On 1 January 2026, CBAM officially starts to levy charges. However, many Chinese exporters have not yet realized that for every tonne of CBAM-covered steel exported to the EU, they may need to pay an additional RMB 130–4,670 [1].
When is the latest deadline for submitting the 2026 annual report?
Who ultimately pays the carbon tariff, and who actually bears the cost?
Are the EU default values for China set systematically high and therefore discriminatory?
How is the carbon cost of exported goods calculated? – Carbon Newture’s CBAM Cost Calculator is now online!
Under the current system of default values and benchmarks, how much hidden cost are Chinese exporters really carrying?
After carbon costs are included, will Chinese exporters be at a competitive disadvantage?
Is it urgent to incorporate carbon costs into corporate cost structures?
This article will focus on answering the key questions that are of greatest concern to enterprises.
01 CBAM Implementation Timeline
The chart below shows the CBAM implementation timeline, including key milestones such as the reporting deadlines and certificate surrender deadlines for the first levy year (2026).
CBAM emissions can currently be calculated using two approaches:
🟢 Default value method (with product- and country-specific parameters set by the EU)
🟢 Actual value method (subject to verification by an accredited third-party body; the official list of such bodies has not yet been published)
For details of the CBAM calculation formula, please refer to “CBAM Is Approaching: What Key Signals Are Released by the EU’s 24 Implementing Acts?”. Based on the currently published parameters and rules, due to the mark-up mechanism and the gradual phase-out of free EU ETS allowances, the actual value method is in most cases more advantageous than the default value method (excluding cases where actual emissions are significantly higher than default values). However, the actual value method also involves challenges:
Professional calculation of embedded emissions;
Third-party verification by an accredited body;
Difficulty in obtaining upstream data.
It should be noted that although the first annual submission deadline is 30 September 2027, if companies plan to use actual values, a rush to meet the Q3 2027 deadline could lead to verification bottlenecks. Enterprises are therefore advised to prepare data and verification well in advance.
02 Who Pays and Who Bears the Carbon Cost?
Under EU rules, CBAM certificates must be surrendered by EU importers, meaning the carbon cost is formally paid by the importer. In practice, however, importers may pass all or part of this cost on to Chinese exporters through mechanisms such as price reductions or contractual cost-sharing arrangements, thereby shifting the burden to Chinese suppliers.
Some companies have already encountered situations where EU importers delayed shipments due to missing data, while others have proactively started budgeting for CBAM costs. Enterprises need not panic, but should prepare early.
03 What the Data Reveal About the Position of Chinese Exporters
Warnings from the Transition Period
According to the Annex to the CBAM Implementation Review Report [2], during the transition period China was the fifth-largest exporter of CBAM goods, mainly iron and steel (87.2%), aluminium (6.5%) and fertilisers (6.0%).
For steel, China ranked third in export volume but first in estimated emissions, with the highest emission intensity ratio (total estimated embedded emissions divided by export volume). Since all countries used the same default values during the transition period, this indicates that the EU default values for major Chinese export categories are set at relatively high levels. In contrast, Ukraine and Canada showed an “inverted” pattern.
Alarms in the Definitive Period
Let us first look at a set of data to understand the taxable emissions of Chinese export products in 2026, i.e. the taxable emissions per tonne of product calculated using the default value method. We first listed the Top 50 steel products, Top 20 aluminium products, and Top 8 fertiliser products by estimated emissions during the transition period, and calculated their taxable emissions for 2026, as shown below. You may refer to the figures to check whether your company’s export products fall into the key categories and their corresponding taxable emission levels.
steel and iron
By analysing the 2026 taxable emissions (default value method) of all CBAM-covered steel products, the carbon cost payable for each tonne of steel exported to the EU ranges from RMB 130 to RMB 4,670 [1].
2026 taxable emissions of Top 50 steel products by emissions for Chinese companies (default value method)
By analysing the 2026 taxable emissions (default value method) of all CBAM-covered aluminium products, the carbon cost payable for each tonne of aluminium exported to the EU ranges from RMB 1,250 to RMB 3,040 [1].
2026 taxable emissions of Top 20 aluminium products by emissions for Chinese companies (default value method)
By analysing the 2026 taxable emissions (default value method) of all CBAM-covered fertiliser products, the carbon cost payable for each tonne of fertiliser exported to the EU ranges from RMB 330 to RMB 2,720 [1].
