CBAM in focus: Preparing for the definitive regime

To avoid disruptions at the border, importers should submit the application for authorised CBAM declarant status as soon as possible and make sure that their customs and supply chain data is consistent.

Starting 1 January 2026, only importers who have applied for authorised CBAM declarant status can provisionally import CBAM products until 31 March 2026. After this, confirmed CBAM declarant status is required for imports. To proceed, importers must include the application number on import documents and refer to TARIC-code Y238. The CBAM National Competent Authorities (NCAs) might take up to 120 days to decide on applications, with a possible 30-day extension if more information is needed. Be aware that data and documentation requirements can differ significantly across NCAs. Importers that expect to import less than 50 tonnes of CBAM goods per year should refer to TARIC-code Y137 to limit disruptions at the European customs border.ⁱⁱ

Importantly, importers should ensure that their data is consistent. Indeed, information acquired by the customs authorities is stored in the CBAM Registry and used for the purpose of cross-checking information provided by the importers. This includes the importers' Economic Operator Registration and Identification (EORI) number, the CBAM account number, the eight-digit Combined Nomenclature (CN) code of the imported goods, the quantity of the goods, the country of origin, the date of the customs declaration, and the customs procedure for which the goods have been declared.ⁱⁱⁱ

To estimate their financial exposure, importers should re-calculate the number of CBAM certificates to be purchased based on the updated default values and benchmarks. 

Broadly speaking, importers’ financial exposure to CBAM depends on the following variables:  

• the amount of CBAM goods imported, 

• the emissions embedded in these imports,  

• the emissions covered by free allocation,  

• the carbon price in the EU Emissions Trading System (ETS), as well as,  

• the carbon price already paid in the country of origin.

The emissions embedded in imported CBAM goods can either be reported using actual emissions or default values. It's important to highlight that these default values have undergone a major shift from the transitional phase to the definitive regime. While the default values in the transitional phase were product-specific but country-agnostic, the default values in the definitive regime are both product-specific and country-specific.  

This difference becomes particularly evident for aluminium, and iron and steel products as indicated in Figure 1. We aggregated all CBAM goods by product group and plotted the minimum, average, and maximum default value for the transitional phase (product-specific and country-agnostic) and the definitive regime (product-specific and country-specific). The difference in the maximum values for iron and steel products is most telling. During the transitional phase, the product with the highest default value of 4.81 tonne CO2e/tonne goods (tCO₂e/t) were ferrous products obtained by direct reduction of iron ore (CN code 72031000). In the definitive regime, the maximum default value is almost three times higher – 13.240 tCO₂e/t for flat-rolled products of silicon-electrical steel (CN code 72261100) imported from Indonesia.

Figure 1: Transitional phase vs definitive regime default values for aluminium, cement, fertilisers, and iron and steel

Note: Authors’ calculation and visualisation based on transitional phase default values^iv and definitive regime default values^v.

A similar observation can be made in Figure 2 that zooms into aluminium products. For each CN4-level product group, we've calculated the average default value during the transitional phase, which is product-specific but not tied to any country, and compared it to the definitive regime, which is both product-specific and country-specific. We've plotted these averages against the minimum and maximum default values for the definitive regime. Let's consider aluminium articles under CN4-level code 7616. On average, the default value for this product was slightly higher during the transitional phase (2.76 tCO2e/t) than in the definitive regime (2.30 tCO2e/t). But importers don't deal with 'average countries'; they work with real ones, and this is where differences become clear. If product 7616 is imported from China, the default value is 5.304 tCO2e/t. In contrast, importing the same product from Chile results in a default value of 0.98 tCO2e/t—over five times smaller.^vi

Figure 2: Transitional phase vs definitive regime default values for aluminium 

Note: Authors’ calculation and visualisation based on transitional phase default values^vii and definitive regime default values^viii.

