{"id":6417,"date":"2025-08-08T12:39:15","date_gmt":"2025-08-08T12:39:15","guid":{"rendered":"https:\/\/climease.com\/?p=6417"},"modified":"2025-08-08T13:22:13","modified_gmt":"2025-08-08T13:22:13","slug":"avoid-eu-default-values-and-save-on-cbam-costs","status":"publish","type":"post","link":"https:\/\/climease.com\/en\/avoid-eu-default-values-and-save-on-cbam-costs\/","title":{"rendered":"Avoid EU Default Values and Save on CBAM Costs"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"6417\" class=\"elementor elementor-6417\" data-elementor-post-type=\"post\">\n\t\t\t\t<div class=\"elementor-element elementor-element-5bed26d6 e-flex e-con-boxed e-con e-parent\" data-id=\"5bed26d6\" data-element_type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-4b5d606c elementor-widget elementor-widget-text-editor\" data-id=\"4b5d606c\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<h2>The Current System: Global Defaults with Built-in Mark-Ups<\/h2><p>Today&#8217;s CBAM allows importers to use default emission values when actual data isn&#8217;t available from suppliers. These aren&#8217;t neutral estimates \u2013 they&#8217;re deliberately designed to be conservative, meaning higher than typical actual emissions to incentivize companies to obtain real data from their suppliers. While &#8220;emissions based on default values do not need to be verified&#8221;\u00b9 compared to actual emissions data which requires verification, this apparent simplicity comes at a significant cost \u2013 you&#8217;re essentially paying penalty rates for the convenience of not collecting real supply chain data.<\/p><h2>The Financial Reality: Default Values Mean Higher Costs<\/h2><p>&#8220;The fundamental principle driving CBAM&#8217;s design is straightforward: default values are intentionally set as mark-ups above actual emissions to incentivize companies to provide verified carbon emission data from their suppliers. When companies use default values instead of actual emissions data, they pay higher costs &#8211; creating a financial incentive to obtain real, verified emissions information throughout their supply chain.<\/p><h2>Why Defaults Cost More<\/h2><ul><li><strong>Conservative by design<\/strong>: Default values represent higher-than-average emissions intensities<\/li><li><strong>No efficiency recognition<\/strong>: Cleaner producers get no benefit when defaults are used<\/li><li><strong>Supply chain cascade<\/strong>: When any tier uses defaults, total embedded emissions increase<\/li><li><strong>Certificate requirements<\/strong>: From 2026, higher reported emissions mean more expensive CBAM certificates<\/li><\/ul><h2>Post 2026: The Country-Specific Revolution<\/h2><p>The current global default system is temporary. Starting in 2026, the EU could implement a more sophisticated \u2013 and potentially more carbon punitive \u2013 approach (<a href=\"https:\/\/co2-iq.com\/en\/default-values-for-cbam-reports\">Co2IQ<\/a>, <a href=\"https:\/\/www.reach24h.com\/en\/faq\/what-are-default-values-under-eu-cbam.html\">Rach24<\/a>, <a href=\"https:\/\/www.spglobal.com\/sustainable1\/en\/insights\/special-editorial\/eu-carbon-border-adjustment-mechanism-to-raise-80b-per-year-by-2040\">S&amp;P Global<\/a>).<\/p><h2>Country-Specific Benchmarks with Penalties<\/h2><p>For the definitive period from 2026: &#8220;country-specific values will be set built on average emissions intensity in each country plus a mark-up.&#8221;\u00b2<\/p><p>&#8220;During the transitional period, only global default values will be made available. During the definitive period (when financial obligations apply), the Commission will provide country-specific or even region-specific default values for greater accuracy.&#8221;\u00b3<\/p><h2>The Mark-up Methodology<\/h2><p>Where actual emissions cannot be determined, &#8220;default values shall be used, set at the average emission intensity of the exporting country increased by a &#8216;proportionately designed mark up.&#8217; Should reliable data not be available for a specific geography, average emission intensities of the worst performing EU ETS installations for that type of good shall be used instead.&#8221;\u2074<\/p><p><b>Translation<\/b>: High-emission countries like China, Turkey, and India will face country-specific defaults that are their national average plus a penalty. Countries without reliable data will face even higher penalties based on the EU&#8217;s worst performers (<a href=\"https:\/\/co2-iq.com\/en\/default-values-for-cbam-reports\">Co2IQ<\/a>, <a href=\"https:\/\/www.reach24h.com\/en\/faq\/what-are-default-values-under-eu-cbam.html\">Rach24<\/a>, <a href=\"https:\/\/www.spglobal.com\/sustainable1\/en\/insights\/special-editorial\/eu-carbon-border-adjustment-mechanism-to-raise-80b-per-year-by-2040\">S&amp;P Globa<\/a>l).<\/p><h2>The Unknown: How Big Will the Penalty Be?<\/h2><p>The EU Commission hasn&#8217;t yet revealed the exact calculation methodology. S&amp;P Global reports that &#8220;previous expectations of this were around 10%, but the final value will be subject to future implementing acts&#8221;\u2074 expected later on in 2025.<\/p><p><b>What we don&#8217;t know yet:<\/b><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\">Will the mark-up be 10%? 20%? Higher?<\/li><li style=\"font-weight: 400;\" aria-level=\"1\">Will different countries face different penalty rates?<\/li><li style=\"font-weight: 400;\" aria-level=\"1\">Will the mark-up vary by sector (steel vs. cement vs. aluminum)?