2026 taxable emissions of Top 8 fertiliser products by emissions for Chinese companies (default value method)
CN code 31021010 has no default value or benchmark, which is suspected to be an error in the EU report; therefore, it is not analysed further below.
Next, let us examine another set of data to understand the country-level differences in taxable emissions for key product categories in 2026. We first identified the five countries with the highest estimated emissions during the transition period for steel, aluminium, and fertilisers (i.e. key countries under CBAM), and then selected the Top 10 products by estimated emissions (Top 8 for fertilisers due to fewer categories) to calculate their 2026 taxable emissions (default value method), as shown below.
Steel | China, Russia, and India Bear the Brunt
China, Türkiye, Russia, Ukraine, and India were the top five countries in terms of estimated emissions of steel products during the transition period (Canada ranked second in export volume but only tenth in estimated emissions, showing an “inversion” pattern). As can be seen from the figure, China, Russia, and India are the most affected, with higher carbon costs per tonne for the same types of products. Among the nine key product categories, China exceeds the average taxable emissions of all countries in seven categories (with Russia and India also pushing up the average), and CN code 73089098 is the highest among all countries.
Note: “No value” indicates that the EU did not provide default values for the corresponding country and product, and such categories are excluded from the China-focused discussion. The average is calculated across six countries.
At the same time, Ukraine, which showed the “inversion” phenomenon during the transition period, and the United States, included as a reference, are below or far below the average in 9 out of 10 categories.
Aluminium | Comprehensive Targeting
Türkiye, China, Mozambique, the United Arab Emirates, and Bahrain were the top five countries in terms of estimated emissions of aluminium products during the transition period. India (ranked eighth and “specially treated” in steel) and the United States (considered “favoured”) are also included for comparison.
For aluminium, China faces “comprehensive targeting” — the taxable emissions of all listed key products are above the average, with Mozambique in a similar position, while India is split roughly half above and half below. It is, however, advisable for India to examine whether its aluminium exports to the EU are concentrated in the higher-than-average product categories.
Note: The average is calculated across seven countries.
Fertilisers | Particularly Targeted
Russia, Egypt, Algeria, Trinidad and Tobago, and Morocco were the top five countries in terms of estimated emissions of fertiliser products during the transition period. China ranked ninth, yet for its eight key product categories, the 2026 taxable emissions are all the highest and all above the average. For CN codes 28141000, 31021019, 31021090, and 31053000, the taxable emissions are 2.6 times, 2.4 times, 2.4 times, and 2.4 times the average, respectively.
Note: The average is calculated across six countries.
In summary, it is evident that the EU’s default value parameters are highly targeted at Chinese companies, while Russia and India are also heavily affected, whereas the United States and Canada appear to be treated more leniently. Under a scenario where the default value method is fully applied, the tax burden on China’s main export products — steel (87.2%), aluminium (6.5%), and fertilisers (6.0%) — will be significantly heavier than that of countries with lower carbon costs. This will indirectly impose a substantial price disadvantage on Chinese products and directly weaken their international competitiveness.
04 How to Quickly Calculate CBAM Costs
– Carbon Newture CBAM Calculator
If CBAM costs are fully passed on to Chinese exporters:
Each tonne of CBAM steel exported to the EU may incur an extra RMB 130–4,670
Each tonne of CBAM aluminium: RMB 1,250–3,040
Each tonne of CBAM fertilisers: RMB 330–2,720
With thousands of parameters and complex formulas, how can companies quickly estimate their carbon cost? How do default values compare with actual values, and under what conditions is the actual value method more economical?
With the Carbon Newture CBAM Calculator, results can be obtained in less than one second:
Search by product name or CN code to obtain default-value emissions
Customisable carbon price
Transparent formulas and parameters
Break-even alerts indicating when actual values become more cost-effective
Advanced functions allowing input of verified actual values to optimise tax payments
References
[1] Based on EU default and benchmark values, assuming a carbon price of EUR 80/t and an exchange rate of 8.15. Where multiple default or benchmark scenarios exist, the first EU-listed case is applied (e.g. [C] BF–BOF route for steel).
[2] Based on the EU CBAM transition period review report, covering Q4 2023 to Q2 2025.