In the draft version of the European Commission document, proposed baseline values have been published to help importers determine the cost of emissions taxes imposed by the EU Carbon Boundary Regulation Mechanism (CBAM).
Although the document is still unofficial and subject to change, MEPs have reviewed it. It provides the clearest understanding to date of the methodology and preliminary carbon intensity indicators, which are a key factor in determining CBAM taxes applied to steel imports from January 1, 2026.
It explains how importers should calculate adjustments that reduce their CBAM obligations under the EU free trade framework. The emission quotas currently provided to EU producers under the Emissions Trading System (ETS) are being phased out. These adjustments are based on the reference values for each product.
In 2026, imported steel products with embedded emissions below the Commission's benchmarks will be taxed at 2.5% of the EU carbon value, which is currently determined by the ETS scheme. Additional emissions exceeding the control level will be taxed at a rate of 100%. Importers will pay taxes using CBAM certificates. Therefore, the higher the emissions benchmark set by the Commission, the fewer CBAM certificates the importer will need to provide.
The Commission's draft documentation includes reference values for a wide range of iron and steel products, including:
- Cast iron, ferroalloys and semi-finished products
- Flat and long products
- Pipes and hollow profiles
- Castings, fittings, and various categories of steel for recycling
Commenting on the preliminary figures, John Carruthers— Green, Member of the European Parliament and steel market analyst, said: "These benchmarks are an important part of the CBAM cost calculation. They define emission thresholds that separate efficient producers from high-emission producers.
" It is important to note that the higher the benchmark, the lower the final cost of CBAM for importers. Even in rough form, they provide the first real indication of future prices for imported steel."
Carbon steel
The European Commission's draft annex to carbon steel products provides detailed criteria for defining each of these categories. Steel imports are carried out using one of three recognized technological routes for steel smelting: scrap/EDP, DRI/EDP and BF/converter. This is an important step, as each production method has its own base cost and is therefore different.
