Guest Post: Whose CBAM is it anyway? Of Default Values and Accreditation
This is a guest post by Hridyanand Ojha & Dr. Akhil Raina[1]
I. Introduction
The European Union’s (“EU”) Green Deal dream, the long-awaited Carbon Border Adjustment Mechanism (“CBAM”) – a carbon-pricing measure covering six industrial sectors – entered its definitive phase of application on January 1, 2026.[2] Just a day earlier, the European Commission (“Commission”) had published, in its Official Journal, rules concerning the calculation of “default values” – emissions figures that the Commission could apply to products manufactured in installations abroad, should the “actual emissions” reported by those installations not be acceptable.[3] In fact, throughout December 2025, the Commission had released a series of complex instruments intended to operationalize CBAM. And within days, the Commission had declared CBAM to be a success.[4]
However, ground realities appear somewhat different. As CBAM moves along its merry way down the train of full enforcement, concerns abound, inter alia regarding the calculation and verification of embedded emissions – the very heart of the CBAM framework and, financially, the most pressing and significant aspect for businesses.[5] Whether the Commission accepts “actual emissions” from foreign “installations” will depend on whether businesses can obtain the required ‘verification’ of their emission data.
This blog seeks to shed light on one practical issue relating to the reporting (and 'reportability') of embedded emissions – namely, whether the CBAM system, as presently designed, is operationally viable. More particularly, is the system capable of catering to the myriad exporters – numbering in the hundreds of thousands – that serve the EU’s internal market and the vast network of customers that rely on these exporters?
II. CBAM without the "bam!": A simplified primer
Under the CBAM framework, importers of certain industrial goods: steel, aluminum, fertilizers, and electricity (yes, electricity), are required to declare the total emissions embedded in the imports they make. This extends not only to emissions generated during the production process of imported goods, but also to the emissions embedded in ‘precursors’, i.e., the input materials used in the manufacture of these goods.[6] Article 7 of the central CBAM Regulation provides that such emissions may be calculated in one of two ways: either by reliance on ‘actual emissions’ or, in the alternative, via the application of ‘default values’.[7]
If importers seek to rely on actual emissions data, the emissions so declared must be verified by an EU-accredited verifier. Each EU Member State is to have a “National Accreditation Body” ("NAB")[8] responsible for granting accreditation, and only verifiers accredited by these bodies may undertake verification of emissions reported by foreign producers.[9]
On the other hand, if actual emissions data are not accepted, default values can be used by the EU.[10] These default values are, by design, hiked up (as compared to the relevant 'actual' emission value[11]) and contain a mark-up, depending on the product category (with steel and aluminium having high and increasing mark-ups and fertilizers relatively lower ones).[12] Since CBAM payments (number of CBAM certificates to be collected) are directly linked to the value of the reported emissions,[13] reliance on default values will typically result in higher CBAM liabilities, as compared to situations where verified actual emissions data are used.
III. CBAM's verification set-up: A system ‘designed to fail’?
The difficulty lies in the simple fact that there seem to be not enough participants in the CBAM system. Ex-concessis, regulation is difficult.[14] However, since default values are inherently higher than using actual emissions values,[15] exporters face two choices: either accept inflated CBAM liabilities or somehow get their emissions data verified. However, obtaining such verification is no mean feat.
Only 403 accredited verifiers are registered in the Union Registry[16] in comparison to 4,100 CBAM declarants that have been authorized as of 1st January 2026, and nearly 12,000 economic operators that have submitted applications for CBAM authorizations until 7th January.[17] As each operator may source goods from multiple installations abroad, the actual number of installations requiring verification is probably significantly higher. Going forward, the gap between the number of installations requiring verification and the number of accredited verifiers available to verify the reported emissions data is only set to increase.
The emerging mismatch has been acknowledged elsewhere as well. France’s national competent authority has warned that not enough verifiers may be ready in time to meet the anticipated demand for CBAM audits. The first accredited verifiers are not expected to be available until autumn 2026.[18] One wonders if this leaves enough time for all installations to be verified before the September 2027 deadline. Accreditation, moreover, itself appears to be progressing at varying speeds across Member States, with only a few jurisdictions[19] currently accepting applications. This further adds to the uncertainty surrounding the availability of verification capacity.
Accreditation can also be a time-consuming process, since, under the CBAM Regulations, accreditation requires a detailed assessment of whether verifiers possess the necessary technical expertise and organizational capacity to carry out verification in accordance with EU-prescribed standards.[20] A bottleneck therefore emerges: the pool of accredited verifiers grows slowly, as their demand continues to rise. In practice, this makes timely verification of emissions data less likely. Thus, even if a company has diligently collected the required emissions data, it may still face the risk of CBAM non-compliance – simply because it cannot get access to an EU-accredited verifier. It is not unreasonable to submit that, as the creator of the system, the EU bears the primary responsibility for ensuring that the system works (or is at least 'workable').
