Methodology for CBAM cost calculations
This section explains the methodology used by SteelOrbis Research Team for CBAM cost calculations.
Introduction
To calculate the CBAM cost for one metric ton of any good covered (raw materials and carbon steel products) starting from January 1, 2026, you must follow the definitive methodology set by the EU.
The calculation is based on the principle of "Equal Treatment". You pay only for the emissions that exceed the free carbon allowances given to European producers.
SteelOrbis Research Team calculates two types of CBAM costs: by verified values and default values.
Verified values: They must be verified by an EU-accredited verifier. It includes only direct emissions (production process) for carbon steel products.
Default values: If verified data is missing, the EU applies "default values" based on the worst-performing 10 percent of country’s origin companies producing that product.
Formula for CBAM cost calculations
CBAM cost per mt = (Embedded emissions - EU Benchmark by product type × CBAM Factor) × Certificate price
Where:
- Embedded Emissions (tCO2e/t) is the amount of greenhouse gases emitted per mt of product.
- EU Benchmark varies from 0.066 tCO2e/t to 1.491 tCO2e/t depending on the product type and production steel process, according to COMMISSION IMPLEMENTING REGULATION (EU) 2025/2620 from 16.12.2025.
The CBAM Factor.
In 2026, the CBAM Factor is 2.5 percent (may only pay for 2.5 percent of the total embedded emissions). This factor increases every year and is expected to reach 100 percent by 2034.
Certificate price (Certificate cost).
The price of one CBAM certificate equals the weekly average auction price of EU ETS allowances (€/tCO2e). In 2026, CBAM costs will be on a quarterly basis, for easier implementation for importers, and from 2027 they will be on a weekly basis. During the current period, SteelOrbis Research Team uses the estimated certificate prices, based on the average ETS price from the start of the current period to the current week. At the end of the period, SteelOrbis will use the real certificate prices based on the average ETS price for the current period.