The CBAM carbon price deduction under Article 9 of Regulation (EU) 2023/956 lets an authorized declarant reduce the number of CBAM certificates surrendered when a carbon price has already been effectively paid on the same embedded emissions in the country of origin. On 13 May 2026, the European Commission published a working draft implementing regulation that, for the first time, sets out how that deduction will actually be calculated: four recognition pathways for foreign carbon pricing schemes, a 10% cap on Article 6 Paris Agreement credits, and a certification regime built around a new "independent person" role.
This regulation is still a draft. Public consultation closed on 10 June 2026, and as of this writing (11 July 2026) the Commission had not adopted it. Industry advisers expect adoption later in 2026, ahead of the first CBAM declaration deadline of 30 September 2027, but no confirmed adoption date has been published. Every rule below is therefore provisional and can change before the final text appears in the Official Journal.
The deduction matters because CBAM prices embedded emissions at the EU ETS rate regardless of what a producer already pays at home. Without Article 9, a producer paying nothing and one fully inside a linked carbon market would face an identical certificate bill for the same tonne of CO2e. The draft is the technical machinery meant to prevent that double payment without weakening CBAM's leakage protection.
What the Draft Regulation Covers, and Why It Is Still Provisional
The draft covers five things: how the carbon price effectively paid is determined for each good, how it converts into euro, how it converts into a certificate reduction, what evidence proves payment, and who is qualified to certify that evidence. Its legal basis is Article 9(5) of Regulation (EU) 2023/956, built on a call for evidence that ran from 28 August to 25 September 2025.
The table below sets out the draft's status as of 11 July 2026.
| Milestone | Date | Status |
|---|---|---|
| Call for evidence | 28 Aug to 25 Sept 2025 | Closed |
| Working draft published | 13 May 2026 | Complete (Ref. Ares(2026)4841230) |
| Public feedback window | 13 May to 10 June 2026 | Closed |
| Commission adoption | Not confirmed | Pending, expected H2 2026 |
| Planned application date once adopted | 1 January 2026 (retroactive) | Draft Article 32 |
Two features carry practical weight. First, the draft states it "shall apply from 1 January 2026," so once adopted, it will cover carbon prices paid from the start of the current CBAM year, not just from the adoption date forward. Second, nothing in the draft is binding today: importers claiming a deduction in 2026 rely on the general wording of Article 9 and Article 3(29) of Regulation (EU) 2023/956, not on the evidentiary rules below.
For the underlying qualification question, the separate CBAM Article 9 qualification guide covers the country-by-country picture and a full worked calculation.
The Four Recognition Pathways for a Foreign Carbon Price
The draft recognizes a foreign carbon price through four practical pathways, all anchored in the narrow definition of "carbon price" in Article 3(29) of Regulation (EU) 2023/956: a tax, levy, or fee, or emission allowances under a binding greenhouse gas emissions trading system. Recital 8 adds a condition across all four: the mechanism must be binding and impose compliance obligations on all operators in the relevant sector "without discrimination."
- Emissions trading systems. A cap-and-trade scheme where operators surrender allowances for their emissions. The draft extends this pathway to baseline-and-credit systems, defined in Article 2(5) as schemes where entities below an intensity baseline earn tradable credits and entities above it must buy them; recital 10 treats such credits as "equivalent to allowances paid under an emissions trading system."
- Point-source carbon taxes, levies, or fees. A charge paid directly by the installation operator on its own measured emissions, evidenced through official tax authority records reflecting any rate changes during the reporting period.
- Fuel-based carbon taxes. A charge levied on the carbon content of a fuel, often collected upstream from a fuel supplier rather than the installation operator. Recital 9 allows a declarant to claim this price even where the installation never paid it directly, provided the tax rate matches the fuel's emission factor.
- Mixed-compliance systems. Schemes letting covered operators meet part of their obligation through more than one route, commonly a fixed price alongside the option to buy carbon credits. Recital 11 requires evidence covering whichever compliance option the operator actually used.
