How to model your future CBAM cost exposure

By Ahmed Medhat · Published11 April 2026 · Updated 3 September 2026

How to model your future CBAM cost exposure

Moving from Compliance to Planning: Forecasting CBAM Cost

For non-EU operators, calculating your 2026 Carbon Border Adjustment Mechanism (CBAM) exposure is only the first step. CBAM is a cost that changes with the certificate price and two published schedules: the CBAM factor and the default value mark-up.

---

1. The Three Moving Variables of Future Exposure

To model your buyer's CBAM cost from 2026 through 2034, your facility forecasts three variables: one market price and two published schedules.

A. The Certificate Price

Your buyer's CBAM bill follows the price the Commission calculates from EU ETS auction clearing prices — a quarterly average for 2026 imports (IR (EU) 2025/2548, Art. 1(1)), a weekly average from 2027 (Art. 5). When forecasting your landed cost for a 3-to-5-year export contract, model several price levels of your own choosing.

B. The CBAM Factor

The free allocation adjustment falls each year with the CBAM factor, and from 2034 no factor applies (Directive 2003/87/EC, Article 10a(1a)).

• In 2026 the factor is 97.5%, so the deduction is the benchmark × 97.5% × the cross-sectoral correction factor (IR (EU) 2025/2620, Annex).
• It falls every year after that, to 14% in 2033, and no factor applies from 2034.
• Modeling your exposure means calculating the deduction for each year of the contract.

C. The Rising Default Mark-Up

Under Annex IV, point 4.1 of Regulation (EU) 2023/956 a default is your exporting country's average intensity for the good, not your own — a cleaner installation gets no credit for being cleaner. On top of that, the EU applies a 10% mark-up to these defaults in 2026 for cement, iron and steel, aluminium and hydrogen, rising to 20% in 2027 and 30% from 2028 onwards (fertilisers carry 1% throughout; Implementing Regulation (EU) 2026/1740, Annex I).

---

2. Scenario Planning with the DeCarbonPro Calculator

Installations can use the DeCarbonPro CBAM Cost Calculator to run these scenarios.

• The "Actual vs. Default" Spread: Quantify what your verified data changes. A default value carries the year's mark-up and describes your country's average; a verified actual value carries no mark-up and describes your installation.
• Supplier and Precursor Modeling: If your facility manufactures complex goods, the embedded emissions of the precursors you buy are part of your goods' embedded emissions (Annex IV). Model how your embedded emissions change if you switch your raw material sourcing.

---

3. Testing a Change at Your Installation

The same model can test a change at your installation.

Run it twice:

1. Baseline: Calculate your buyer's CBAM cost from 2026 to 2034 with your current embedded emissions, your price scenarios and the CBAM factor schedule.
2. Change scenario: Recalculate it with the embedded emissions you project for the change, using your own figures.
3. Compare: The difference between the two runs is what the change does to your buyer's CBAM cost.

---

4. Sharing the Forecast with Your Buyers

You can share a multi-year forecast with your EU buyers alongside your emissions data. Show them what your verified data means for their cost year by year, as the mark-up on default values rises to 2028 and the CBAM factor falls to 2034.