Whether importers use actual emissions or default values for reporting, the financial impact calculation needs to be adjusted for free allocation through CBAM benchmarks. If default values are chosen, the adjustment should also rely on these default CBAM benchmarks. These benchmarks are set at a product-specific level and are not tied to any country. This is significant for calculating importers' financial exposure. Take aluminium foil (CN code 76071119) as an example: it has a consistent default CBAM benchmark of 0.9258 tCO2e/t, regardless of whether it's imported from China or Chile. However, the default value differs—5.559 tCO2e/t for China and 1.15 tCO2e/t for Chile. This distinction is key for understanding financial implications.

Importers are navigating a choice between using actual emissions data or default values, and this decision varies depending on the specific CBAM goods and their country of origin. On one hand, a high default value could justify the effort to gather, calculate, and verify actual emissions. Conversely, a low default value might not warrant such an investment. This highlights the need for a tailored approach to each situation.

To avoid financial surprises in 2027, importers should closely monitor European carbon prices throughout 2026. 

With the start of the definitive regime on 1 January 2026, importers need to financially compensate for the emissions embedded in their imported CBAM goods by purchasing CBAM certificates. The year 2026 stands out because importers will purchase these certificates retrospectively in 2027 for the previous year. From 1 February 2027, importers can purchase CBAM certificates for 2026. As shown in Figure 3, the certificate price is based on the average EU ETS allowance price of the quarter when the goods are imported. So, whether the import happens at the end of January with an ETS price of EUR 82 or in early March at EUR 68, the certificate price will reflect the quarter 1 average, perhaps EUR 75. But, importing in quarter 2 with an average price of EUR 70 or in quarter 4 at EUR 81 can impact costs. Importers should plan strategically when to import CBAM products.

From 2027, the certificate price will be determined by the weekly average of EU ETS allowance prices, requiring importers to purchase certificates with a forward-looking approach.^x

Figure 3: EU ETS prices and CBAM certificate price-setting in 2026

Note: This figure is for illustration purposes only. We extracted the EU ETS price for each Wednesday in 2025 to proxy for a weekly price. The prices are extracted throughout 2025 to proxy for 2026.

To anticipate potential future financial exposure, importers should assess their supply chains for downstream products that may fall under CBAM starting in 2028.

Should this proposal be approved, a range of industrial products, vehicle components, household appliances, and other manufactured goods will be included under CBAM from 1 January 2028.

Figure 4: CBAM product scope expansion

Note: Authors’ calculation and visualisation based on European Commission (2025).^xii

To estimate future financial exposure and anticipate supply chain disruptions, importers should assess the regulatory environment beyond CBAM. 

Figure 5: CBAM and the proposed EU steel overcapacity regulation 

Note: Authors’ calculation and visualisation based on European Commission (2025).^xv

The proposed regulation is set to impact over 300 CN8-level products, with a significant overlap with iron and steel CBAM products. Notably, 63% of these CBAM products will be influenced by the steel overcapacity regulation, and nearly all products under the proposed regulation also fall under CBAM.

For importers, this scenario presents a dual challenge that requires immediate attention. The mix of reduced import quotas, increased tariffs, high CBAM default values, and low CBAM default benchmarks could sharply raise import costs, potentially making some imports unviable.

Swiss-based businesses should pay close attention to both CBAM and the proposed EU steel overcapacity regulation. While Swiss exports to the EU are excluded from CBAM, the revision of Switzerland’s CO2 Ordinance aligns the reduction of emission allowances in the Swiss ETS with the EU ETS, maintaining the link established in 2020. ^xvi For sectors like aluminium, iron and steel, electricity, fertilisers, hydrogen, and cement, this could mean higher production costs that need careful evaluation. Additionally, as Switzerland isn't part of the European Economic Area (EEA), Swiss steel exports face direct impacts from the proposed EU regulation, including reduced import quotas and higher tariffs.

The landscape of international trade and sustainability policies is ever-changing, and as highlighted in this article, these areas are becoming more interconnected. At PwC, we're prepared to help you manage these shifts and tackle your trade and sustainability challenges strategically.

Reach out to us to explore:

• CBAM compliance and governance.

• Financial modelling and hedging strategies related to CBAM. 

• Restructuring supply chains and supporting incentives for emission reduction technologies.