And what about the much-sympathized-with MSMEs? CBAM requires reporting of granular information regarding the functioning of installations and the goods produced therein.[21] This may be something that large-scale exporters, with pre-existing data and digital systems, can manage.[22] However, for MSMEs, this task may prove considerably more difficult, since they have to not only gather the required detailed information (itself quite a task for a company), but also secure an accredited verifier in time to meet their CBAM obligations.[23]
IV. Conclusion
The CBAM thus appears somewhat 'designed to fail'. On the one hand, its framework emphasizes reporting of 'verified' actual emissions data; but on the other, there does not seem to be a sufficient number of accredited verifiers to realistically enable such verification within the applicable deadlines. This should have been an obvious fact to the legislators, given the sheer volume of exports that are subject to this framework.
The asymmetry seems even more unfair when viewed via the prism of the intended use of CBAM revenues. As has been well reported, the revenue generated through the CBAM, including that arising from the application of default values, will go towards supporting decarbonization efforts within the EU.[24] In effect, therefore, non-EU exporters must not only bear the costs of complying with CBAM reporting requirements, but they must also watch as these revenues are channeled to support decarbonization efforts outside their own jurisdiction (i.e., in the EU's industry).[25]
And if non-EU exporters are to contribute to the financing of the EU Green Deal, it raises a legitimate question about the character of CBAM as a measure supposedly designed as an instrument in furtherance of global climate objectives.[26] The externalization of decarbonization costs onto non-EU exporters, particularly in developing and least developed countries, sits uncomfortably with the notions of ‘Nationally Determined Contributions’ (NDCs) and ‘Common-but-Differentiated Responsibilities and Respective Capabilities’ (CBDR-RC), as enshrined under the Paris Agreement.[27]
If the objective of CBAM is to prevent ‘carbon leakage’ and encourage cleaner production methods beyond the EU’s borders through accurate accounting of emissions, the absence of sufficient verification capacity appears to undercut that objective. Conversely, if the mechanism is 'designed to fail', i.e., designed in a way that makes it difficult, if not impossible, to achieve compliance, in order to ultimately support the EU’s own NDCs through the revenues that it generates via CBAM, the resulting burden on non-EU exporters, to say nothing of the unfairness of the situation, becomes difficult to justify.
We wish to be helpful here; not merely critical. In our view, some degree of procedural flexibility within the verificatory framework of CBAM may be necessary, at least during the initial phase of CBAM’s operation. EU legislators are free to decide the length of time for which this flexibility should remain. As we see it, the present system of individual (i.e., verifier-by-verifier) accreditation, undertaken by one NAB at a time, appears too rigid and slow to square with the sheer number of installations and exporters subject to the framework. Some possible approaches include (1) permitting provisional recognition for verifiers already operating under internationally recognized carbon accounting and auditing standards, such as ISO 14064[28], ISO 17029,[29] GHG Protocol[30] etc., and (2) expedited accreditation, particularly for entities that are subsidiaries or affiliates of (already) accredited EU-based verification bodies that follow common compliance protocols. Such measures will mitigate the risk that CBAM’s verification mechanism will collapse under the weight of its own procedural rigidity.
The ‘workability’, and therefore the credibility, of CBAM, now depends on whether the EU's verificatory framework is capable of sustaining the system that it seeks to enforce. At a more fundamental level, the quieter though uneasier ('trade-and-' [31]) question is: whose CBAM is it, anyway?
[1] Hridyanand Ojha is an Advocate with Sarvada Legal in India; Akhil Raina is an independent practitioner based in Belgium. The views expressed here are in the authors' academic capacities, and do not reflect the views of their firms or clients. We would like to thank Mr. Atul Sharma, Mr. Folkert Graafsma, and Mr. Maksym Podopryhora for their views and support. All errors and omissions remain ours.
[2] ‘CBAM Legislation and Guidance’ https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism/cbam-legislation-and-guidance_en
[3] Commission Implementing Regulation (EU) 2025/2621 of 16 December 2025 laying down rules for the establishment of default values https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L_202502621.
[4] ‘CBAM successfully entered into force on 1 January 2026’ https://taxation-customs.ec.europa.eu/news/cbam-successfully-entered-force-1-january-2026-2026-01-14_en
[5] Stakeholders had previously raised concerns regarding the lack of clarity on the calculation and verification of emissions. See, for instance, ‘Staalfederatie calls for urgent clarification on CBAM’ https://eurometal.net/staalfederatie-calls-for-urgent-clarification-on-cbam/; ‘Lack of clarity ‘undermines’ CBAM objectives: summit’ https://eurometal.net/lack-of-clarity-undermines-cbam-objectives-summit/; ‘Cement importers dread CBAM rollout as EU finally releases details’ https://www.spglobal.com/energy/en/news-research/latest-news/fertilizers/121725-cement-importers-dread-cbam-rollout-as-eu-finally-releases-details; Certain industry stakeholders, including EU-based traders, have indicated that a significant proportion of exporters in their supply chains remain insufficiently prepared to produce defensible verification reports https://eurometal.net/eu-steel-imports-ex-asia-risk-failed-cbam-verifications/; Concerns pertaining to verification have also been raised in academic circles, See ‘Carbon Borders Without Differentiation: Why India's Challenge Tests the European Union’s Climate Diplomacy’ https://ielp.worldtradelaw.net/2026/03/guest-post-carbon-borders-without-differentiation-why-indias-challenge-tests-the-european-unions-climate-diplomacy/ ;
[6] See, Regulation (EU) 2023/956 dated 10 May 2023 establishing CBAM, Annex IV, para. 3.
