The EU Carbon Border Adjustment Mechanism (EU CBAM) is set to be officially implemented in 2026. After more than two years of data collection and operational testing during the transition period, the EU has revised some of the rules of the CBAM and has been releasing them intensively recently. For specific documents, please refer to the attachment of this article. In a nutshell, the main changes include the following aspects:
(1) Expand the scope of application: Include 180 specific steel and aluminum-intensive downstream products, such as auto parts, home appliances, and metal furniture (involving CN73, 74, 83, 84, 85, 87, 90, 93), etc.
(2) Simplify emission calculation: For complex products such as aluminum materials (CN 7603-7608) and products (CN 7609-7616, excluding CN 7615) in CBAM goods, only the embodied carbon emissions in their raw materials (i.e., precursors, including primary aluminum, recycled aluminum, etc.) are calculated. The direct emissions from the aluminum production process itself (such as rolling, extrusion, etc.) are relatively small. Not included in CBAM emissions; According to the Q&A document of the European Commission, the newly included downstream products only involve the embodied carbon emissions of raw materials, and the emissions from product processing such as cutting, welding and assembly processes are not included.
(3) Set an exemption threshold: EU importers whose cumulative annual imports do not exceed 50 tons will be exempted from the CBAM fee.
(4) Release emission benchmark values: The benchmark values are the baseline red lines for free quotas. This article summarizes them in Table 1. Based on the previously determined regulation that all free quotas will be abolished by 2034, this benchmark value will be gradually reduced year by year before 2034 until all free quotas are abolished by 2034.
(5) Release of default emission values: Default CBAM commodity emission values for each country for 2026-2028 have been released. These default values are used as punitive measures when actual emission values verified by verification authorities cannot be provided. Table 2 of this article selects the default emission values set by the European Union for China's CBAM aluminum commodities. By comparing the default emission values of various countries, it can be seen that the default emission values set by the European Union for Chinese goods are mostly at the highest level, which is 3.5 to 8.8 times the lowest value. For details, please refer to Figure 1. In addition, the default values set by the European Union are also significantly higher than the domestic standards of China. According to the "National Carbon Emission Trading Market Technical Specification Number for the 'Enterprise Greenhouse Gas Emission Accounting and Reporting Guidelines - Aluminum Smelting Industry'" "CETS - AG - 04.1-V01-2024", the direct emissions from China's electrolytic aluminum process are approximately 1.565 tCO2e/t of aluminum. However, the EU has set a default value of 3 tCO2e/t of aluminum for China, which is nearly double the Chinese standard. Eu documents also show that the default value will increase year by year.