The table below summarizes what evidence each pathway requires under the draft.
| Pathway | Who typically pays | Core evidence required |
|---|---|---|
| Emissions trading system (including baseline-and-credit) | Installation operator | Yearly weighted average auctioning price, or secondary market price, plus proof of allowances or credits surrendered |
| Point-source tax, levy, or fee | Installation operator | Official tax authority records, including any in-year rate changes |
| Fuel-based tax | Fuel supplier (cost passed through) | Evidence the tax rate matches the fuel's emission factor |
| Mixed-compliance system | Installation operator, via chosen option | Evidence for the specific compliance option used, including credit purchase records where applicable |
Article 6 Credits Are Capped at 10 Percent, Domestic Credits Are Not
International carbon credits count toward the deduction only up to 10% of the reported and confirmed emissions under the third-country mechanism, and only if authorized and issued under Article 6.2 or Article 6.4 of the Paris Agreement as Internationally Transferred Mitigation Outcomes. Credit purchases beyond that 10% share are not counted toward the recognized carbon price under the draft.
Recital 13 explains the reasoning: the Commission wants third-country producers to pursue most decarbonization domestically rather than buying their way to a lower CBAM bill through international offsets, while still leaving screened Internationally Transferred Mitigation Outcomes as a limited supplementary route. This 10% ceiling applies only to credits generated outside the country whose carbon price is being claimed.
Domestic credits face no separate EU-imposed limit. Where a third-country compliance scheme lets operators meet part of their obligation with domestically generated credits, recital 12 defers entirely to that country's own limits instead of layering an additional EU cap on top. Existing schemes show how varied those domestic limits already are.
- South Africa's Carbon Tax Act permits a 5% to 10% offset allowance
- California's Cap-and-Invest Program caps offset use at roughly 6%
- South Korea's K-ETS allowed Korean Offset Credits up to 10%, since tightened to 5%
- Colombia's carbon tax allows domestic credits to cover up to 50% of the tax liability
Because these domestic limits travel with the credit rather than being re-capped at the border, a generous domestic offset allowance can produce a larger deductible carbon price than the flat 10% international ceiling would suggest.
Proof of Payment: The Evidence and Certification an Importer Needs
Proof of payment must take the form of a carbon price report prepared by the third-country operator and certified by an accredited independent person, not a self-declaration by the EU importer. This certification role is new to CBAM and legally distinct from the accredited verifiers who already check embedded emissions data.
The core proof-of-payment requirements are listed below.
- Independent person accreditation. The certifier must hold accreditation from a national accreditation body under harmonised standard EN ISO/IEC 17029:2019, for a specific "certification of the carbon price effectively paid" scope, valid up to five years and subject to annual surveillance.
- Materiality threshold. The independent person applies a materiality level of 5% of the effective carbon price per tonne attributed to each good, by Combined Nomenclature code, when deciding whether a misstatement must be corrected before certification.
- Currency conversion. Foreign carbon prices convert into euro using yearly average exchange rates the Commission publishes based on European Central Bank rates, or Eurostat data where no ECB rate exists.
- Actual values only. The deduction applies only where embedded emissions are determined using verified actual values for the good itself. Operators may still use Commission-published default carbon prices for precursors and indirect emissions where a supplier's own certification report is unavailable.
- Rebates reduce the claim. Free allowances, baseline exemptions, tax rebates, and indirect cost compensation all reduce the carbon price counted as "effectively paid," with one carve-out for revenues a scheme recycles into public, transparent, emissions-reducing subsidies for the installation itself.
This actual-values-only condition connects directly to CBAM verification and CBAM default values: an importer reporting on defaults forfeits the Article 9 deduction entirely for that period, regardless of what its supplier actually pays at home.
How the Certificate Reduction Is Calculated
The draft sets out two formulas depending on whether the declarant reports actual embedded emissions with a certified effective carbon price, or reports using a Commission-published default carbon price. Both formulas divide the carbon price by a yearly reference price for CBAM certificates, calculated as the average of the CBAM certificate prices published for the year of import under Implementing Regulation (EU) 2025/2548.
| Basis | Formula | What it means |
|---|---|---|
| Certified actual carbon price | Reduction = (Effective carbon price in EUR per tonne of good, or per MWh) divided by (yearly CBAM reference price), multiplied by the quantity of the good declared | The effective price is already expressed per unit of good, so it converts straight into a share of certificates |
| Default carbon price | Reduction = (Commission default carbon price in EUR per tCO2e), multiplied by the declared specific embedded emissions in tCO2e per unit, divided by the yearly CBAM reference price, multiplied by the quantity declared | The default price is per tonne of CO2e, so it must first be multiplied by the emissions intensity of the good |
A simplified illustration: if a certified effective carbon price works out to EUR 20 per tonne of good, the yearly CBAM reference price is EUR 75 per tonne CO2e, and the declarant imports 1,000 tonnes, the reduction is (20 divided by 75) multiplied by 1,000, or roughly 267 fewer certificates for that shipment, before any other adjustment such as the SEFA free-allocation factor.
