Under EU CBAM, the buyer declares and the Indian producer's data sets the bill

The EU Carbon Border Adjustment Mechanism entered its definitive period on 1 January 2026¹. Steel and aluminium imported this year will be settled in the first annual declaration and surrender, due by 30 September 2027².

The legal duties sit in the EU. The importer, or its indirect customs representative, must be an authorised CBAM declarant. Only the declarant owes certificates; penalties fall on the declarant, or on anyone who imports without authorisation^2,3. An Indian producer takes on duties only if it registers as an operator in the CBAM Registry³.

The cost is set elsewhere. As the book behind this note puts it: “The EU importer, as authorised CBAM declarant, buys and surrenders the certificates, but the exporter's data decides how many.”

Certificates owed equal embedded emissions, less a free-allocation adjustment, less any carbon price paid abroad once that deduction operates^4,5. The adjustment is the CBAM factor times the cross-sectoral correction factor (CSCF) times an EU benchmark⁴. The factor is 97.5% in 2026 and reaches zero in 2034⁶. Every tonne above the adjustment pays the full certificate price from the first year; on the author's reading, treating the phase-in as a charge on 2.5% of emissions badly understates 2026 costs.

For steel and aluminium, only direct emissions are charged; indirect emissions count only for cement, fertilisers and agglomerated iron ore⁵. Precursor emissions count, with EU-made precursors at zero⁵, so a rolling mill's figure depends on its sponge-iron or crude-steel supplier. With actual values, the declarant builds the adjustment from process benchmarks weighted by the producer's own precursor ratios⁴, which it cannot do without the producer's route and data.

Defaults against verified actuals

A declarant may declare actual emissions only if an accredited verifier has verified them; otherwise it uses default values³. These sit in Implementing Regulation (EU) 2025/2621, whose Annexes I and IV were replaced by Implementing Regulation (EU) 2026/1740 of 20 July 2026, with effect from 1 January 2026⁷. The Registry adds a mark-up of 10% in 2026, 20% in 2027 and 30% from 2028^7,5. On defaults, one benchmark applies to the whole good, for the route Annex I indicates for the country⁴.

The book's illustrative worked example for Indian hot-rolled flat steel (CN 7208) shows the order of magnitude. It rests on assumptions stated as at 25 September 2026, three of them still open:

• Default value. An India default of 4.28 tCO2e per tonne, taken from secondary compilations and not yet confirmed against the Commission's official values.
• Route. The route assigned to India for that code is unconfirmed; the example assumes blast furnace.
• CSCF. Implementing Regulation (EU) 2025/2620 does not state the 2026 value⁴; the example uses 1, and a lower factor would raise every figure.

It uses the Q2 2026 certificate price of €75.28, published on 6 July 2026; the Q3 price is due on 5 October 2026⁸. The actual case assumes an integrated producer verified at 2.30 tCO2e per tonne.

Author's worked example on the assumptions above; not an estimate for any installation.

If Annex I assigns India's default for this code to the DRI route, the 2026 default cost rises to €319.11. On these inputs, defaults are cheaper in 2026 only if verified emissions exceed about 4.7 tCO2e per tonne.

Defaults also cost cash early. From 2027 the declarant must hold, at each quarter-end, certificates for at least 50% of that year's embedded emissions, measured on defaults without the mark-up or on the previous year's surrender². Surplus certificates are repurchased only within limits and otherwise cancelled³, so a buyer that over-buys on India's default may not recover the difference.

Two traps remain. A DRI or pig-iron supplier without verified data will normally push the Annex IV precursor default into the producer's figure⁷. And re-routing goods or re-labelling a route to reach a softer default is exposed to the circumvention rules, which a pending Commission proposal would tighten for that case^3,9.

What the EU buyer will ask for

Expect five requests.

• Proof that it may import. An importer that applied for authorisation by 31 March 2026 may keep importing while the application is pending; others must be authorised first^3,10. The 50-tonne annual threshold counts per importer across all codes and origins².
• A data pack per installation and period. CN code, verified specific embedded emissions, route, precursors with their specific masses, and the verification reference. The declarant files the verification report with its declaration⁶; the Registry lets an operator share verified data with several declarants³.
• A verifier the EU recognises. A verifier based in India may be accredited for CBAM, but only by a national accreditation body in a Member State⁵. Verification is to reasonable assurance and covers the monitoring plan itself¹¹, so the methodology should precede the data year.
• An agreed reporting period. The default is the calendar year; the Commission's Q&A allows another, such as a financial year, on conditions⁵. A company on an April–March year should settle this before the period starts.
• Risk terms. A missing certificate attracts the EU ETS excess-emissions penalty, €135.31 for 2025, with the 2026 figure to apply, and payment does not discharge the surrender^3,12. The authority may reduce it where an operator supplied incorrect information³, hence buyers' requests for data-error indemnities.

The Article 9 deduction for an Indian carbon price is not yet usable: the implementing act was published in draft on 13 May 2026 and not adopted by 25 September 2026^13,1. From 2027, a declarant on defaults may claim it only against Commission default carbon prices². On the author's reading, a CBAM price clause should set that term at zero, state its inputs (verified emissions, benchmark chain, price, CSCF), and pair a provisional charge with an annual true-up.

For listed companies, BRSR greenhouse gas data are a head start on meters, invoices and evidence, but they are entity-level, whereas CBAM needs installation-level figures under Implementing Regulation (EU) 2025/2547 and an EU-accredited verifier^14,5.

The UK CBAM and what comes next

The UK CBAM applies from 1 January 2027 under the Finance Act 2026, with regulations made on 13 July 2026 in force from that date^15,16,17,18. It covers aluminium, cement, fertiliser, hydrogen, and iron and steel¹⁵. The importer is liable, registration turns on a £50,000 value test (next 30 days or previous 12 months), and only direct and precursor emissions are charged¹⁶.

The UK sets one rate per sector each quarter from UK ETS auction prices, with a sector-average free-allocation adjustment built in^16,18. On the author's reading, every embodied tonne then carries the rate, so lower verified emissions cut the UK bill from the first tonne. Actual data count only if verified to ISO 14065:2020 and ISO/IEC 17029:2019, and HMRC says the methods are designed for interoperability with the EU CBAM¹⁶. Registration opens on 1 January 2028; the first return is due by 31 May 2028^16,19.

India's Carbon Credit Trading Scheme is on the UK's provisional list of qualifying schemes, so relief is possible, capped at the liability and subject to an independent verifier's form^20,18,16. India's release on the CETA, in force since 15 July 2026, does not mention the UK CBAM, and HMRC reports no international arrangements^21,16. The India–EU FTA, concluded on 27 January 2026, carries commitments on recognising carbon prices and verifiers, and was unsigned at 25 September 2026^22,23. On the author's reading of the Commerce Ministry's release, none exempts Indian goods.

Further out, a Commission proposal would extend CBAM from 1 January 2028 to downstream goods heavy in steel or aluminium; the Commission, Council and Parliament's ENVI committee lists run to 180, 200 and 457 goods^9,24.

The workable response is one installation dataset built to the stricter standard, verified once where accreditation allows, and issued as separate EU and UK data packs.

This note draws on The CBAM Exporter's Compliance Guidebook (The Enterprise Compliance Set, Volume II; 2026 Definitive-Regime Edition) by Harshal Kate, in preparation.

Analysis, not legal advice. Law stated as at 25 September 2026.