Under the definitive Carbon Border Adjustment Mechanism (CBAM), importers may apply default values for most covered goods when verified actual emissions are not available. The cost impact increases as the mark-up on country- and year-specific defaults rises. Defaults are increased by 10% in 2026, 20% in 2027, and 30% from 2028.
The mark-up applies to default values for CBAM goods other than electricity under the definitive methodology. Fertilisers are subject to a lower 1% mark-up. The approach is designed to reduce the risk of underestimating embedded emissions and to encourage verified actual data.
Where a specific default value is not available for the relevant product or country, the methodology may require using a value from other countries and territories. Those alternative values can be based on high-emissions exporters, depending on what is available under the rules.
Higher mark-ups increase the cost of relying on defaults
For steel and aluminium suppliers, inadequate emissions data can have financial consequences even if a plant’s physical emissions do not change. If a producer’s actual emissions are below the applicable default, EU CBAM liability can still rise when performance cannot be substantiated through required verification.
As the mark-up increases, relying on defaults can become more commercially disadvantageous. Exporters are expected to compare certificate costs calculated using applicable default values with costs based on verified actual emissions.
For exporters in the Western Balkans, this comparison may be relevant where real production emissions are lower than generic or conservative defaults. Establishing verified actual values can help prevent products from being assessed using less favourable assumptions due to limited market-specific data.
Default-value exposure affects financial risk for importers
For EU importers, default-value exposure is described as more than an environmental cost. It can affect working capital, supplier concentration, inventory economics, and potential compliance liabilities linked to incorrect or insufficiently supported data.
Credit assessments for borrowers are expected to examine how CBAM exposure is measured. They should also consider whether costs can be passed through under contracts and what occurs if suppliers do not provide verified emissions information.
Importers remain responsible for substantiating figures used in CBAM declarations. Suppliers are required to maintain records that buyers and accredited verifiers can trace to the relevant installation and reporting period.
Installation-level monitoring supports verified emissions reporting
Reducing dependence on default values requires monitoring and reporting that can produce installation-level embedded-emissions data for accreditation checks. This includes defined processes, source streams, precursor information, production quantities, and appropriate controls.
Evidence is expected to be collected as production takes place. From 2027, suppliers cannot reliably reconstruct a complete year’s emissions allocation from annual energy invoices alone if process records and allocation controls were not maintained.
The rising mark-up is described as creating a measurable financial rationale for emissions-data projects. Exporters can compare expected certificate costs under default values with costs under verified actual emissions, alongside investment needs for monitoring, reporting and verification (MRV).
Quantifying gaps between defaults and actuals
Risk reporting should account for situations where claimed actual-emissions values cannot be substantiated. If the basis for an actual-emissions calculation is lost, an importer may need to use a more punitive default, increasing liability independently of movements in EU ETS certificate prices.
Management is expected to identify suppliers and products with the largest differences between expected actual emissions and applicable defaults. Verification efforts and data-quality improvements should then be prioritised accordingly.
Exporters are also expected to calculate the default-versus-actual cost gap for principal EU-bound products across 2026, 2027, and 2028. Where differences are material, business cases for pre-verification, improved metering, and stronger supplier-data controls should be approved before the 30% mark-up begins.
Integrating CBAM evidence into commercial and finance processes
A practical test described in the rules is whether a company can explain its CBAM calculation to both a verifier and a commercial manager using the same underlying records. Compliance documentation should be integrated with purchasing, production, customs, and finance rather than handled as a separate reporting exercise.
Routine data collection with controlled assumptions and documented fallback treatments allows updates when suppliers, routes, prices, or legal requirements change. This also supports customer negotiations by making emissions figures and supporting evidence easier to substantiate.
The minimum decision file is described as connecting customs volumes, the emissions basis, the applicable certificate price, cash-flow timing, and contractual cost pass-through arrangements. It should identify who approves each assumption and specify alternative treatment when preferred emissions calculations cannot be substantiated.
Fallback procedures defined in advance are intended to prevent companies from discovering their exposure only after challenges by a verifier, customs authority or authorised declarant. Even where fallback treatment is commercially less attractive, it provides a controlled response to missing or insufficient evidence.
CBAM default values are described as a compliance fallback rather than a cost-free alternative to verified data. As mark-ups rise from 10% to 20%, then 30%, delays in establishing reliable emissions evidence can become increasingly expensive for exporters and their EU customers.