Under the definitive Carbon Border Adjustment Mechanism (CBAM), importers may use default values for most covered goods when verified actual emissions are not available. The fallback becomes progressively more expensive as country- and year-specific defaults are increased by a mark-up of 10% in 2026, 20% in 2027 and 30% from 2028. The design is intended to reduce the risk of underestimating embedded emissions and to encourage the use of verified actual data.
The mark-up applies to default values for CBAM goods other than electricity under the definitive methodology. Fertilisers are subject to a lower 1% mark-up. Where a specific default value is not available for the relevant product or country, the methodology may require using values for other countries and territories, potentially based on high-emissions exporters.
Default-value costs increase as mark-ups expand
The financial consequences of relying on inadequate emissions data can grow even if a plant’s physical emissions remain unchanged. For steel and aluminium suppliers, a producer whose actual emissions are below the applicable default may still expose its EU customer to higher CBAM liability if it cannot substantiate its performance through the required verification process. This means EU liabilities can change due to data availability rather than changes in production emissions.
As the mark-up rises, the commercial disadvantage of using defaults can widen. Exporters are expected to assess the difference between certificate costs calculated using applicable default values and expected costs based on verified actual emissions. The same comparison is relevant for evaluating whether emissions-data projects can be justified against the cost of default-based assessments.
For exporters in the Western Balkans, the gap between real production emissions and generic or conservative defaults can be particularly significant. Establishing verified actual values can help prevent products from being assessed using less favourable assumptions when reliable market-specific data are not available. The approach targets situations where actual embedded emissions are lower than default benchmarks.
Data quality affects EU importer finance and compliance
For EU importers, default-value exposure is described as more than an environmental cost. It can affect working capital, supplier concentration, inventory economics and potential compliance liabilities linked to incorrect or insufficiently supported data. Procurement teams, banks and credit committees are identified as stakeholders whose assessments may be influenced by CBAM-related data quality.
Credit assessments are expected to examine how a borrower measures its CBAM exposure and whether costs can be passed through under contractual arrangements. They should also consider what happens if suppliers fail to provide verified emissions information. Companies able to show clear controls and credible fallback arrangements are positioned to explain and manage their financial exposure.
Importers remain responsible for substantiating figures used in their CBAM declarations. Suppliers must maintain records that buyers and accredited verifiers can trace to the relevant installation and reporting period. Where commercial carbon-accounting practices go beyond the prescribed legal methodology, the two approaches should be documented separately rather than treating a broader product-footprint calculation as the official CBAM result.
Installation-level monitoring becomes central from 2027
Reducing dependence on default values requires monitoring and reporting systems capable of producing installation-level embedded-emissions data that an accredited verifier can check. This includes defined processes, source streams, precursor information, production quantities and appropriate controls. The requirement focuses on evidence that aligns with verification expectations rather than high-level estimates.
Evidence needs to be collected as production takes place. From 2027, suppliers cannot reliably reconstruct a complete year’s emissions allocation from annual energy invoices alone if necessary process records and allocation controls were never maintained. This creates an operational requirement for ongoing record-keeping tied to allocation controls.
The increasing mark-up provides a measurable financial rationale for emissions-data projects. Exporters can compare expected certificate costs under default values with costs under verified actual emissions, then assess investment needs for monitoring, reporting and verification (MRV). EU buyers can apply the same comparison when evaluating suppliers and setting deadlines for delivery of emissions data.
Managing substantiation risk across 2026–2028
Risk reporting should account for the possibility that a claimed actual-emissions value cannot be substantiated. If substantiation fails, an importer may have to use a more punitive default, potentially increasing liability independently of movements in EU ETS certificate prices. The risk is therefore linked to verification outcomes as well as underlying emission estimates.
Management is expected to identify suppliers and products with the largest differences between expected actual emissions and applicable defaults. Verification efforts and data-quality improvements should then be prioritised accordingly. Exporters are also expected to calculate default-versus-actual cost gaps for principal EU-bound products across 2026, 2027 and 2028.
Where differences are material, approvals for pre-verification steps such as improved metering and stronger supplier-data controls should be made before the 30% mark-up takes effect from 2028. The timing is tied directly to when higher default-value increases apply under the definitive methodology.
Integrating CBAM evidence into commercial and financial controls
A practical implementation test is whether a company can explain its CBAM calculation to both a verifier and a commercial manager using the same underlying records. Compliance documentation should be integrated with purchasing, production, customs and finance rather than maintained as a separate reporting exercise. This approach links evidence generation with operational decision-making.
Routine data collection with controlled assumptions and documented fallback treatments allows calculations to be updated when suppliers, routes, prices or legal requirements change. It also supports customer negotiations by making emissions figures and supporting evidence easier to substantiate within verification constraints. The documentation focus is on traceability and consistency across functions involved in CBAM reporting.
The minimum decision file should connect customs volumes, the emissions basis, applicable certificate price, cash-flow timing and contractual cost pass-through arrangements. It should identify who approves each assumption and specify an alternative treatment when preferred emissions calculations cannot be substantiated. Defining fallback procedures in advance helps prevent exposure surprises when claims are challenged by verifiers, customs authorities or authorised declarants.
CBAM default values are described as a compliance fallback rather than a cost-free substitute for verified data. As mark-ups rise from 10% to 20% and then 30%, delays in establishing reliable emissions evidence can become increasingly expensive for exporters and their EU customers.