Based on reporting of Kate Abnett and Tom Daly
A new draft proposal from the European Commission indicates that imports of aluminium, cement, and other industrial commodities into the EU will probably face higher than expected costs related to carbon from 2026, as part of the full implementation of the Carbon Border Adjustment Mechanism (CBAM). The draft benchmarks outline tougher CO₂ intensity values, which directly increase the cost burden on non-EU producers exporting to the Single Market.
Under CBAM, which becomes fully operational in January, importers must purchase certificates reflecting the embedded emissions of covered products. These costs are pegged to the EU ETS carbon price, ensuring that foreign producers face a comparable carbon cost to EU manufacturers already participating in the bloc’s emissions trading system. Lower benchmarks translate to higher carbon fees for importers, particularly for producers that do not disclose verified emissions data. According to draft default values and an €80/t EUA price, primary aluminium from Mozambique which is the EU’s largest supplier in early 2025, could face charges of around €168/t, while imports from India and the UAE may incur charges of roughly €51/t.
Hot-rolled steel coil importers will also feel the impact, with estimated CBAM surcharges ranging from €80/t for South Korea to over €600/t for Indonesia, according to Morgan Stanley. Although CBAM costs will be phased in gradually, the direction is clear: embedded-carbon exposure is becoming a material competitiveness factor in global trade.
FACS Perspective
The tightening of CBAM benchmarks show a broader shift: carbon intensity is becoming a central determinant of trade competitiveness. For importers, producers, and traders, accurate emissions data, procurement planning, and carbon cost forecasting will be essential.
At FACS, we view the new draft benchmarks as a strong signal that CBAM compliance will demand more granular reporting and more proactive EU allowance procurement strategies. As the system finalizes in 2026, firms that invest early in emissions monitoring, verified data pathways, and strategic hedging frameworks will be best positioned to navigate the rising cost of carbon across international supply chains.
You can read the full Reuters report here:
EU aluminium and cement imports to face higher emissions costs, draft shows
This post is based on reporting by Reuters. All rights, including copyright, belong to the original author(s).