If you export steel, aluminium, cement or fertiliser to Europe, there’s one number that could cost you more than your price negotiation. It’s the carbon figure attached to your product. And if you don’t give your buyer one, the EU will fill it in for you, on purpose, at the high end.
That’s what CBAM default values are. Here’s how they work and why the cost of relying on them goes up every year.
CBAM in one paragraph
CBAM stands for Carbon Border Adjustment Mechanism. It puts a carbon price on certain imports into the EU so they carry roughly the same carbon cost as goods made inside Europe under the EU Emissions Trading System. The definitive phase started on 1 January 2026. It covers iron and steel, aluminium, cement, fertilisers, hydrogen and electricity. Importers bringing in 50 tonnes or more of covered goods a year have to declare the emissions embedded in them and, from 2027, buy certificates to cover them.
The importer pays, not you. But the cost gets passed back through the supply chain, and it’s what your buyer is thinking about when they compare you with a supplier in another country.
Our earlier post on what Indian exporters need to do about CBAM covers the wider obligations. This one is about a single, expensive detail.
What a default value is
Every CBAM declaration needs an emissions figure for each tonne of product. There are two ways to get it:
Actual values. The emissions from the plant that made the goods, measured under the EU’s methodology and checked by an accredited verifier.
Default values. A figure the European Commission sets for each country and product. It’s based on available production data for that country and sector, not on your plant.
If your buyer can’t get verified actual data from you, they use the default. And the default is built to be higher than a typical plant’s real number. On top of that, a mark-up is added:
| Year | Mark-up on default values (steel, aluminium, cement, hydrogen) |
| 2026 | 10% |
| 2027 | 20% |
| 2028 onwards | 30% |
Fertilisers are treated differently, with a much smaller mark-up, for food security reasons.
So the penalty for not having your own data isn’t fixed. It’s designed to grow every year you don’t fix it.
Why this matters to your buyer
Put yourself in the importer’s seat. They’re buying the same grade of steel from two mills. One sends verified emissions data. The other doesn’t, so the importer has to use the marked-up default for that mill’s country.
The CBAM certificate price follows the EU carbon price, which has traded roughly in the €70 to €80 per tonne range through much of 2026. Every extra tonne of CO2 per tonne of steel is a real cost on the importer’s side.
Here’s a simple illustration. These are made-up numbers, not actual default values:
- Your plant’s verified emissions: 2.0 tCO2e per tonne of product
- A hypothetical default for your country and product: 2.6 tCO2e per tonne
- With the 2026 mark-up of 10%: 2.86 tCO2e per tonne
Without your own data, your buyer pays for 0.86 tonnes of CO2 per tonne of product that your plant never emitted. At 2028’s 30% mark-up, the gap widens further. On large volumes, that’s enough to lose the order.
What “verified actual data” means in practice
It isn’t a spreadsheet you email to your buyer. To replace defaults, the installation needs:
A monitoring plan describing how emissions are measured and recorded under the EU’s CBAM methodology.
The calculation itself. Specific embedded emissions per tonne of product, including direct emissions and relevant precursors.
Verification by an accredited verifier. The first verification involves a site visit.
That work sits somewhere between GHG accounting and a product footprint. If you’ve already done a life cycle assessment or a cradle-to-gate study, you have a head start on the inventory. But CBAM has its own rules and boundaries, so it won’t be a copy and paste.
Key dates
- 1 January 2026: Definitive phase started. Imports from this date count.
- 1 February 2027: Sale of CBAM certificates begins.
- 30 September 2027: First annual declaration and certificate surrender, covering imports during 2026.
That last date is why this matters now. The goods you ship this year are being counted this year. The data your buyer needs for their September 2027 declaration comes from production happening today.
Where India’s own carbon market comes in
CBAM allows a deduction for carbon price already paid in the country of origin. That’s why India’s Carbon Credit Trading Scheme matters to exporters, not only to the obligated plants.
The UK moved first. In September 2026 it recognised CCTS as a qualifying carbon pricing scheme for its own CBAM, which starts on 1 January 2027 and covers aluminium, cement, fertiliser, hydrogen, and iron and steel. Relief isn’t automatic. The UK importer needs verified evidence of the carbon price actually paid on the embedded emissions.
The EU hasn’t done the same yet. Until it does, Indian exporters to Europe can’t count on a deduction for CCTS, which makes verified emissions data even more important. We cover how CCTS pricing works in carbon credit price in India and how the market opens in how carbon credit trading will work in India.
What to do now
- Ask your EU buyers what they’re currently declaring for you. If the answer is “defaults”, you know your exposure.
- Pick your highest-volume product going to Europe. Start there. You don’t need every product line done at once.
- Build the monitoring plan and emissions calculation under the EU methodology, and line up an accredited verifier.
- Share verified data with your buyer before their 2027 declaration. Suppliers who can do this early have a real edge in contract talks.
Questions we get asked
What is the full form of CBAM? Carbon Border Adjustment Mechanism. It’s the EU’s carbon price on imports of carbon-intensive goods.
What are CBAM default values? Emissions figures set by the European Commission for each country and product. Importers use them when they don’t have verified actual emissions data from the plant that made the goods.
How much is the CBAM default value mark-up? For steel, aluminium, cement and hydrogen, it’s 10% in 2026, 20% in 2027 and 30% from 2028. Fertilisers carry a much smaller mark-up.
Who pays CBAM, the exporter or the importer? The EU importer buys and surrenders CBAM certificates. But the cost affects which suppliers the importer prefers, so exporters feel it through pricing and orders.
When is the first CBAM payment due? CBAM certificates go on sale from 1 February 2027. The first declaration and surrender, covering 2026 imports, is due by 30 September 2027.
Does India’s carbon market reduce CBAM costs? The UK has recognised India’s CCTS under its own CBAM, starting in 2027, so a verified carbon price paid can be deducted. The EU hasn’t recognised CCTS yet.
Bilancia Consulting is an Ahmedabad based sustainability and ESG advisory firm. We help Indian exporters build verified emissions data through GHG accounting and life cycle assessment. If your EU buyers are declaring defaults for your products, a short call will show you what it takes to replace them.
Call +91-9510144494 or email general@bilanciaconsulting.co.in