The default emissions value within the Carbon Border Adjustment Mechanism, or CBAM, will be equivalent to the average emissions of producers of similar goods in the EU throughout the transition period, according to a leaked draft seen by S&P Global Platts.
During the transition period, importers of certain goods will have to purchase the same quantity of CBAM certificates per ton of goods imported — equivalent to the default value for the specified goods — regardless of the carbon intensity; those with an audited supply chain lower than the default value will receive a rebate.
The transition period will run for three years, from Jan. 1, 2023 until Jan. 1, 2026, and according to the proposal, will cover goods such as aluminum, cement and steel.
Once fully implemented, the CBAM will require importers to purchase CBAM certificates equivalent to the carbon emissions level of their goods.
Importers who do not have a carbon audited supply chain after the transition period ends will be required to buy CBAM certificates equivalent to a new default emission value.
The leaked draft, published by the French news website Contexte, says that after the transition period the default value “shall be set at the average emission intensity of each exporting country and for each of the goods listed.”
In a previous draft seen by Platts in June, the default value was defined as being equal to the 10% worst carbon emitters within the EU. The new, more lenient definition during the transition period will likely be welcomed by importers from high emitting regions. However, from 2026 they will be expected to buy a greater number of certificates than previously expected.
The price of the CBAM certificate will be the average ETS price of the week prior to purchase.
The European Commission is set to unveil the full policy on July 14 as part of a suite of policies known as Fit for 55. The CBAM has been designed to prevent carbon leakage as the commission tightens the emissions regulatory environment on the continent.
An EC spokesperson declined to comment on the draft proposals.
— William Healy, Diana Kinch
