Budgeting for CBAM Costs in 2026: A Guide

Here's the mistake most SME importers make: they look at their 2026 CBAM bill, see a small number, and assume that's what they'll pay next year.

It's not. Your 2034 bill will be significantly higher — for the same imports. The exact multiplier depends on your sector and emissions profile: steel BF-BOF costs grow ~4.8×, aluminium ~17.7×, and cement ~26× by 2034.

CBAM costs grow as free allocation phases out. If you're budgeting using only 2026 numbers, you're building a financial plan that breaks in 2029.

This guide walks through the actual numbers — sector by sector — so you can build a realistic 5-year budget.

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The CBAM Cost Formula

Four inputs. That's it.

Step 1: Calculate embedded emissions

Embedded emissions (tCO₂e) = Quantity (tonnes) × Emission factor (tCO₂e/tonne)

Step 2: Apply the benchmark deduction

Free allocation (tCO₂e) = Benchmark × CBAM factor × Quantity
Chargeable emissions = Embedded emissions − Free allocation

Where the CBAM factor is 97.5% in 2026 (declining to 0% by 2034). The benchmark is sector-specific: 1.370 for BF-BOF steel, 0.666 for cement clinker, 1.423 for aluminium, etc. (Source: Regulation 2023/956 Art. 7 + IR 2025/2621)

Step 3: Calculate certificate cost

Certificate cost (EUR) = max(0, Chargeable emissions) × Certificate price (EUR/tCO₂e)

Step 4: Deduct any carbon price paid at origin

Net CBAM cost = Certificate cost − Carbon price deduction

Important: Unlike a simple "pay X% of everything" formula, CBAM only charges emissions above the benchmark threshold. The benchmarks represent the top 10% most efficient EU installations. If your actual emissions are close to the benchmark, your cost is much lower than if you're far above it.

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The Phase-Out Schedule That Changes Everything

Most of the financial impact isn't in 2026. It's in 2029–2030, when the free allocation offset drops sharply.

Year	CBAM factor (free allocation offset)	Effective liable share*
2026	97.5%	varies by sector
2027	95%	varies by sector
2028	90%	varies by sector
2029	77.5%	varies by sector
2030	51.5%	varies by sector
2031	39%	varies by sector
2032	26.5%	varies by sector
2033	14%	varies by sector
2034	0%	100%

Source: Regulation (EU) 2023/956, Annex VIII — CBAM factor phase-out schedule

*The effective liable share depends on your actual emissions vs. the sector benchmark. For example, BF-BOF steel at 1.85 tCO₂/t is ~28% liable in 2026, while cement at 0.70 tCO₂/t is only ~7% liable. The cost multiplier from 2026 to 2034 also varies — steel BF-BOF costs grow ~4.8×, aluminium ~17.7×, and cement ~26×. See the worked examples below for exact sector projections.

The jump between 2028 and 2029 is the biggest single increase — effective liable share rises sharply in that year.

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2026 Certificate Price: The Starting Point

The first official CBAM certificate price was published on April 7, 2026:

Period	Price	Method
Q1 2026	€75.36/tCO₂	Quarterly average of EU ETS auctions
Q2 2026	~€80 (est.)	Published July 6, 2026
Q3 2026	TBD	Published October 5, 2026
Q4 2026	TBD	Published January 4, 2027

Source: European Commission, DG TAXUD — Price of CBAM certificates page

Starting 2027, prices switch to weekly averages. That means more fluctuation. Plan for it.

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Steel Importer Budget: Two Scenarios

Scenario A: BF-BOF (blast furnace) — 1,000 tonnes/year

Year	Liable emissions (correct)	Est. price	Annual cost
2026	564 tCO₂	€75	~€42,300
2027	599 tCO₂	€80	~€47,900
2028	667 tCO₂	€85	~€56,700
2029	838 tCO₂	€90	~€75,400
2030	1,194 tCO₂	€95	~€113,500
2034	1,900 tCO₂	€100	~€190,000

Formula: (1,900 total emissions) − (1.370 × CBAM factor × 1,000t). BF-BOF benchmark: 1.370. For 2026: 1,900 − (1.370 × 0.975 × 1,000) = 564.25 tCO₂. CBAM factors: 0.975 (2026), 0.95 (2027), 0.90 (2028), 0.775 (2029), 0.515 (2030), 0 (2034).

⚠️ These are substantially higher than the old simplified estimates. The 2026 cost is ~€42,300, not €3,600 — because the benchmark deduction only covers ~1,336 tCO₂ out of 1,900 tCO₂. You pay for all 564 tCO₂ above the benchmark, not just 2.5% of everything.