What the Draft Means for UK ETS, Turkish, and Chinese Supply Chains
None of the UK, Turkey, or China currently has Commission recognition under Article 9; the draft does not itself grant recognition to any specific country's scheme. It only sets the criteria a future determination would apply. The table below maps each to its most plausible pathway.
| Country | Likely pathway | Status as of July 2026 |
|---|---|---|
| United Kingdom | Emissions trading system | UK ETS is mandatory and economy-wide, but not linked to the EU ETS; no Commission recognition decision exists |
| Turkey | Emissions trading system | The pilot ETS implementing regulation envisaged under Climate Law No. 7552 (published July 2025) has not itself been published in the Official Gazette; even once live, pilot-phase 100% free allocation would leave little or no "effectively paid" price |
| China | Emissions trading system (baseline-and-credit) | CN-ETS expanded to steel, cement, and aluminium in March 2025, but remains intensity-based and priced far below the EU ETS |
The UK's mandatory, economy-wide UK ETS structurally resembles the kind of binding trading system pathway one is built around, but that fit does not translate into an actual deduction today. As the UK CBAM double-payment analysis explains, the UK ETS is not linked to the EU ETS, and no Commission implementing regulation confirms UK ETS recognition under Article 9, so EU importers of UK-origin goods still carry the full gross certificate obligation.
Turkey's position is shaped by Article 8 rather than pathway eligibility as such. Even if Turkey's pilot ETS enters into force, its 100% free allocation to covered installations during the pilot phase would count as a rebate under Article 8, reducing the recognized carbon price toward zero for the reasons already set out for CBAM Turkey.
China's case shows the draft's most consequential technical change. Recital 10's treatment of baseline-and-credit systems as equivalent to conventional emissions trading directly addresses the intensity-versus-absolute-cap objection long raised against China's National ETS, though that is not recognition. Coverage, price level, and a formal Commission determination all still stand between the draft and a usable deduction for CBAM China supply chains, and the CN-ETS price, which has traded around USD 11 per tonne CO2e through 2025 and into 2026, would offset only a modest share of the gross obligation even if recognized.
Frequently Asked Questions
Is the CBAM carbon price deduction available today under these draft rules?
No. The draft had not been adopted as of 11 July 2026, so none of its evidence, certification, or calculation rules are legally binding yet. Importers can still claim a deduction under the general terms of Article 9 and Article 3(29) of Regulation (EU) 2023/956, just without the detailed evidentiary framework this draft would supply.
Does the deduction apply when an importer uses default emission values?
No, not for the good itself. The draft limits the certified deduction to goods reported with verified actual embedded emissions. Declarants using default values may still apply default carbon prices for precursors and indirect emissions, but not for the primary good's own default-based figure.
What happens if the regulation is not adopted before the September 2027 declaration deadline?
Adoption is unconfirmed, though industry advisers expect it later in 2026. If it slips close to or past the 30 September 2027 deadline, importers claiming a deduction would rely on the general Article 9 wording and document evidence as thoroughly as possible, since competent authorities retain the right to inspect any claim during a review.
Can free allocation received by the foreign producer reduce the deduction?
Yes. Free allowances, baseline exemptions, tax rebates, and indirect cost compensation all reduce the carbon price counted as "effectively paid" under Article 8 of the draft, except where the compensation is a public, transparent subsidy aimed specifically at reducing the beneficiary installation's own emissions.
Does the 10% cap apply to all carbon credits, or only international ones?
Only to international credits authorized and issued under Article 6.2 or Article 6.4 of the Paris Agreement. Domestic credits used within a third country's own compliance scheme face no additional EU-level cap; the draft defers to whatever limit the domestic scheme already applies.