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CBAM Default Emission Values and Why They Cost More

Understanding EU default emission values, the penalty markup structure (10% in 2026, 30% by 2028), and why providing verified actual emissions saves money.

6 April 20260 views

CBAM Default Emission Values and Why They Cost More

The EU Commission's default emission values are one of the most financially consequential aspects of CBAM for South African exporters. Understanding how they work — and why they are deliberately set high — is essential for any compliance strategy.

What Are Default Emission Values?

Default emission values are EU Commission-set benchmarks representing the embedded carbon content of CBAM goods. They serve as a fallback when:

  • An exporter has not measured their actual embedded emissions
  • Verified emission data is not available from the production facility
  • The EU importer cannot obtain emission data from the exporter

The European Commission publishes default values for each product category covered by CBAM, based on the average emission intensity of production in the country of origin (or a global average where country data is unavailable).

The Penalty Markup Structure

The critical detail that many exporters miss: default values include a penalty markup that increases over time:

YearMarkup on Default ValuesEffective Penalty
2026+10%Significant
2027+20%Substantial
2028++30%Severe

This escalating penalty is deliberate — it creates a strong financial incentive for exporters to invest in actual emission measurement and verification.

Default Values by Sector (2026, with 10% markup)

SectorProductDefault ValueUnit
SteelHot-rolled coil2.18tCO2/tonne
AluminiumPrimary aluminium12.4tCO2/tonne
FertilisersUrea2.85tCO2/tonne
CementPortland cement0.87tCO2/tonne
HydrogenGrey hydrogen10.9tCO2/tonne

The Financial Case for Actual Emissions

Consider a South African steel exporter shipping 100,000 tonnes of hot-rolled coil to the EU annually, with actual embedded emissions of 1.85 tCO2/tonne (below the default):

ScenarioEmission FactorCBAM Cost (65 EUR/t ETS)Annual Saving
Actual verified (2026)1.85 tCO2/tEUR 12,025,000—
Default + 10% (2026)2.18 tCO2/tEUR 14,170,000EUR 2,145,000
Default + 30% (2028)2.57 tCO2/tEUR 16,705,000EUR 4,680,000

The investment in verification (typically R500,000 to R2,000,000 for a large facility) pays back within months.

How to Avoid Default Values

  1. Measure your emissions: Implement continuous emission monitoring or use approved calculation methods
  2. Engage an accredited verifier: Commission a third-party verification under ISO 14065
  3. Provide data to your EU importer: Share the verification report with your EU buyer
  4. Register in the CBAM Registry: Demonstrate your compliance readiness to EU importers

References

Frequently Asked Questions

What are CBAM default emission values?
Default emission values are EU Commission-set benchmarks for embedded emissions in CBAM goods. They are used when exporters cannot provide verified actual emission data.
Why are default values higher than actual emissions?
Default values are intentionally set above average actual emissions to incentivise exporters to measure and verify their actual emissions. A 10% markup applies in 2026, rising to 30% by 2028.
What is the default emission value for steel?
The EU default emission value for hot-rolled coil steel is 2.18 tCO2/tonne (including the 10% markup for 2026).
How much more expensive are default values vs actual emissions?
For most sectors, actual verified emissions are 15-30% lower than default values. At 65 EUR/tonne ETS price, this can save 20-50 EUR per tonne of exported product.
When does the 30% markup take effect?
The penalty markup increases progressively: 10% in 2026, and reaches 30% by 2028. Exporters who delay measurement face escalating costs.

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