SEFA, the specific embedded free allocation, is the free allocation embedded in one tonne of a CBAM good, expressed in t CO2e per tonne. Implementing Regulation (EU) 2025/2620 defines it and uses it in the free allocation adjustment, which reduces the CBAM certificates a declarant must surrender.
SEFA stands for specific embedded free allocation. It is the free allocation embedded in one tonne of a good, expressed in tonnes of CO2e per tonne, and it is defined by Commission Implementing Regulation (EU) 2025/2620. That regulation was adopted on 16 December 2025 and applies from 1 January 2026. It sets the methodology for the free allocation adjustment referred to in Article 31 of Regulation (EU) 2023/956.
How SEFA feeds the free allocation adjustment
The free allocation adjustment, or FAA, is the adjustment to the number of CBAM certificates to be surrendered. The Annex to Regulation 2025/2620 sets the core formula in Equation 1: the FAA for a good equals its SEFA for the year multiplied by the total mass of that good imported during the reporting year. The declarant includes the FAA in the annual CBAM declaration, and it reduces the certificates to be surrendered.
The logic mirrors the EU ETS. EU producers in CBAM sectors retain 97.5 per cent of their free allocation in 2026, and the FAA mirrors that allocation for imports, so CBAM-covered imports effectively face about 2.5 per cent of their gross certificate obligation in 2026. That share is not permanent: it rises to 5 per cent in 2027, 10 per cent in 2028, and reaches 100 per cent in 2034 as free allocation is withdrawn.
Two routes to a SEFA value
| Route | Basis |
|---|---|
| Actual data (Annex point 3) | CBAM benchmarks derived from EU ETS free-allocation benchmarks, scaled by the CBAM factor (Art. 10a(1a), Directive 2003/87/EC) and the cross-sectoral correction factor |
| Default values (Annex point 4) | Predefined default CBAM benchmarks matched to the same production routes and precursor assumptions as the emission defaults |
Regulation 2025/2620 should not be confused with Regulation 2025/2621. The former sets allocation defaults, and its FAA reduces the certificates due; the latter sets emission default values, whose markups increase the base.
GreenSutra’s consultants model SEFA and the FAA when planning certificate budgets ahead of certificate purchase and surrender opening on 1 February 2027. CBAM advisory covers embedded-emissions calculation, declaration preparation and certificate cost planning. The CBAM cost calculator gives a first estimate of the certificate cost a product line carries.
Sources: Implementing Regulation (EU) 2025/2620 · Regulation (EU) 2023/956 · European Commission CBAM