The qualifying third-country carbon cost that may be recognised against CBAM exposure when linked to covered emissions from production.
Carbon price matters when an importer claims that a carbon cost has already been paid in the country of origin. The implementation challenge is proving that the foreign price maps to the covered greenhouse-gas emissions and goods in the CBAM declaration.
CBAM recognises carbon-price evidence only when the cost relates to greenhouse-gas emissions from production in a way the mechanism accepts. The source boundary should stay separate from voluntary corporate carbon pricing or climate strategy assumptions. It can take the form of a tax, levy or fee, or an allowance under a greenhouse gas emissions trading system.
Regulation (EU) 2023/956 establishing a carbon border adjustment mechanism
the monetary amount paid in a third country, under a carbon emissions reduction scheme, in the form of a tax, levy or fee or in the form of emission allowances under a greenhouse gas emissions trading system, calculated on greenhouse gases covered by such a measure, and released during the production of goods;
Reference: Article 3, point 29
Reviewed public draft page. Aligns with CBAM high-priority policy: source-bound method boundaries, concrete implementation records, and evidence/cost-focused commentary. Commission Implementing Regulation (EU) 2023/1773 adds transitional reporting and calculation context rather than a second formal definition.
CBAM and product carbon footprint (under ESPR or the Battery Regulation) both quantify emissions associated with goods, but use different methodologies, scope boundaries, and regulatory purposes. CBAM focuses on production-process emissions at installation level; product carbon footprinting uses lifecycle thinking from raw material to end-of-life. A company may need to run both calculations for the same goods, and the numbers will differ — this is expected and not a compliance error.
Commission Implementing Regulation (EU) 2023/1773 Article 7(1) requires information on the carbon price due in a country of origin, including the type of carbon price, country, rebate or compensation, amount due, legal-act provision, copy of the legal act, and the embedded direct or indirect emissions covered. This supports carbon-price recognition as a documented source-law and emissions-coverage question, not a voluntary price signal.
Implementation records should capture foreign pricing mechanism, payment evidence, covered emissions, goods link, country of origin, liable actor, amount paid, period, eligible greenhouse gases, embedded-emissions link, and adjustment calculation.
Carbon price is an evidence-linking and cost-reduction term. Payment records need to be linked to goods, emissions, jurisdiction, and mechanism rules before a claimed foreign carbon cost can be reconciled against CBAM exposure.
Transitional-period reporting and calculation rules that support this CBAM term without replacing the formal Regulation (EU) 2023/956 definition.
Open reference