A surcharge clause that passes CBAM on to the buyer has to be invoiced before the certificate price is known, so it needs a formula, a provisional price and a true-up.
A CBAM surcharge per tonne is the number of certificates the importer owes per tonne of goods, times the certificate price, plus the importer's compliance cost per tonne. For an illustrative steel product with verified embedded emissions of 2.10 tCO2e a tonne, a benchmark of 1.37 and a 75 euro certificate price, it is (2.10 − 1.37 × 97.5%) × 75 + 2.00 = 59.32 euros a tonne in 2026. Because the price for the quarter of import is published after the goods are invoiced, the clause needs a provisional price and a true-up.
Worked in full in The CBAM Compliance Handbook by Julian R. Sterling, with every figure reproduced in a free workbook.See the book on Amazon →
An EU distributor that imports hot-rolled coil and resells it carries the CBAM obligation as the declarant, but its customers are the ones who should bear the cost. The usual answer is a separate line on the invoice, a CBAM surcharge, instead of a higher base price. That keeps the commercial price comparable with EU mill steel and makes the carbon cost visible. It also creates a problem: for goods imported in 2026 the certificate price is the average of EU ETS auction prices over the quarter of import, published in the first week of the next quarter, and from 2027 it is set weekly. The surcharge is invoiced before the figure exists. A fixed number per tonne will be wrong; a formula with a settlement step will not.
| Input | Value |
|---|---|
| Verified specific embedded emissions of the supplier, tCO2e a tonne | 2.10 |
| Product benchmark, tCO2e a tonne (illustrative) | 1.37 |
| Share of free allocation EU producers retain in 2026 | 97.5% |
| Provisional certificate price at invoicing, euros | 75.00 |
| Published price for the quarter of import, euros (illustrative) | 82.00 |
| Annual compliance cost: verification, declarant work, systems, euros | 40,000 |
| Tonnes imported and resold a year | 20,000 |
| Tonnes on one customer's invoice | 1,500 |
The benchmark and both prices are illustrative. Benchmarks are set by product and production route in implementing acts; look up the value for your CN code before writing it into a contract. The case leaves out any carbon price paid in the country of origin.
1. Free allocation adjustment per tonne = benchmark × share retained = 1.37 × 97.5% = 1.33575 tCO2e.
2. Certificates per tonne = embedded emissions − adjustment = 2.10 − 1.33575 = 0.76425.
3. Carbon cost per tonne at the provisional price = 0.76425 × 75.00 = 57.32 euros.
4. Compliance cost per tonne = 40,000 / 20,000 = 2.00 euros.
5. Provisional surcharge = 57.32 + 2.00 = 59.32 euros a tonne, or 88,978.13 on a 1,500 tonne shipment.
6. True-up when the quarter's price is published: 0.76425 × (82.00 − 75.00) = 5.35 a tonne, 8,024.62 on the shipment. The final surcharge is 64.67 a tonne, 97,002.75 for the shipment.
In Excel, with certificates per tonne in B4: =B4*Price_quarter+Admin/Volume, and the true-up as =B4*(Price_quarter-Price_provisional)*Tonnes.
The clause itself can be written the same way: surcharge per tonne = C × P + A, where C is the certificates per tonne from the supplier's verified data, P the published price for the period in which the goods were released for free circulation, and A a fixed compliance charge. Fix C per supplier and per product, not per shipment, and state which price P refers to. The quarter of import is what the importer pays; the quarter of resale is irrelevant.
On 20,000 tonnes the importer owes 15,285.0 certificates. At the provisional 75 euros they cost 1,146,375.00; at the published 82 they cost 1,253,370.00. Without a settlement mechanism the importer absorbs 106,995.00 euros, more than two and a half years of its compliance budget. With one, the customer pays what the certificates actually cost and the importer earns its 2.00 a tonne. Every euro on the certificate price moves the surcharge by 0.76 a tonne, and every 0.10 tCO2e of embedded emissions by 7.50 at 75 euros.
| Year of import | Free allocation retained | Certificates a tonne | Carbon cost | Surcharge |
|---|---|---|---|---|
| 2026 | 97.5% | 0.76425 | 57.32 | 59.32 |
| 2027 | 95.0% | 0.79850 | 59.89 | 61.89 |
| 2028 | 90.0% | 0.86700 | 65.03 | 67.03 |
| 2029 | 77.5% | 1.03825 | 77.87 | 79.87 |
| 2030 | 51.5% | 1.39445 | 104.58 | 106.58 |
In 2026 the price matters more than the year: at 60 euros the surcharge is 47.86 a tonne, at 90 euros 70.78. From 2029 the phase-out of free allocation takes over, and a contract signed today for several years of deliveries should carry the formula rather than a number. A multi-year contract that fixes the 2026 surcharge would leave the importer absorbing 47.26 a tonne by 2030 at an unchanged price.
The surcharge depends on the supplier, not only on the product. If verified data is missing and the importer has to declare a marked-up default value, illustratively 2.64 tCO2e a tonne, the certificates rise to 1.30425 a tonne and the surcharge to 99.82, 40.50 more. Write into the clause which embedded emissions figure applies and who pays when the supplier fails to deliver its data.
The certificate cash calendar behind the surcharge, with the quarterly holding requirement and the buffer, is in the free workbook for this case.
No. The importer only buys certificates for embedded emissions above the free allocation adjustment, which in 2026 removes the benchmark times 97.5 per cent. Charging 2.10 tCO2e at 75 euros gives 157.50 a tonne, 2.75 times the 57.32 the importer actually pays, and a customer who checks the arithmetic will not sign the next contract.
Invoice at a provisional certificate price, then settle the difference once the price for the quarter of import is published. In the illustration the surcharge is invoiced at 75 euros and the quarter prints 82: the gap of 7.00 times 0.76425 certificates a tonne is 5.35 a tonne, or 8,024.62 euros on a 1,500 tonne shipment.
It rises as EU producers lose free allocation. Holding the illustrative benchmark and a 75 euro price constant, the surcharge on a product at 2.10 tCO2e a tonne goes from 59.32 euros in 2026 to 67.03 in 2028 and 106.58 in 2030, when EU producers keep only 51.5 per cent of their free allocation.
This article is one calculation from The CBAM Compliance Handbook. The book takes the same case from first principles to the decision, chapter by chapter, and every figure it prints is a live formula in the free companion workbooks.
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