Scenario B: EAF (electric arc, scrap) — 1,000 tonnes/year

Year	Liable emissions (correct)	Est. price	Annual cost
2026	530 tCO₂	€75	~€39,700
2027	532 tCO₂	€80	~€42,500
2028	535 tCO₂	€85	~€45,500
2029	544 tCO₂	€90	~€49,000
2030	563 tCO₂	€95	~€53,500
2034	600 tCO₂	€100	~€60,000

Formula: (600 total emissions) − (0.072 × CBAM factor × 1,000t). Scrap-EAF benchmark: 0.072. For 2026: 600 − (0.072 × 0.975 × 1,000) = 529.80 tCO₂. Note: EAF costs grow more slowly than BF-BOF because the scrap benchmark (0.072) is very small, so the phase-out of free allocation has less impact.

Note: Steel benchmarks from IR (EU) 2025/2621, Annex I. Certificate price estimates use current market trends and should be updated quarterly.

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Aluminium Importer Budget (500 tonnes/year)

Aluminium is an Annex II sector under Regulation 2023/956 Article 7(1). Only direct emissions are chargeable. Indirect emissions (from electricity) are reported but excluded from the cost calculation.

Year	Liable emissions (correct)	Est. price	Annual cost
2026	56 tCO₂	€75	~€4,200
2027	74 tCO₂	€80	~€5,900
2028	110 tCO₂	€85	~€9,300
2029	199 tCO₂	€90	~€17,900
2030	384 tCO₂	€95	~€36,400
2034	750 tCO₂	€100	~€75,000

Formula: (750 direct emissions) − (1.423 × CBAM factor × 500t). For 2026: 750 − (1.423 × 0.975 × 500) = 56.29 tCO₂. Direct emissions estimate: 1.50 tCO₂/t. Aluminium benchmark: 1.423 (IR 2025/2621).

The indirect exemption matters here. If indirect emissions were included, a coal-powered aluminium plant would pay 5-10× more — but under current rules, only direct smelting emissions are chargeable (Annex II).

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Cement Importer Budget (2,000 tonnes/year)

Cement includes both direct and indirect emissions in the chargeable calculation — it's not in Annex II.

Year	Liable emissions (correct)	Est. price	Annual cost
2026	101 tCO₂	€75	~€7,600
2027	135 tCO₂	€80	~€10,800
2028	201 tCO₂	€85	~€17,100
2029	368 tCO₂	€90	~€33,100
2030	714 tCO₂	€95	~€67,800
2034	1,400 tCO₂	€100	~€140,000

Formula: (1,400 total emissions) − (0.666 × CBAM factor × 2,000t). Cement clinker benchmark: 0.666 (IR 2025/2621). For 2026: 1,400 − (0.666 × 0.975 × 2,000) = 1,400 − 1,298.70 = 101.30 tCO₂. Cement is not in Annex II, so both direct and indirect emissions are chargeable.

Note: Cement's 2026 cost (~€7,600) is lower than steel's despite higher volume, because the cement benchmark (0.666) is a larger fraction of total emissions (0.70) than the steel benchmark (1.370) is of steel emissions (1.90).

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The 2029 Cliff: Budget for This

The jump between 2028 and 2029 is the sharpest:

• 2028: 10% liable
• 2029: 22.5% liable

That's a 125% increase in a single year.

What to do	When	Why
Start reducing emissions now	2026–2027	Gives you a lower baseline before the cliff
Negotiate CBAM into contracts	2026–2027	Pass costs to customers gradually
Track carbon price deductions	2026	Every euro you've already paid is a euro saved
Model different ETS scenarios	2026	Know what €120/tCO₂ does to your numbers

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5-Year Budget Template

Here's a blank template. Fill it in for your numbers.

Year	Volume (t)	Benchmark	tCO₂/t	Total tCO₂	Free alloc.	Liable tCO₂	Price	Cost
2026	___	___	___	___	B×0.975×V	T−F	€75	L×P
2027	___	___	___	___	B×0.95×V	T−F	€80	L×P
2028	___	___	___	___	B×0.90×V	T−F	€85	L×P
2029	___	___	___	___	B×0.775×V	T−F	€90	L×P
2030	___	___	___	___	B×0.515×V	T−F	€95	L×P

Formula: Free allocation = Benchmark × CBAM factor × Volume. Liable = max(0, Total − Free allocation). Cost = Liable × Price.

*Use our free CBAM calculator to generate these numbers automatically for your specific sector and volume.

