EU CBAM committee approves revised default, benchmark carbon intensity values

A committee of EU member state representatives voted to approve revised default and provisional benchmark carbon intensity values under the bloc's Carbon Border Adjustment Mechanism, with the European Commission expected to formally adopt the measures on Dec. 16, several industry sources told Platts, part of S&P Global Energy.

The vote, which took place on Dec. 9, establishes crucial calculation methodologies for CBAM, providing much-needed clarity to importers of carbon-intensive goods, including iron and steel, aluminum, cement, fertilizers, hydrogen and electricity.

The revised benchmark and default values have seen several changes, with some default values less punitive than in a previous version, according to a draft document seen by Platts. This comes after Brussels faced pushback from the European industry on the initial default values.

The values have undergone significant review, with Pauline Miquel, policy and research lead at CBAMBOO, telling Platts that "it's a win for EU industry," though the new values "will be a clear shock for importers who are very ill-prepared to manage this cost."

Default values were always meant to be intentionally punitive, designed to penalize companies that choose not to calculate their own actual emissions in line with the EU's strict reporting and measurement framework.

"We have seen changes such as the stainless-steel benchmark going down, the direct-reduced iron (DRI) benchmark is also down quite drastically," Dan Maleski, a senior environmental markets adviser and CBAM lead at Redshaw Advisors, said on a webinar on Dec. 10.

Phased approach

The most significant change introduces a phased approach to penalty rates for companies using default emission values rather than facility-specific verified emissions data.

Under the revised framework, the punitive markup for several products will be phased in, starting at a 10% markup in 2026, increasing to 20% in 2027, and reaching the originally planned 30% markup from 2028 onward.

"So, the changes are quite wide and varied," Maleski added. "My personal big takeaway is the new phase-in schedule for the punitive default values. And so that is a new lens."

However, fertilizer producers received more favorable treatment, with default value markups capped at just 1% across all years, according to the draft document.

Miquel said this is because the sector expressed concern about inflation as a result of CBAM, which would be reflected in consumer prices.

"And so they've constrained the cost increase on fertilizers by only applying a 1% markup."

But the opposite was the case for steel, she adds, where high markups were added to protect European competitiveness.

"The steel industry in Europe was in favor of having the highest default values possible," said Miquel.

"Especially for China, because they're unhappy with cheap Chinese products entering the EU. They see this as the main competitiveness issue. They have won by getting Chinese values increased for most steel products, which is going to be quite significant for a lot of importers."

Importance of benchmarks

A spokesperson at the European Commission was unavailable for immediate comment on the Dec. 10 vote.

However, an EC official previously told Platts that the Commission was looking to adopt a number of implementing and delegated acts, including on the methodology, verification rules and carbon price under CBAM by the end of the year.

"We strive to ensure that a final list of CBAM benchmarks will be available as soon as possible. Concretely, we are indeed expecting that they will only be adopted in early 2026," the official added.

The benchmark value is a reference value used to calculate the embedded emissions of imported goods and determine the cost of CBAM certificates. It is derived from the average greenhouse gas emissions of the 10% most efficient installations in the EU for that product.

The CBAM benchmarks will be based on the respective EU ETS benchmarks to adequately mirror the bloc's carbon market, and the ETS benchmarks are currently being finalized by the Commission and member states, the sources added.

The CBAM default values are estimates of embedded carbon emissions for certain imported goods depending on the country of origin.

CBAM is currently in a transitional phase, requiring importers to report emissions without financial penalties. The mechanism enters its definitive phase on Jan. 1, 2026, with companies liable for their emissions. This is expected to have significant implications for carbon-intensive industries.