Certificates to surrender equal declared embedded emissions minus the free allocation adjustment and any carbon price deduction, never below zero. One certificate covers one tonne of CO2e. In 2026, 2.5 per cent of the benchmark is no longer deducted. That figure is not 2.5 per cent of the embedded emissions. Purchases open 1 February 2027; the first annual declaration falls due 30 September 2027.
The number of CBAM certificates needed for a reporting year equals the declared embedded emissions of the imported goods minus the free allocation adjustment, and each certificate covers one tonne of CO2e. Commission Implementing Regulation (EU) 2025/2620, adopted 16 December 2025 and applicable from 1 January 2026, sets the methodology for that adjustment under Article 31 of Regulation (EU) 2023/956.
How the adjustment is calculated
The Annex of Regulation 2025/2620 gives the core formula: FAAg = SEFAg,y x Mg. The free allocation adjustment for a good equals its specific embedded free allocation for the year, expressed in tonnes of CO2e per tonne of good, multiplied by the total mass of that good imported during the reporting year. The declarant includes the adjustment in the annual CBAM declaration, where it reduces the certificates to be surrendered. The adjustment mirrors the free allocation EU producers of the same good still receive. With default values, SEFA is the good’s CBAM benchmark, times the CBAM factor for the year, times the cross-sectoral correction factor, which is 100 per cent for 2026 to 2030. Any carbon price deduction also comes off, and the number never falls below zero. The deduction shrinks each year as free allocation is withdrawn, as the table below shows.
Example: one tonne of Indian hot-rolled flat steel (CN 7208) imported in the third quarter of 2026 on default values. The default value of 4.280 tonnes of CO2e, with the 10 per cent mark-up, gives 4.708. The adjustment is 0.975 x 1.00 x 1.370, or 1.336. The declarant surrenders 4.708 minus 1.336, or 3.372 certificates, about EUR 278 at the third-quarter 2026 price of EUR 82.32.
| Year | Share of the benchmark still deducted (CBAM factor) |
|---|---|
| 2026 | 97.5 per cent |
| 2027 | 95 per cent |
| 2028 | 90 per cent |
| 2029 | 77.5 per cent |
| 2030 | 51.5 per cent |
| 2031 | 39 per cent |
| 2032 | 26.5 per cent |
| 2033 | 14 per cent |
| 2034 | 0 per cent |
Buying, holding, declaring
Certificate purchases open on 1 February 2027. Certificates carry no fixed price. In 2026 the price is the quarterly average of EU ETS auction clearing prices. The Commission published EUR 75.36 for Q1 on 7 April 2026, EUR 75.28 for Q2 on 6 July and EUR 82.32 for Q3 on 5 October. It becomes a weekly average in 2027. From 2027, at the end of each quarter, the declarant must hold certificates for at least 50 per cent of the embedded emissions imported so far that year. That is measured on default values without the mark-up, or on last year’s surrender, after the adjustment. Purchasing therefore runs ahead of the annual settlement. The first annual CBAM declaration falls due on 30 September 2027.
Cost planning starts from the same flow: expected import mass, embedded emissions per tonne, the adjustment for the year, and the running certificate price. The CBAM cost calculator turns those inputs into a budget figure across scenarios. GreenSutra’s consultants prepare the embedded-emissions calculation and the certificate cost plan behind that number; CBAM advisory covers preparing for declarant authorisation through to surrender.
Sources: Regulation (EU) 2023/956 · Implementing Regulation (EU) 2025/2620 · European Commission CBAM