The European Commission’s long-awaited draft CBAM benchmark values were provided in a leaked document this week, giving EU importers a crucial number they need to calculate steel import cost from 1 January 2026. They remain subject to revision before finalising and have been called into question by some industry sources, Kallanish notes.
The benchmarks are provided in two columns, A for use when applying the actual emissions intensity data provided and verified by a non-EU steelmaker, and B for use with default values when actual data is not available.
In the case of A, one benchmark value is provided per HS code. However, the document stipulates the requirement to select a production route.
If more than 50% of mass of the crude steel produced or used is sourced from scrap, the production route to be selected is scrap/EAF. If more than 50% of mass of the crude steel produced or used is sourced from DRI, the production route to be selected is DRI/EAF. If more than 50% of mass of the crude steel produced or used is sourced from a blast furnace or smelting reduction route, the production route to be selected is BF/BOF.
If neither of the three routes above contribute more than 50% of the final steel, the production route is selected based on the component contributing the highest mass of the steel, the leaked document says.
Column B provides multiple benchmark values per HS code divided by production process – BF-BOF, DRI/EAF and scrap/EAF.
The basic formula to calculate CBAM cost per tonne of steel imported is:
Actual or default embedded emissions – (corresponding emission benchmark x CBAM factor) x EU ETS price – carbon tax paid.
Taking Indian hot rolled coil as an example, when using default emissions data and therefore a default emissions benchmark of 1.53 tonnes CO2/tonne of steel and country-specific default emissions value of 4.27tCO/t, and assuming a €80/tonne ETS price, the CBAM cost comes to €222.26/tonne in 2026. This is with a CBAM factor – or phase-in rate – of 97.5%, which deceases each subsequent year till it reaches zero in 2034, increasing the cost of import.
For many, however, the leak provides more questions than answers. Although the document lays out detailed rules for actual data that determine how the production route should be selected, “column A contains only one value per product – so the rules have no practical function,” Moravia Steel deputy commercial director Daniel Biedrawa points out in a LinkedIn comment.
For default/column B benchmarks, there are multiple values reflecting different production routes, but the document provides no guidance on how the appropriate route should be chosen. “In other words, the rules exist where they are not needed and are missing where they are essential,” he adds.
GTG Consulting managing partner Luigi Villani meanwhile notes: “Column B remains more relevant because it is the only method that can be fully verified with real data. The iterative method would require proving the ‘precursor of the purchased precursor’, which is not possible in practice, so Column B provides the correct and demonstrable outcome.”
Market participants will be hoping for official European Commission notifications in the short term to dispel some of the uncertainty.
Adam Smith Austria
