CBAM in Numbers: It's Time to Calculate the Real Cost of Certificates (Carbon Duty)
CBAM in Numbers: It's Time to Calculate the Real Cost of Certificates (Carbon Duty)
How to correctly calculate the number of CBAM certificates needed and convert the emission data into specific financial costs
Why composite products, precursor emissions and consideration of free allocation can fundamentally affect the resulting CBAM obligation
How to use quality supplier data and scenario calculations in cost planning, pricing, and margin management
A number of companies tried to answer this question already during the preparations for the definitive CBAM period. In practice, however, we encountered that some parts of the methodology were not clear enough and the preliminary calculations could thus lead to significantly different results. In particular, composite products, work with precursor emissions and the way free allocation in the EU ETS system was taken into account were problematic.
With the current specification of the methodology by the European Commission, it is therefore a good time to return to the current calculations, verify their correctness and recalculate the expected number of CBAM certificates according to the current rules. Only then can it be more reliably determined what financial impact the CBAM will have on a particular company.
From Isoage Data to Financial Impact
The calculation is not just a multiplication of the imported quantity by the emission factor and the price of the certificate. A number of parameters come into play – for example, the actual or default values of the emissions contained in the product, the rules applicable to precursors, the consideration of free allocation in the EU ETS or the possible carbon price actually paid in a third country.This is where the difference between an indicative calculation and a calculation that can actually be used for financial planning becomes apparent.
The result of a correctly performed calculation is not only data on emissions. It is information that is significantly more important for management: how many CBAM certificates the company will need and what cost it represents at the expected price.
For complex products, the calculation can be significantly more complicated
One of the areas where we encountered the greatest difficulties when working with clients was the compound products and the correct inclusion of their precursors.In practice, an importer often does not buy a simple product directly from its primary producer. For example, he may import a product from a foreign manufacturer who buys steel or other material from other suppliers for its production. Thus, several companies, sometimes from different countries, can participate in the final product.
Another methodologically demanding area was the correct consideration of the free allocation of allowances in the EU ETS. In the case of composite products, it was not always clear in previous calculations how to correctly reflect this factor in the resulting CBAM obligation.
The experience from our contracts therefore shows that the calculations made at an earlier stage of preparation for the CBAM should be re-examined. The difference between a simplified and methodologically correct calculation will ultimately be reflected in the number of certificates, and thus directly in the financial cost of the company.
It is advisable to model the first financial impacts now
The obligation related to CBAM certificates already applies to imports made in 2026. Therefore, companies should not wait until the moment when it is necessary to actually acquire certificates and settle their obligation.On the contrary, it is advisable to continuously monitor how the expected CBAM exposure develops according to the actual quantity imported, the structure of imported products, their emission intensity and the price linked to the EU ETS.
The company can thus continuously answer questions that are no longer just compliance issues:
- What CBAM cost do we incur from imports made in 2026?
- Which products, suppliers or countries of origin generate the largest part of the expected cost?
- How does the result change when using actual emission data instead of standard values?
- What circulation can we expect in the next quarter or the whole year?
- How will CBAM translate into costs and margins in the coming years?
Such information is important not only for the team responsible for CBAM compliance, but also for controlling, purchasing, pricing, supplier negotiations, and margin planning.
The CBAM thus shifts from a regulatory obligation to a quantity that a company should work with in its financial management.
Data from suppliers is starting to have quantifiable value
At the same time, more complex calculations show how important the quality of data obtained from manufacturers and suppliers from third countries is.It is not enough to just ask the supplier for “CBAM data”. The company must know which data it really needs for the calculation, in what structure it should be obtained and whether it is usable for the calculation.
Data quality thus begins to have a very specific economic meaning. If a result based on actual emission data can be compared with a calculation using appropriate standard or substitute values, a company can see how financial it really is to obtain better data from a supplier.
Therefore, working with suppliers is no longer just an administrative part of CBAM reporting. It is becoming part of the company's future cost management.
From CBAM Calculation to Financial Exposure Management
We have also reflected the experience from the calculations so far in our CBAM calculation tool. Its purpose is not only to convert emission data into the number of certificates, but also to enable us to work with more complex situations that we encounter in practice and to quantify the CBAM obligation according to the current methodology.This allows companies to continuously update their expected obligation according to the actual imports and at the same time create scenarios for future developments.
It is scenario calculations that can be essential for management. For example, they make it possible to assess the impact of different emission values, the structure of imports or suppliers, and to monitor how the change in input parameters will be reflected in the number of certificates needed and subsequently in the expected cost.
The CBAM calculation does not have to be used only for the regulatory settlement of the obligation. It can become an ongoing management tool for managing financial exposure associated with imports.
How much will CBAM cost your company?
In my opinion, this is a question that importers should start asking themselves now.For companies that have previously modelled CBAM costs, the first step is to check whether the calculation so far corresponds to the current methodology – especially where the company imports composite products and precursors enter the calculation.
The next step is to verify the quality of the input data and transfer the calculated obligation into a financial plan. The company can then not only monitor what CBAM exposure it incurs during the year, but also model its further development and work with it when making decisions about suppliers, purchases, prices or margins.
At BDO, we help companies with the methodology of CBAM calculation, setting up the acquisition of the necessary data from suppliers, and with the specific quantification of the expected number of CBAM certificates and the associated costs. At the same time, we also reflect the experience from specific situations we have encountered while working with clients in the calculations.
Thus, CBAM does not have to be a cost whose actual amount the company finds out only when it has to pay it. It can be a cost that it knows in advance, understands what creates it, and can actively manage it.