What constitutes an “effectively paid” carbon price?
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Since the beginning of 2026, EU importers of carbon intensive products (iron & steel, cement, aluminium, fertilisers, hydrogen, and electricity) must factor in the cost of the embedded emissions. Importers can begin purchasing CBAM certificates (to cover their 2026 imports) from February 2027.
For 2026, CBAM certificate prices will determined on a quarterly basis based on the average EUA price at auction during that three month period. On 7th April the European Commission announced the Q1 2026 CBAM certificate price as €75.36 per tonne of CO2. From next year the CBAM certificate price will be calculated weekly, based on the average auction clearing price.
However, that is only part of the calculation that importers of CBAM covered goods need to calculate. An authorised CBAM declarant (as they're known under the regulations) can claim a reduction in the number of CBAM certificates it needs to purchase, "if the carbon price has been effectively paid in the country of origin.”
This point has been critical in driving global carbon price development, as governments seek to defend their export competitiveness in Europe, while also capturing the CBAM revenue that would have otherwise filled Brussels coffers. As I've noted previously, research from Bruegel shows that the greater the trade exposure to CBAM, the more likely it is that a country will adopt a carbon price (see No carbon copy: Emissions trading schemes are ploughing their own furrow, and that's a risk to future growth).
Clearly the greater the difference between the EU carbon price and that which has been "effectively paid" in the country of origin, the larger the CBAM certificate bill for the importer, and hence the greater the likelihood that existing trading relationships will be disrupted.
Discussing the potential for carbon prices to rise towards €100 back in December, I cautioned that policymakers are likely to be even more sensitive to high prices, especially given the impact this could have far from Europe's borders:
"It's worth bearing in mind that until now EU policymakers have only been concerned with their domestic audiences perception of carbon prices. The launch of CBAM means that higher prices will reverberate across the globe, impacting on Europe's relationship with its main trading partners."
Indeed, earlier in 2026, former top climate official Jos Delbeke, wrote of his increasing concern that if the gap between the EU carbon price and the rest of the world grew too large, then CBAM-induced shuffling of trade flows might start to dominate the political narrative:
"It will be useful to avoid too wide a gap between carbon prices in the EU and other major economies, as otherwise unhelpful side-effects such as resource-shuffling or trade diversion may start to dominate the political debate."
Less than six months since the start of CBAM we're already seeing evidence that it is having an adverse impact. Two months ago, on 15th March, one of Africa's largest aluminium smelters, the Mozal facility in Mozambique shutdown with its owners citing high power prices. As Carbon Risk has highlighted before, the southern African country is one of, if not the most exposed economies to CBAM (see Call of duties: Mozambique demonstrates how CBAM could redraw global commodity trade flows)
There's the context. Now what about the actual rules?
