The draft law on CBAM default values clarifies the logic of the revision
The default values related to the upcoming final phase of the Carbon Dioxide Emissions Control Mechanism (CBAM) were approved by the CBAM Committee of the European Commission in the week starting on December 8, with a draft law on default values detailing the principles underlying the recent changes.
McCloskey exclusively and in detail covered the latest values in an article that coincided with the "yes" vote.
The draft implementation regulation "establishing rules[ ]regarding setting default values" describes in detail the principles and processes underlying these changes, bringing some clarity to what some industry participants call "illogical" or "unrepresentative" data.
McCloskey previously noted that the default values, which market participants assumed were due to a lack of emission data collected during the CBAM transition, were based on the model of the EU Joint Research Center (JRC), based on publicly available datasets such as those from the International Energy Agency (IEA)., as well as industry associations when creating revised and currently approved default values.
In fact, the CBAM regulations have always assumed that the default values will be based on publicly available data, as described in Annex IV.:
"Default values should be determined based on the best available data. The best available data should be based on reliable and publicly available information."
.As detailed in the aforementioned McCloskey article, the initially widespread defaults were almost unanimously criticized by steel market participants throughout the value chain, prompting the Commission to update the dataset based on transition data available in the CBAM registry.
Despite the extensive debate about default values for specific product categories and their origin, the positions in the steel value chain in Europe can be relatively accurately described as follows: "steel producers believed that they were too low," especially in China, and "importers believed that they were too high", especially in China. as for recent revolutionary events such as Indonesia.
The verification process seemed to be in favor of the steel manufacturer's position, because where it was possible to combine more than 30 transition data points for the origin of the product category, the value in the 90th percentile of the product range was adopted as the new default value – where the specified value was higher than the original JRC value.