts with the EU ETS and Free Allocation
The CBAM calculation does not operate in isolation from the EU ETS. Two interactions directly affect the net cost importers face.
The Free Allocation Phase-Out
EU ETS free allocation for CBAM sectors reduces the CBAM certificate obligation proportionally through the SEFA methodology established in IR (EU) 2025/2620. The CBAM factor (the fraction of free allocation phased out) governs the net certificate obligation, as shown in the table below.
| Year | CBAM Factor | Net obligation as % of gross |
|---|---|---|
| 2026 | 2.5% | 2.5% |
| 2027 | 5% | 5% |
| 2028 | 10% | 10% |
| 2029 | 22.5% | 22.5% |
| 2030 | 48.5% | 48.5% |
| 2034 | 100% | 100% |
The steepest increase occurs between 2029 and 2030, when the CBAM factor jumps from 22.5% to 48.5%. An importer of 10,000 tonnes of BF-BOF steel per year at €70 ETS will see their net annual CBAM cost rise from approximately €35,000 in 2026 to approximately €678,000 in 2030, simply from the free allocation phase-out. No change in import volume or ETS price is required for this increase to occur.
The Article 9 Carbon Price Deduction
Importers whose non-EU suppliers have paid a qualifying carbon price in their country of origin can deduct that price from the CBAM certificate obligation under Article 9 of Regulation (EU) 2023/956. The deduction reduces, not eliminates, the obligation proportionally.
The conditions for a qualifying deduction are three in number: the carbon pricing scheme must be legally binding and effectively enforced; the price must have been actually paid; and the Commission must have recognized the scheme. As of April 2026, South Korea's K-ETS is pending Commission assessment. Switzerland's ETS, linked to the EU ETS, is likely to qualify. No deduction is available for goods from countries without recognized carbon pricing, including Turkey, Russia, India, China, and Egypt.
The CBAM regulation legal basis under Article 192(1) TFEU classifies CBAM as an environmental measure, not a trade measure. This distinction affects how Article 9 deductions interact with WTO obligations, a question that remains unsettled in the ongoing dispute WTO DS639 (Russia vs EU, 2025).
Caption: Net CBAM calculation costs for BF-BOF steel rise approximately 40-fold between 2026 and 2034 as EU ETS free allocation phases out from 97.5% to zero.
Frequently Asked Questions on CBAM Calculation
What is the formula for CBAM calculation?
The CBAM calculation formula is: CBAM obligation (€) = Specific Embedded Emissions (tCO₂e/t) × Quantity (tonnes) × EU ETS price (€/tCO₂e). The specific embedded emissions figure comes from verified actual data from the production installation or, if unavailable, from Commission default values published in IR (EU) 2025/2621.
Does CBAM calculation use the same emission factor for all countries?
No. The CBAM calculation uses production-installation-specific embedded emissions, not country averages. Default values are country-specific (per IR (EU) 2025/2621), but actual verified data from the specific facility overrides any country average. A BF-BOF steel producer in Turkey operating a modern, efficient plant may have lower actual SEE than the Turkish country default.
Is the CBAM calculation different for steel versus cement?
Yes. Steel CBAM calculation covers direct emissions only (CO₂). Cement CBAM calculation covers both direct and indirect emissions (including electricity consumption in the production process). Cement is one of two sectors where indirect emissions are priced under CBAM; the other is fertilizers. This makes cement's SEE data requirements more complex, as importers must obtain both the direct emission figure and the electricity consumption data from the production installation.
Can an importer use default values for the CBAM calculation?
Yes, but with a financial penalty. Default values from IR (EU) 2025/2621 are available when actual verified data cannot be obtained. They carry a mark-up of 10% in 2026, rising to 30% from 2028 onward (1% for fertilizers). The CBAM steel sector example illustrates how the gap between default and actual values can translate into material cost differences as free allocation phases out.
Does the 50-tonne de minimis exemption affect the CBAM calculation?
The de minimis threshold exempts small importers entirely from CBAM obligations, meaning no calculation is required if total annual imports across all CBAM goods (excluding electricity and hydrogen) fall below 50 tonnes per importer per calendar year. The threshold applies per importer, not per shipment or per commodity type. Importers above the threshold must perform the full CBAM calculation for all their covered imports.
Do CBAM calculations change quarterly?
The embedded emissions figure used in the annual declaration does not change quarterly. The quarterly holding requirement, however, forces importers to track cumulative embedded emissions throughout the year and hold at least 50% of that cumulative figure in their CBAM Registry account at each quarter-end. The EU ETS price used in the final financial obligation is set by the quarterly average auction price for 2026, published by the Commission under IR (EU) 2025/2548.
How Does CBAM Calculation Differ for the Six Sectors?
The six sectors covered by CBAM use the same core formula but differ in which emission types are included in the SEE figure and which GHGs are counted.
Does the CBAM calculation cover perfluorocarbons (PFCs) from aluminium?
Yes. For aluminium, the SEE includes both CO₂ from anode consumption and PFC emissions (CF₄ with GWP of 6,630, and C₂F₆ with GWP of 11,100) from anode effect events during Hall-Héroult smelting. PFCs are converted to CO₂e for the CBAM calculation using their global warming potential values. Primary aluminium producers with higher rates of anode effect events carry higher SEE figures and thus higher CBAM certificate obligations. Secondary aluminium (recycled scrap) has negligible PFC emissions and an SEE of approximately 0.05–0.10 tCO₂e/t.
Is the CBAM calculation for green hydrogen zero?
Green hydrogen produced by electrolysis using verified renewable electricity produces embedded emissions of approximately 0–0.3 tCO₂/t H₂, depending on the carbon intensity of the electricity source. At an SEE of zero, the CBAM certificate obligation is also zero. For the CBAM calculation to treat hydrogen as green, the EU importer must provide verified evidence that the electricity used in electrolysis was genuinely additional, renewable, and temporally and geographically correlated with generation, aligned with the EU's Renewable Energy Directive Delegated Acts. The CBAM sectors article covers the full requirements for each of the six sectors.