A draft EU regulation will decide how much of the carbon a foreign producer already paid for can be deducted from the CBAM bill — and who gets to vouch for the receipt.
For three years the European Union has been building a carbon wall around its single market. The Carbon Border Adjustment Mechanism, or CBAM, will from 2026 charge importers of steel, cement, aluminium, fertiliser, hydrogen and electricity the same carbon price that European factories already pay. The principle is simple: no free ride. The practice, less so.
A foreign producer who has already coughed up for a carbon tax at home should not pay twice. But how should Brussels count those foreign payments? Which schemes qualify? What of rebates, free allowances and offsets? And who, exactly, will sign the receipt?
The draft Commission Implementing Regulation circulated on 13 May 2026 attempts an answer. Below, what it means for ten distinct constituencies — and ten ways of looking at it.
The draft does three things at once. First, it sets the maths for converting a foreign carbon bill into fewer CBAM certificates. Second, it polices what counts: only mandatory taxes or trading schemes, with rebates netted out and offsets capped at 10%. Third, it appoints the referees — independent verifiers accredited by national bodies, working off a single English-language template lodged in an EU registry.
The deduction is generous in spirit, narrow in evidence. Producers who measure precisely will save real money. Those who guess will pay the gross sticker.
Five parties, one piece of paper, one number that matters: how many CBAM certificates the importer must surrender.
A single 33-page regulation refracts very differently depending on where you stand. Below, what each group needs to read first.
Your bill shrinks only if your supplier proves payment. No certified report, no deduction — pay the gross sticker.
You may claim a reduction in CBAM certificates to be surrendered equal to the carbon price effectively paid abroad, converted to euros at the published yearly average rate, divided by the CBAM reference price.
Sloppy carbon books cost your customer money — and therefore cost you customers.
You must produce a standardised carbon price report (Annex II) in English, attribute emissions to each good, and submit to certification by an EU-accredited verifier. Embedded emissions must be on actual values; only then does an actual price deduction unlock.
Brussels has just written the eligibility rules for your scheme — and they're stricter than you may have thought.
A carbon price mechanism qualifies only if it is binding, applies to all operators in covered sectors without discrimination, takes the form of a tax/levy/fee or a tradeable allowance, and confirms emissions through verification or formal regulator sign-off.
A profitable, jurisdictionally awkward new specialism: physical site visits in faraway places, paid for by foreign firms, supervised by a single national body.
Issue a "reasonable assurance" certification — high but not absolute — that the operator's carbon price report is free of material misstatement. Apply EN ISO/IEC 17029:2019. Provide reports in English, on a Commission template, via the CBAM registry from 2027.
Heavier workload, new sector, identical-to-verifier accreditation: efficient in theory, congested in practice.
You must accredit certifiers for a new scope of accreditation (Annex III), conduct on-site visits and witness audits, run annual surveillance, and exchange standardised data with competent authorities and the Commission via the CBAM registry.
A registry, a reference price, a default price, and a duty to publish exchange rates. The plumbing is yours to operate.
Review CBAM declarations under Art. 19(2). Share results with accreditation bodies — they treat your findings as complaints triggering Article 23 process. Effective oversight depends on registry hygiene and timely information exchange.
CBAM was sold as your level playing field. This regulation determines how level it actually becomes.
Foreign carbon price evidence is held to a high bar: actual values, accredited certifier, English template, rebates netted out. Sloppy reporting from competitors hands them no relief, and they still pay the gross sticker.
The EU has just minted a new use-case for Article 6 credits — and a hard ceiling on it.
Credits surrendered under a third-country compliance scheme count toward the carbon price paid, but only domestic credits or international credits authorised under Article 6.2 or 6.4 of the Paris Agreement as "internationally transferred mitigation outcomes" (ITMOs).
CBAM's price flows down the supply chain. The cleaner the foreign supply, the less you pay at the tail.
Indirectly, your input costs will reflect not only foreign carbon prices but also the quality of foreign carbon documentation. Suppliers that cannot present a certified carbon price report will be passing the gross CBAM bill on to you.
A regulation written to survive a WTO challenge — and to drive Article 6 markets — with predictable equity tensions.
The non-discrimination language (Recital 8), the rebate-and-subsidy carve-outs (Article 8(2)), and the WTO-sensitive treatment of indirect cost compensation. The 5% materiality threshold and 10% offset cap may become flashpoints with India, Brazil and China.
The remaining charts examine rebate treatment, accreditation chains, cost stacks for an illustrative tonne, the procedural calendar, and the system-level ripples.
The draft is, properly understood, an evidentiary instrument. It does not change which gases warm the planet, nor which countries decarbonise first. It changes which producers can present a piece of paper that an EU customs official will accept as proof of carbon paid.
That sounds bureaucratic. It is. But the bureaucracy is the policy. By specifying the template, the language, the certifier's accreditation chain, the materiality threshold, the rebate carve-outs and the offset cap, Brussels has determined who wins the deduction race — and they are, broadly, jurisdictions and firms most resembling the EU itself.
For the foreign producer, the message is plain: build your documentation now, or pay the gross sticker. For the EU importer, vet your suppliers' paperwork before signing the bill of lading. For everyone else, the rules are public, the templates standardised, and the deadlines firm.
The draft becomes binding from 1 January 2026. The Commission has invited stakeholder evidence through a Better Regulation call. Comments, presumably, in English.