Key benchmarks for calculating specific steel import cost exposures under the upcoming fiscal stage of the Carbon Border Adjustment Mechanism (CBAM) will likely not be officially unveiled until the first quarter of 2026, McCloskey learns from private European Commission correspondence.
In a letter from Gerassimos Thomas, director-general for the Taxation and Customs Union of the European Commission, the Commission representative outlines that CBAM benchmarks “will be based on the respective [European Union Emissions Trading System] benchmarks,” which “are being updated for the period 2026-2030.” The letter is dated from the start of this week and was seen by McCloskey on 1 October.
Gerassimos said that he expects that the benchmarks for the EU’s carbon market “will only be adopted in early 2026. This means that a final list of CBAM benchmarks may only be available at that moment.”
Benchmarks for the EU carbon market track free allowance allocation to the different installations covered by the scheme to prevent carbon leakage, or companies leaving the European Union to set up operations in jurisdictions without a carbon pricing mechanism. As the CBAM is phased in from 2026 to 2034, installations across Europe will gradually receive fewer and fewer free carbon allowances until these are phased out entirely by 2034.
European steel importers have been operating under the expectation that the CBAM benchmarks – which are multiplied against the free allocation-tracking CBAM factor and then deducted from the total embedded emissions – would be presented before the end of this year. This was premised upon the European Commission’s Steel and Metals Action Plan, recent consultations on the technical aspects of CBAM, and its commitment to releasing implementing acts on the benchmark rules in the fourth quarter.
Importantly however, the Commission’s commitment to clarifying the rules defining the benchmarks is not necessarily a commitment to releasing the specific values themselves, and could be limited to outlining correspondence between the two systems.
Gerassimos’ letter aligns with McCloskey’s previously reported response from European Climate Commissioner Wopke Hoekstra to Filip Turek – a Czech member of the European Parliament – in early September about the ETS-CBAM benchmark codependence, undermining European steel importers’ expectations that official CBAM benchmarks would be available before 2026
As a core part of the formula for calculating the extent of embedded emissions liable to CBAM-covered imports like steel, importers require these ETS-CBAM benchmark values to forecast their specific and itemized cost exposure to the carbon leakage mechanism, and manage their finances on current import purchases.
Steel importers have already been deterred from bringing material into Europe on existing exposure uncertainties, avoiding material with lead times beyond the start of 2026, and in some cases signaling a preference to clear material in Q4 even if subject to out-of-quota duties of 25%.
If release of the benchmarks is pushed further into Q1, then importers could be facing the same barriers of uncertainty for another quota period – either pushing import purchases back further, or taking another hit on out-of-quota duties.
As the European Commission is also currently preparing its long-term replacement for the EU’s steel safeguard system, with strong speculations and steelmaker lobbying for an intensification of out-of-quota duties to 50% and possible implementation from January, the European import market could see an even heavier CBAM burden than it is already shouldering.
McCloskey has wide-ranging databases on upcoming green steel projects worldwide in our Green Steel Profiles, but even if importers can source the cleanest steel globally for European import, they cannot truly know the opportunities of capitalisation without clarification on CBAM and its calculation benchmarks.
Benjamin Steven Journalist, Steel
