Why CBAM will be a Cost Topic long before it becomes a Compliance One

With the latest updates to the CBAM documentation, many companies are revisiting a question that is becoming increasingly urgent:

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What will CBAM actually cost us?

While final benchmark values are expected to be released next year, the data already available today tells a very clear story. CBAM is not a distant regulatory exercise. It is a near-term cost driver, and the way emissions are calculated will largely determine how expensive it becomes.

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CBAM is phased in, but the financial impact starts early

CBAM will be introduced gradually between 2026 and 2034. In the early years, only a small share of emissions will be priced, which often creates a false sense of security. In reality, cost differences appear immediately, driven primarily by whether companies rely on CBAM default values or use supplier specific emissions data. As only verified actual values are eligible for use under CBAM, this makes early supplier engagement and emissions data verification a critical lever for managing future compliance costs.

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A concrete example: default values vs. actual data

To make this tangible, we compared CBAM costs using default values versus actual supplier-specific emissions data. 

For a given CN code (​​7213 10 00), default emission intensities can vary widely by country of origin. As an illustrative example, default values without markup indicate emissions of 0.74t CO2 per tonne for production in the Philippines, compared with 4.72t CO2 per tonne for India. Despite this significant disparity, both cases ultimately converge on the same benchmark value within the CBAM framework, limiting the ability to reflect actual production realities and potentially leading to higher carbon related import costs. See an example below for China:**

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Input data (per tonne)

• Default emissions: 4.12t of CO2 (10% markup for 2026)
• Actual emissions: 1.89t of CO2
• Benchmarks: 1.364 (default route) vs 0.038 (actual route)
• Assumed ETS (EU Emissions Trading System) price: €85 / tCO2
• CSCF (Cross-Sectoral Correction Factor)* assumed for 2026: 1

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How CBAM costs evolve over time

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2026 (CBAM just starts)

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• Default values: ~ €183 per tonne
• Actual values: ~ €102 per tonne
• Difference: ~ €81 per tonne

For an importer bringing in 1,000 tonnes, this already means ~ €81,000 in avoidable CBAM costs. With an average material cost of approximately €500 per tonne (7213 10 00), applying the default values would result in an avoidable markup of ~ 16% per tonne.

Even in the first year of financial implementation, CBAM related costs materialize due to the combination of quite low benchmark values and default emissions intensities.

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2030 (CBAM halfway in, 51,5% CBAM factor)

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• Default values: ~ €425 per tonne (incl. 30% markup from 2028)
• Actual values: ~ €103 per tonne
• Difference: ~ €322 per tonne

At 1,000 tonnes imported, this translates to at least €322,000 in avoidable CBAM costs. With an average material cost of approximately €500 per tonne (7213 10 00), applying the default values would result in an avoidable markup of ~ 64% per tonne.

From this point onward, both emissions values and benchmarks materially impact CBAM costs.

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2034 (CBAM fully rolled out, 0% CBAM factor)

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• Default values: ~ €751 per tonne
• Actual values: ~ €105 per tonne
• Difference: ~ €646 per tonne

For 1,000 tonnes imported, that is at least €646,000 per year. With an average material cost of approximately €500 per tonne (7213 10 00), applying the default values would result in an avoidable markup of ~ 129% per tonne.

At scale, CBAM becomes a six-figure cost topic driven largely by data quality.

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Why default values get expensive

CBAM default values are conservative by design. They are meant to cover missing data, not to reflect how efficient a specific supplier actually is.

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The consequence:

• Importers pay for emissions that may never have occurred
• Efficient suppliers are treated the same as inefficient ones
• CBAM costs increase simply because data is missing

In other words, relying on defaults is an active decision to overpay.

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How to Benefit from correct emission data

CBAM is often perceived as a reporting obligation. In reality, it functions as a carbon pricing mechanism that directly impacts procurement costs. The financial benefit emerges when companies move from conservative default values to verified supplier specific emissions data. Usually this reduces the share of embedded emissions subject to CBAM and thus lowers the overall cost of imported goods.

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Companies that invest early in reliable, supplier-specific emissions data benefit from:

• Lower CBAM costs from the very first year
  
• Predictable cost trajectories as CBAM phases in
  
• Stronger leverage in supplier discussions and sourcing decisions

Those that delay will see costs rise with limited room to react.

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The bottom line

CBAM will not suddenly become expensive in 2034. It will become expensive gradually, quietly, and much earlier than many expect. The difference between default values and verified, supplier specific emissions data already translates into tens of thousands of euros today and hundreds of thousands over time. As only verified actual values are eligible under CBAM, early supplier engagement and emissions data validation become essential to avoid unnecessary carbon costs. At forward earth, we help companies move beyond conservative defaults and build a reliable emissions data foundation early, turning CBAM from an uncertainty into a managed and predictable cost.

If you’re a supplier, importer or platform provider looking to simplify CBAM reporting, let’s talk. Reach out via our contact form and we’ll set up a personalized walkthrough to show how effortlessly you can generate compliant and defensible emission figures.

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* The Cross-Sectoral Correction Factor (CSCF) is applied under the EU Emissions Trading System (EU ETS) when the sum of calculated free allowances (bottom-up across all eligible installations) exceeds the overall cap for free allocation. In that case, the CSCF uniformly scales down free allocation across sectors.

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** Actual values depend on the following aspects:

• All relevant CBAM goods that are used to make the product (100% of the product could use only 70% of CBAM relevant precursors) - understanding the BOM and what CN code are used becomes key 
• Country of production of the precursors has a huge impact (e.g. EU precursors have 0 emissions)
• Share of recycled or scrap has implications on the emissions