—Based on reporting by Fastmarkets
A leaked draft annex from the European Commission provides the first detailed look at the provisional benchmark values that will guide CBAM cost calculations when the mechanism enters its definitive phase on 1 January 2026. The document outlines how Specific Embedded Free Allocations (SEFA) and Free Allocation Adjustments (FAA) will be determined, giving importers early insight into potential liabilities under the new system. According to the draft, benchmark values for aluminium and steel largely match industry expectations: primary aluminium remains at 1.464 tCO₂e, while secondary aluminium is set at 0.139 tCO₂e, with production routes shifting to “secondary” whenever scrap content exceeds 50%. For steel, provisional benchmarks differ by production technology. These early figures suggest the Commission is taking steps to address long-standing concerns such as the “scrap loophole,” though market participants continue to await clarity on country-specific default values and accreditation protocols.
While the leaked benchmarks clarify part of the CBAM cost structure, one key component remains outstanding: default values for embedded emissions. These values, used when verified actual emissions data is unavailable, will be essential for importers seeking to complete 2026 declarations, especially in complex supply chains where upstream data is limited. Market expectations point to publication in early 2026, alongside updated ETS benchmarks, enabling companies to model more accurate CBAM exposures. With the definitive phase of CBAM less than two months away, and CBAM certificate purchasing beginning in 2027, the emerging framework show the urgency for producers, traders, and importers to strengthen data collection, verification processes, and hedging strategies.
FACS Perspective
The leaked benchmarks for aluminium and steel represent a significant step toward operational clarity for CBAM-exposed sectors. Stable, predictable benchmark values paired with verified actual emissions data can materially reduce compliance costs and support more accurate hedging strategies under the EU ETS. For industrials and traders alike, these developments reinforce the importance of investing early in robust emissions measurement, data management, and procurement planning. As default values and final benchmarks are released in early 2026, companies will gain the remaining pieces needed to model CBAM liabilities with confidence and integrate carbon cost forecasting into commercial and supply-chain decision-making.
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