Simple CBAM Carbon Cost Calculation

Firstly, importers need to identify the minimum inputs

For each product from each supplier, importers must identify:

1. Imported quantity – tonnes of product imported
2. Embedded emissions intensity – tonnes of CO₂ per tonne of product (tCO₂/t), based on verified supplier data
3. EU ETS carbon price – € per tonne of CO₂ (typically an average price over the relevant period)
4. Carbon price already paid abroad (if any) – € per tonne of CO₂ (only deductible if verifiable and CBAM-eligible)

Simplified Core Formula

CBAM Carbon Cost = Imported quantity (t) × Embedded emissions (tCO₂/t) × (EU ETS price − eligible foreign carbon price)

From 2026 to 2034, CBAM is phased in. In early years, importers only pay for an increasing percentage of embedded emissions (mirroring the phase-out of EU ETS free allowances).

Source of Graph: European Commission CBAM Regulation and EU ETS reform policy framework and associated analysis (e.g., PWC, Climate Action documentation

The examples below show the full-exposure cost for simplicity and comparability.

Example 1: Steel supplier:

• Product: Hot-rolled steel
• Supplier: Supplier A (non-EU)
• Quantity imported: 1,000 tonnes
• Emissions intensity: 2.2 tCO₂ / tonne
• EU ETS price: €80 / tCO₂
• Foreign carbon price paid: €0

Calculation for 1000 t: 1,000 × 2.2 × 80 = €176,000 CBAM cost

Carbon cost per tonne of product: €176 / tonne

Example 2: Aluminium  supplier  (with foreign carbon price)

• Product: Primary aluminium
• Quantity: 500 tonnes
• Emissions intensity: 8.0 tCO₂ / tonne
• EU ETS price: €80 / tCO₂
• Carbon tax paid abroad: €20 / tCO₂

Net carbon price: 80 − 20 = €60 / tCO₂
Calculation for 500 tonnes: 500 × 8.0 × 60 = €240,000 CBAM cost
Carbon cost per tonne: €480 / tonne

Example 3: Using EU default values if a supplier provides no usable data

If a supplier provides no usable data, the EU applies default values

Example for steel
Default emissions intensity for steel: 2.9 tCO₂ / tonne
1,000 × 2.9 × 80 = €232,000
Penalty for poor data per tonne: €56 / tonne extra cost.

How MM Markets Can Support

MM Markets supports companies with CBAM readiness through:

1. Data requirement mapping (per product, per supplier): CN-code scope, required metrics, and methodology alignment.
2. Supplier data packs: submission templates aligned with EU requirements + evidence checklists.
3. Supplier action plans: escalation pathways where suppliers can’t deliver compliant data on time.
4. Data validation: calculation checks, methodology reviews, and benchmark sanity checks.
5. Verification readiness: pre-verification review, data cleaning, and audit prep for accredited third-party verification in the definitive regime.
6. Cost modelling & supplier impact assessment:
   1. Carbon cost per supplier
7. 1. Supplier emission comparison
8. 1. Savings from switching suppliers
   1. Long-term exposure forecasting.