Introduction to CBAM Certificates
With the start of the CBAM definitive phase, the certificate purchasing mechanism has become part of the daily operations of companies importing into the EU. The certificate system is designed to reflect the carbon cost borne by EU producers under the EU Emissions Trading System (EU ETS) onto imported products as well (Regulation 2023/956, Recital 1).
This guide explains all the technical details of the certificate purchasing process, the pricing mechanism, and the financial planning dimensions.
What Is a Certificate and What Does It Represent?
Each CBAM certificate represents one tonne of CO2 equivalent (tCO2e) of embedded emissions. Certificates are distinct from EU ETS allowances: they are not tradable, and are purchased and surrendered solely to meet CBAM obligations.
Certificates can only be purchased by authorized CBAM declarants. To obtain declarant status, companies must apply to the competent authority of the EU member state in which they operate.
The Pricing Mechanism: The EU ETS Link
Weekly Price Calculation
The CBAM certificate price is not a static or arbitrary figure. Each week, the European Commission calculates and publishes the certificate price as the weekly average of closing prices on EU ETS auction platforms (Regulation 2023/956, Article 21(1)).
This direct link means:
- When the EU ETS price rises, the CBAM certificate cost rises with it
- When the EU ETS price falls, the CBAM cost falls correspondingly
- The price varies from week to week based on market conditions
Current Price Range
Throughout 2025, EU ETS prices fluctuated in the range of EUR 55-78 per tonne. As of early 2026, prices are trading in the EUR 65-75 band (ICE Endex, EU ETS Futures data). With the total allocation volume declining in line with the EU's 2030 climate targets, prices are expected to trend upward over the medium term.
Impact of Price Volatility
Since weekly price changes directly affect certificate costs, strategic purchasing timing becomes important. Importers can build forward certificate stocks during periods when prices are relatively low.
The Purchasing Process: Step by Step
Step 1: Authorized Declarant Status
Every company importing CBAM-covered products into the EU must register as an authorized declarant in the relevant member state. The application process involves assessment of the company's financial standing and customs history.
Step 2: Access to the CBAM Registry
Authorized declarants purchase certificates through the CBAM registry operated by the European Commission. The registry tracks each declarant's certificate balance, purchase history, and surrender status.
Step 3: Certificate Purchase
Declarants can purchase any quantity of certificates through the registry platform. The price is the weekly average in effect during the week of purchase.
Step 4: Certificate Surrender
Purchased certificates are held in the declarant's account and surrendered during the annual surrender period to cover the corresponding embedded emissions.
Surrender Timelines and Obligations
Annual CBAM Declaration
By May 31 each year, authorized declarants must submit a CBAM declaration for goods imported during the previous calendar year. This declaration includes:
- Total quantity of each type of goods imported
- Total embedded emissions (based on verified data)
- Number of certificates surrendered
- Foreign carbon price deduction claimed (Regulation 2023/956, Article 6)
Quarterly Balance Requirements
Beyond the annual declaration, declarants must hold a certificate balance covering at least 80 percent of the embedded emissions of their cumulative imports at the end of each quarter (Regulation 2023/956, Article 22(2)).
This quarterly requirement is designed to prevent companies from deferring all certificate purchases to year-end and to ensure ongoing compliance.
Buy-Back Mechanism
Declarants that have purchased excess certificates may sell back up to one-third of the certificates in their balance to the European Commission. The buy-back price is the price at which the certificate was originally purchased (Regulation 2023/956, Article 22(3)).
Foreign Carbon Price Deduction
The Deduction Mechanism
A core principle of CBAM is to prevent the same emissions from being priced twice. If a carbon price has already been paid in the country where the imported product was manufactured, that amount is deducted from the CBAM certificate obligation (Regulation 2023/956, Article 9).
Which Carbon Prices Are Deductible?
Eligible carbon pricing mechanisms include:
- Allowance costs paid under emissions trading systems (ETS)
- Carbon taxes
- Other direct carbon pricing mechanisms
Voluntary carbon credit purchases or indirect carbon costs (such as the carbon component of energy taxes) are not eligible for deduction.
Significance for Turkey
Once Turkey's TR-ETS system becomes operational, the carbon price paid by Turkish exporters will be deductible from their CBAM obligation. This represents a critically important opportunity for Turkish industry. However, for the deduction to apply:
- The carbon price must have been actually paid
- Portions received as free allocation cannot be deducted
- Documentation must meet EU standards (European Commission, CBAM Certificate Guidance, 2025)
Sectoral Cost Analysis
Steel
Average embedded emissions intensity ranges from 1.6-2.0 tCO2 per tonne of steel. At EUR 70/tCO2, this produces a CBAM cost of EUR 112-140 per tonne, equivalent to approximately 15-20 percent of the steel price.
Cement
Average embedded emissions intensity ranges from 0.6-0.8 tCO2 per tonne of cement. At EUR 70/tCO2, this produces a CBAM cost of EUR 42-56 per tonne.
Aluminium
Primary aluminium's embedded emissions intensity varies dramatically from 4-16 tCO2 per tonne, depending on the energy source used. Facilities powered by renewable energy see a dramatic reduction in this figure.
Recommendations for Financial Planning
- Develop price scenarios: Plan your budget with three scenarios where the EU ETS price is EUR 50, 70, and 100 per tCO2
- Quarterly balance management: Establish a regular purchasing schedule to comply with the 80 percent quarterly requirement
- Track carbon price deduction opportunities: Monitor whether origin-country carbon mechanisms qualify for the CBAM deduction
- Evaluate emissions reduction investments: Lowering embedded emissions is the most effective long-term cost mitigation strategy
- Include verification costs: Installation-level verification should be planned as a separate budget item
Action Item: CBAM certificate costs are directly linked to the EU ETS price, which is expected to trend upward. Financial planning should be based on the worst-case scenario, while emissions reduction investments should be viewed as the best long-term hedge.