The Final Stretch of the Transitional Period
Six quarterly reporting cycles have passed since the CBAM transitional period launched in October 2023. The Q1 2025 report carries a different weight: with less than 9 months until the definitive phase begins, the European Commission is raising reporting expectations each quarter. Here is what has changed in this reporting period and how exporters should prepare.
Tightening of Default Values
The most significant change in Q1 2025 reporting is the further narrowing of conditions for using default values. Under Article 4 of Commission Implementing Regulation 2023/1773, importers could use default values under certain conditions during the transitional period. However, the restriction applied since 31 July 2024 limits default values to no more than 20 percent of total embedded emissions.
In the first quarter of 2025, this threshold is being enforced more rigorously in practice. The European Commission's automated checks through the CBAM Transitional Registry are monitoring default value usage rates more closely and requesting explanations for inconsistencies (European Commission, CBAM Transitional Period Implementation Guidance, 2024).
The Push Toward Actual Data
What does this mean in practice?
- Installation-level emissions data is becoming a requirement, not a preference
- Importers are requesting direct measurement or calculation-based emissions data from suppliers
- Reports submitted with default values face increasing justification requirements
- The Commission's country- and sector-specific default values will be phased out entirely in the definitive phase
Reporting Format Improvements
The CBAM Transitional Registry received several technical updates since early 2025. These updates both simplify the reporting process and require more detailed data submissions.
Precursor Reporting
Disaggregating precursor emissions in complex goods (such as steel screws or aluminum profiles) was one of the most problematic areas in previous quarters. As of Q1 2025, the Registry offers an improved interface for step-by-step entry of precursor emissions (European Commission, CBAM Transitional Registry Technical Documentation, 2025).
Indirect Emissions Detail
Electricity-related indirect emissions are critically important, particularly for the steel and aluminum sectors. In the updated format:
- The electricity grid emission factor for the production facility's country is auto-populated
- A new option allows suppliers with specific electricity procurement contracts to document these
- The calculation methodology for indirect emissions must be explicitly stated
Preparing for the Definitive Phase: 9 Months to Go
When the definitive phase begins on 1 January 2026, CBAM will transform from a reporting mechanism into a financial mechanism. Importers will be required to purchase CBAM certificates for embedded emissions. The price of these certificates will be linked to the EU Emissions Trading System (EU ETS) carbon price (EU Regulation 2023/956, Article 21).
Strategic Steps for Exporters
Priority sequence for definitive phase preparation:
- Build your emissions inventory: Calculate installation-level Scope 1 and relevant indirect emissions
- EU-approved verification: In the definitive phase, emissions data must be approved by accredited verifiers
- Track carbon prices: Monitor EU ETS price trends — this will directly impact costs
- Supply chain communication: Start early dialogue with your EU customers on data formats and processes
The Carbon Price Impact
The financial impact on exporters in the definitive phase will depend on two variables:
- Embedded emissions volume: Tonnes of CO2 equivalent per product
- Net certificate cost: Calculated by deducting any carbon price paid in the country of production from the EU ETS price
When a country operates a domestic emissions trading system, its exporters can deduct that amount from the CBAM certificate cost. Countries without a carbon pricing mechanism in place will face the full certificate cost, making early preparation for emissions accounting all the more critical.
What to Watch This Quarter
When preparing your Q1 2025 report, review this checklist:
- Deadline: The report must be submitted by 30 April 2025
- Default value ratio: If you are using default values for more than 20 percent of total embedded emissions, prepare a valid justification
- Data sources: Clearly identify the source of each emissions data point (installation data, national methodology, or default value)
- Precursors: Report input emissions disaggregated for complex goods
- CN codes: Verify that your products are correctly matched to their Combined Nomenclature codes
Looking Ahead
This quarterly report is one of the last practical opportunities before the definitive phase. While transitional period reporting does not carry financial penalties, it serves as a rehearsal for the definitive phase processes. The data infrastructure and processes established today will have direct financial consequences from 2026 onward.
Key Takeaway: Your reporting quality during the transitional period is a leading indicator of the operational burden you will face in the definitive phase. Do not delay the transition from default values to actual data — this shift gets harder with each passing quarter.
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