Trade professionals and customs declarants should take immediate note of the European Commission’s newly released draft implementing act regarding the Carbon Border Adjustment Mechanism (CBAM). Published on 13 May 2026, and currently under public consultation until 10 June 2026, these rules provide the first clear framework for how carbon prices paid in third countries—including the UK—can be deducted from the certificates required for EU imports during the definitive phase.
The "Effectively Paid" Requirement
A central pillar of the new draft is the definition of a carbon price "effectively paid." To qualify for a deduction, the price must stem from a binding carbon pricing mechanism, such as an Emissions Trading System (ETS) or a direct carbon tax. The Commission has clarified that only explicit carbon prices are eligible; implicit costs, such as those incurred through regulatory compliance or technology mandates that do not involve a direct levy per tonne of CO2, will not be considered for deduction.
For UK exporters, this is a critical development. While the UK ETS is widely expected to qualify as a compatible mechanism, the draft legislation places the burden of proof firmly on the authorized CBAM declarant. Declarants must provide evidence that the carbon price was not only levied but that no rebate or compensation was received that would negate the price paid. This includes any free allocations or state aid provided to the original installation in the UK.
Actual Values vs. Default Data
Perhaps the most challenging aspect of the draft for TCSA members is the restriction on using default values. The Commission proposes that deductions for foreign carbon prices will only be permitted where the CBAM declaration is submitted using actual emissions data. This creates a significant incentive for supply chain transparency. Companies relying on EU-provided default values for their emissions reporting will likely find themselves unable to offset the carbon costs they have already paid in their home jurisdictions, potentially leading to a double-taxation scenario.
Verification and Article 6 Credits
The draft also introduces strict limits on the use of international carbon credits. Under the proposed rules, credits from Article 6 of the Paris Agreement may only be used to offset up to 10% of reported emissions. Furthermore, the verification of carbon prices paid abroad must be conducted by accredited independent verifiers, adding another layer of administrative overhead for customs brokers and trade compliance departments.
Practical Implications for UK Trade Professionals
For those managing UK-EU supply chains, the immediate priorities should include:
- Data Mapping: Ensure that UK installations are prepared to share actual, verifiable emissions data. Relying on default values is no longer a viable long-term strategy if you intend to claim carbon price deductions.
- Financial Impact Assessment: Calculate the potential for double-taxation if your current reporting processes do not meet the new EU verification standards.
- Consultation Participation: The TCSA encourages members to review the draft annexes and provide feedback before the 10 June deadline, particularly regarding the administrative burden of the proposed evidence requirements.
As we navigate the first full year of the CBAM definitive regime, these rules represent a pivotal shift from the flexible transitional period. Compliance teams must evolve from simple data collection to sophisticated financial and regulatory reporting to protect their margins in a carbon-constrained market.
