As the official phase of the EU Carbon Border Adjustment Mechanism (CBAM) in 2026 approaches, the era of relaxed regulations during the transition period — "submitting reports without paying fees" — is coming to an end. The official phase will fully enter an era where enterprises need to pay real money to purchase CBAM certificates.
At present, many key details of the EU regulations have not been fully finalized, leaving enterprises generally trapped in a dilemma: struggling to formulate budgets, hesitant to negotiate export quotes, and reluctant to make arbitrary adjustments to the supply chain.
In fact, CBAM carbon costs are not difficult to predict. Among the key factors, embedded product emissions, product default values, and free allowances are the two fundamental core elements that directly determine the benchmark for cost accounting. By clarifying these two key points in advance, enterprises can take the first step toward compliance.
I. Embedded Product Emissions: Accounting Rules Unfinalized, Focus on Three Key Points in Advance
Embedded product emissions are the primary prerequisite for CBAM cost calculation, mainly including direct emissions (Scope 1) and indirect emissions (Scope 2). Notably, indirect emissions are only accounted for cement and chemical fertilizer products.
Currently, the EU's final emission accounting method for the official phase has not been fully finalized. This requires enterprises to focus on three key issues in advance: whether the accounting boundaries will be adjusted, whether actual measured data must be adopted instead of estimates, and whether mandatory third-party verification is required, as well as the definition of verification cycles and standards.
Any changes to these three major rules will directly force enterprises to upgrade their existing monitoring systems, data quality standards, and reporting processes.
If enterprises overlook these details, they are likely to fall into a passive position due to non-compliant systems when the official phase starts, and may even face the risk of additional cost increases.
II. Product Default Values: Easily Overlooked "Cost Traps", Three Actions to Avoid Risks
Product default values are a high-risk area that enterprises tend to overlook during the compliance process.
If an enterprise fails to submit actual measured data or the submitted data is incomplete, the EU will directly use default values to calculate emissions.
In reality, the default values set by the EU are generally higher than enterprises' actual emissions, which poses two direct risks: first, enterprises with low actual emissions may see their carbon costs double when calculated using default values; second, in sectors lacking reliable industry data, default values may even be unreasonably high.
Therefore, after the official implementation of CBAM's formal phase, enterprises must take three immediate actions: first, compare the EU default values with their own actual emissions promptly; second, determine whether they must submit actual measured values to avoid overestimated costs from default values; third, quickly calculate the cost difference between "default values vs. actual measured values".
This judgment is directly related to the enterprise's future profit margins and should not be underestimated.
III. Free Allowances: Exemption Dilemma Due to System Mismatch, Monitor Rule Implementation Closely
Free allowances refer to the portion of emissions for which enterprises are exempt from paying carbon tariffs, sourced from EU ETS allowances. However, there is an inherent calibration mismatch between the EU ETS and CBAM systems.
The EU ETS calculates benchmark allowances based on production processes, while CBAM calculates emissions based on products (CN codes), resulting in the awkward situation where "there are free allowances for processes, but no corresponding benchmarks for products".
The EU is currently studying the conversion rules from process-based benchmarks to product-based benchmarks, but no final decision has been made yet.
This leaves enterprises completely unable to predict the amount of exemptions they can enjoy, whether the exemption ratio will decrease year by year in the future, or whether industry benchmarks will be reset.
These uncertainties have a significant impact on export product pricing and long-term order negotiations. After the official regulations are released, enterprises must promptly focus on the industry benchmark calculation method, the specific value of free allowances, and the impact of changes on product prices.
IV. SKYCO2: Helping Enterprises Solve Difficulties in Emission Accounting and Allowance Exemption
Faced with the uncertainty of CBAM accounting rules and confusion about free allowance exemptions, enterprises often struggle to cope alone.
Based on in-depth interpretation of EU carbon policies and industry practical experience, SKYCO2 provides targeted solutions for enterprises: assisting in organizing product emission data, establishing monitoring systems that meet EU requirements, and accurately comparing the cost differences between actual measured values and default values;
real-time tracking of updates to free allowance conversion rules, and formulating exemption strategies in advance.
If you are troubled by product emission accounting and free allowance issues, please feel free to contact SKYCO2. We will help you lay a solid foundation for compliance and stabilize and control carbon costs.