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Price Scenarios: What If ETS Spikes?

EU ETS prices are volatile. Here's how different prices affect a steel importer (1,000t BF-BOF with 1.90 tCO₂/t embedded):

For 2026: chargeable = (1,900 − 1.370 × 0.975 × 1,000) = 564.25 tCO₂ For 2030: chargeable = (1,900 − 1.370 × 0.515 × 1,000) = 1,194.45 tCO₂ For 2034: chargeable = 1,900 tCO₂ (no benchmark deduction)

Scenario	2026 cost (correct)	2030 cost	2034 cost
Low (€60)	~€33,900	~€71,700	~€114,000
Base (€80)	~€45,100	~€95,600	~€152,000
High (€120)	~€67,700	~€143,300	~€228,000
Very high (€150)	~€84,600	~€179,200	~€285,000

Budget recommendation: use the high scenario (€120/tCO₂). You'll either be right or pleasantly surprised. Try the CBAM calculator to model your own ETS price scenarios.

Budget recommendation: use the high scenario (€120/tCO₂). You'll either be right or pleasantly surprised. Try the CBAM calculator to model your own ETS price scenarios.

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When You Actually Pay

Date	Event
Feb 1, 2027	Certificate sales start
Quarterly in 2027	Purchase certificates for 2026 imports
Sep 30, 2027	First annual declaration due

You don't pay anything in 2026. The first payments happen in 2027. But the costs are based on 2026 imports.

For a detailed breakdown of how the certificate price is calculated and how the phase-in factor works, see our CBAM certificate cost guide.

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Key Takeaways

• Your 2026 cost is not your real cost. Budget using 2029–2030 numbers.
• The 2029 cliff (125% jump) is the biggest single-year increase.
• Steel BF-BOF importers pay 3× more than EAF importers at every stage.
• Aluminium importers benefit from the Annex II indirect exemption.
• Budget using €120/tCO₂ for safety margin.
• Track certificate prices quarterly — they change every 3 months.

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Budget Accurately with CbamTrack

CbamTrack shows your costs in real time — current year and projected.

• Live ETS price feed
• 5-year cost projection by sector
• Scenario modeling (low, base, high)
• Sector-specific benchmarks
• PDF budget reports for your finance team

Start free. No credit card required.

Sign up at cbamtrack.com/sign-up — or compare our plans to see which fits your import volume.

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FAQs

How much will CBAM cost me in 2026?

For a typical steel importer (1,000t BF-BOF with 1.90 tCO₂/t embedded), about €42,300. For aluminium (500t, direct-only under Annex II), about €4,200. For cement (2,000t at 0.70 tCO₂/t), about €7,600. These numbers are higher than the old simplified estimates for most sectors because CBAM charges emissions above the benchmark threshold, not a flat percentage of everything. The exception is cement, where the benchmark (0.666) is close to the actual emissions (0.70), keeping the 2026 cost relatively low.

When do I pay CBAM?

Certificate sales start February 1, 2027. You purchase certificates quarterly in 2027 to cover your 2026 imports. The first annual declaration is due September 30, 2027.

What's the CBAM phase-in factor?

The CBAM factor is the percentage of the sector benchmark that you receive as free allocation. In 2026, it's 97.5% — meaning 97.5% of the benchmark value is deducted from your chargeable emissions. The remaining emissions above that threshold are fully liable. By 2034, the factor reaches 0%, meaning no free allocation remains.

⚠️ Important: The "you pay for 2.5%" shortcut is misleading. The 97.5% factor applies to the benchmark, not to your total emissions. If your actual emissions are 1.85 tCO₂/t and the benchmark is 1.370, you pay for (1.85 − 1.370 × 0.975) = 0.514 tCO₂/t — which is 28% of your total, not 2.5%. The correct formula: Chargeable = Emissions − (Benchmark × CBAM factor). (Source: Regulation 2023/956, Art. 7)

Can I deduct carbon price paid in my country?

Yes. If you've paid a carbon tax or ETS in your country, that amount can be deducted from your CBAM obligation. You need official documentation.

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Sources

• EU Regulation 2023/956 — CBAM main regulation (Annex VIII phase-out schedule)
• IR (EU) 2025/2621 — Default emission values and sector benchmarks
• IR (EU) 2025/2548 — Certificate pricing and transitional rules
• IR (EU) 2025/2620 — Benchmark values for free allocation
• European Commission CBAM page

Last updated: July 2026 | Sources: EU Regulation 2023/956, CBAM Certificate Price Publication (April 7, 2026), EU ETS Auction Data, IR (EU) 2025/2621