Iron & Steel and Cement are Pakistan's CBAM-covered exports to the EU. They are a small share of a textile-led trade, but every tonne above the threshold is declared.
The EU is Pakistan's largest export market, but about three-quarters of that trade is textiles and clothing under GSP+, which CBAM does not cover today. The goods it does cover are steel and cement: long products and billets from scrap-fed induction and electric arc furnaces around Karachi and Lahore, and clinker and grey cement shipped from the southern plants through Karachi, which carry most of the sea-borne exports. Nitrogen fertiliser output from the Fauji, Engro and Fatima plants is sold mainly at home. IR (EU) 2026/1740 Annex I publishes country-specific values for Pakistani cement, fertilisers, aluminium and ferro-alloys; steel falls back to the "Other countries and territories" table.
Source: IR (EU) 2026/1740 Annex I, which replaced the Annex I of IR (EU) 2025/2621 from 1 January 2026 · Default = the published total-emissions value · Net cost adds the Annex I mark-up once — 10% in 2026 and 30% from 2028 for cement, iron and steel, aluminium and hydrogen, 1% for fertilisers · Used when verified actual data is not provided
| Product | Sector | Default tCO₂e/t | Net cost 2026 €/t | Net cost 2030 €/t |
|---|---|---|---|---|
Grey Portland cement CN 25232900 | Cement | 1.3200 | €60.42 | €103.36 |
Anhydrous ammonia CN 28141000 | Fertilisers | 2.4600 | €75.33 | €128.03 |
Urea (solid) CN 31021019 | Fertilisers | 1.6500 | €59.25 | €90.48 |
Ammonium nitrate CN 31023090 | Fertilisers | 1.9600 | €92.73 | €119.29 |
Steel semi-finished (BF-BOF) CN 72071114 | Iron & Steel | 3.9959 | €230.78 | €338.17 |
Unwrought aluminium CN 7601 | Aluminium | 0.3600 | €0.00 | €0.00 |
Hydrogen CN 28041000 | Hydrogen | 10.8200 | €522.46 | €861.59 |
Net cost = the default increased by the year’s mark-up, less the specific embedded free allocation for that year (the good’s Column B CBAM benchmark × the CBAM factor, with the cross-sectoral correction factor taken as 1.0 until the Commission publishes it), charged at €75.28 (Q2 2026, official price of CBAM certificates) [IR (EU) 2025/2620 Annex point 4, Equation 6]. Actual liability depends on verified embedded emissions. Values shown are for illustrative default scenario only.
Carbon pricing in Pakistan: Pakistan charges a carbon levy on petrol, diesel and furnace oil (PKR 2.50 per litre from July 2025, rising to PKR 5 in 2026-27). It is a fuel levy at the pump, not a price on the emissions of an installation. The 2024 carbon market policy guidelines set up crediting for the voluntary market and Article 6 trading, not a compliance price. No emissions trading scheme or carbon tax applies to the production of CBAM-covered goods.
Nothing is deductible yet. Article 9 takes off a carbon price effectively paid in a third country on the declared embedded emissions, and evidenced. Pakistan's fuel levy is paid on litres of fuel, not on the tonnes of CO₂ an installation reports, and the Commission's act on how a paid price is evidenced and converted is still a draft. A domestic compliance scheme for exposed sectors is the route that would create a deductible price; the federal climate ministry is designing an emissions trading scheme, but nothing is in force. Until one exists, the full certificate cost applies to embedded emissions above the benchmark, and verified actual data is where the saving is.
Our reading of Pakistan's own published measures as at September 2026, not an EU-published value — third-country carbon policy changes without warning. Confirm the current position with advisers in the country of production before pricing anything on it.
Pakistani steel is almost entirely scrap-fed induction furnace and EAF production. IR (EU) 2026/1740 Annex I publishes no Pakistani value for semi-finished steel, so CN 7207 11 11 falls back to the "Other countries and territories" figure of 3.996 tCO₂e/t, 4.40 with the 2026 mark-up, a figure the Annex ties to the BF-BOF route (indicator C), applied to a scrap-based mill. A verified actual figure for a scrap-EAF route is usually a fraction of that, so Pakistani steel exporters have one of the strongest financial cases in the regulation for monitoring and verifying. Cement carries country-specific values (1.30 tCO₂e/t grey clinker, 1.32 grey cement before mark-up), so the gain there comes from beating the published route figure with plant data.
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Book a demoDefault values sourced from IR (EU) 2026/1740 Annex I (European Commission). Net costs are illustrative — actual liability depends on verified embedded emissions, SEFA benchmark deduction, and the applicable CBAM phase-in factor. Not legal or compliance advice.
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