<\/li><li style=\"font-weight: 400;\" aria-level=\"1\">How often will these country-specific benchmarks be updated?<\/li><\/ul><h2>Supply Chain Intelligence: Your Competitive Advantage<\/h2><p>The shift toward country-specific penalties creates enormous opportunities for companies that invest in supply chain carbon intelligence.<\/p><h2>The Cascade Effect<\/h2><p>Real emissions data is crucial because &#8220;EU importers need a solution to get actual emissions data after July 2024. As setting up an emissions monitoring can be a lengthy process, the dialogue with suppliers and manufacturers needs to be started now.&#8221;\u2075<\/p><p><b>Why upstream matters most:<\/b><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\">Tier 2 and Tier 3 suppliers: Often represent 80%+ of total product emissions<\/li><li style=\"font-weight: 400;\" aria-level=\"1\">Default concentration: Raw materials and energy inputs frequently rely on default values<\/li><li style=\"font-weight: 400;\" aria-level=\"1\">Multiplier effect: Real data from upstream suppliers reduces total embedded emissions across the entire product<\/li><\/ul><h2>The Business Case for Real Data<\/h2><p>Your direct suppliers have the same incentive you do: prove lower emissions to reduce costs. When suppliers can demonstrate actual emissions below country defaults (especially below the mark-up penalty), they become more competitive and can offer better pricing.<\/p><h2>The Bottom Line: Default Values Are Becoming Expensive<\/h2><p>As one industry analyst noted: &#8220;The European Commission&#8217;s newly published default emissions will not apply from 2026 onwards. Another set of default values will be introduced, setting the average emission intensity of each exporting country.&#8221;\u2076<\/p><p>The CBAM is evolving from a reporting mechanism to a sophisticated carbon pricing system that will penalize companies relying on defaults \u2013 especially those sourcing from high-emission countries.<\/p><p>The opportunity is clear: Companies that invest in supply chain carbon intelligence today will gain significant cost advantages, while those relying on defaults will face increasing financial penalties as country-specific mark-ups take effect in 2026.<\/p><p>The winners in this new carbon-constrained trade environment will be those who can prove \u2013 not estimate \u2013 their actual emissions. The time to build that capability is now, before the penalties get much steeper.<\/p><p>\u00b9 European Commission releases Omnibus Package I proposal to simplify EU Carbon Border Adjustment Mechanism regulation. Available at: <a href=\"https:\/\/www.crowell.com\/en\/insights\/client-alerts\/european-commissions-proposed-omnibus-simplification-package-what-are-the-main-changes-for-importers-of-cbam-goods\">https:\/\/www.crowell.com\/en\/insights\/client-alerts\/european-commissions-proposed-omnibus-simplification-package-what-are-the-main-changes-for-importers-of-cbam-goods<\/a><\/p><p>\u00b2 Default values for CO2 emissions in CBAM reports. Available at: <a href=\"https:\/\/co2-iq.com\/en\/default-values-for-cbam-reports\">https:\/\/co2-iq.com\/en\/default-values-for-cbam-reports<\/a><\/p><p>\u00b3 What Are the Default Values Under the EU CBAM? REACH24H Consulting Group. Available at: <a href=\"https:\/\/www.reach24h.com\/en\/faq\/what-are-default-values-under-eu-cbam.html\">https:\/\/www.reach24h.com\/en\/faq\/what-are-default-values-under-eu-cbam.html<\/a><\/p><p>\u2074 EU Carbon Border Adjustment Mechanism to raise $80B per year by 2040. S&amp;P Global. Available at: <a href=\"https:\/\/www.spglobal.com\/esg\/insights\/featured\/special-editorial\/eu-carbon-border-adjustment-mechanism-to-raise-80b-per-year-by-2040\">https:\/\/www.spglobal.com\/esg\/insights\/featured\/special-editorial\/eu-carbon-border-adjustment-mechanism-to-raise-80b-per-year-by-2040<\/a><\/p><p>\u2075 Default values for CO2 emissions in CBAM reports. Available at: <a href=\"https:\/\/co2-iq.com\/en\/default-values-for-cbam-reports\">https:\/\/co2-iq.com\/en\/default-values-for-cbam-reports<\/a><\/p><p>\u2076 EU CBAM&#8217;s default carbon emissions values published. MEPS International. Available at: <a href=\"https:\/\/mepsinternational.com\/gb\/en\/news\/eu-cbam-s-default-carbon-emissions-values-published\">https:\/\/mepsinternational.com\/gb\/en\/news\/eu-cbam-s-default-carbon-emissions-values-published<\/a><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>A Heavyweight in Emissions Most of today\u2019s steel is produced using the blast furnace\u2013basic oxygen furnace (BF-BOF) method, a process that relies heavily on coking coal. This route emits roughly 2 tonnes of CO\u2082 per tonne of steel, making it one of the most carbon-intensive industrial processes in the world. Despite incremental improvements, the steel [&hellip;]<\/p>\n","protected":false},"author":24,"featured_media":6418,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","inline_featured_image":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-6417","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-e-learning"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.9 (Yoast SEO v26.8) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Avoid EU Default Values and Save on CBAM Costs | Climease<\/title>\n<meta name=\"description\" content=\"Learn about Avoid EU Default Values and Save on CBAM Costs. 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