[7] CBAM, Article 7, para. 2.
[8] CBAM, Article 8; European Commission, list of National Accreditation Bodies https://webgate.ec.europa.eu/single-market-compliance-space/notified-bodies/acred-bodies ; individual National Accreditation Bodies maintain and publish lists of accredited verifiers on their respective websites, See e.g. https://tools.cofrac.fr/fr/easysearch/resultats_advanced.php?list-10290708
[9] Commission Delegated Regulation (EU) 2025/2551 of 20 November 2025 laying down rules on accreditation of verifiers, including conditions for grant, oversight, withdrawal, and mutual recognition and peer evaluation of accredited bodies.
[10] Guidance Document on CBAM Implementation for Installation Operators outside the EU, page 157 and 158 https://taxation-customs.ec.europa.eu/system/files/2023-12/Guidance%20document%20on%20CBAM%20implementation%20for%20installation%20operators%20outside%20the%20EU.pdf.
[11] See, for example, CBAM, Annex IV, para. 4.1 “when reliable data for an exporting country cannot be applied for a type of goods, the default values shall be based on the average emission intensity of the 10 exporting countries with the highest emission intensities for which reliable data can be applied for that type of goods.”
[12] ‘Questions and answers on the Carbon Border Adjustment Mechanism (CBAM)’ https://ec.europa.eu/commission/presscorner/detail/en/qanda_25_3089.
[13] EU importers must purchase and surrender CBAM certificates corresponding to the embedded emissions they declare. https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en. See also, ’What is a CBAM certificate and how do you get one?’ https://www.coolset.com/academy/what-is-a-cbam-certificate-and-how-do-you-get-one.
[14] See generally, Thomas A. Lambert, How to Regulate (Cambridge, 2017).
[15] CBAM Default Values vs Actual Data: Cost Analysis for Exporters’ https://carbonsettle.com/blog/2026-01-29-cbam-default-values-vs-actual-data-cost-analysis-for-exporte
[16] These are the verifiers under the EU ETS, See https://union-registry-data.ec.europa.eu/report/eu-registry-accounts. While the EU has not yet released an official list of accredited verifiers for the CBAM, EU ETS verifiers are allowed to extend the scope of their accreditation to cover CBAM verification (See Commission Delegated Regulation (EU) 2025/2551 of 20 November 2025, Preamble, para. 9).
[17] https://taxation-customs.ec.europa.eu/news/cbam-successfully-entered-force-1-january-2026-2026-01-14_en.
[18] ‘France warns of verifier shortage’ https://www.cbamboo.com/newsletter/cbamboo-insights-16
[19] Ibid. The source suggests that only three countries are currently accepting applications: the Netherlands, Sweden, and Italy.
[20] See, CBAM, Article 18, para. 2 and Commission Delegated Regulation (EU) 2025/2551 of 20 November 2025, Article 3 para. 1 and Article 3, para. 4, read with Annex II. Along with its application, an accreditation applicant is required to furnish descriptions of the procedures prescribed in Annex II, including those relating to verification processes, its quality management system, and the competence of its personnel.
[21] See, Commission Implementing Regulation (EU) 2025/2547 of 10 December 2025 laying down rules for the calculation of emissions embedded in goods, Annex IV, para. 1.1. This information includes information on the installation’s monitoring plan, specific direct embedded emissions of goods produced; balances of imported, produced, consumed, and exported measurable heat, waste gases and electricity per production process etc.
[22] See Colette van der Ven and Sanvid Tuljapurkar, ‘The CBAM and Beyond: Leveraging EU-India trade cooperation to decarbonise Indian steel’ (Tulip Consulting, 30 April 2026) https://www.tulipconsulting.ch/content/uploads/2026/04/FINAL-Tulip-CBAM-Final-.pdf
[23] ‘Auto Bytes July 2025’ https://www.grantthornton.in/insights/thought-leadership/auto-bytes-july-2025/. Many MSMEs in India lack the requisite infrastructure and financial capacity to comply with CBAM requirements, as they often do not possess advanced metering systems to accurately track inputs, and find it difficult to access or invest in costly low-carbon technologies such as hydrogen-based DRI or renewable energy integration.
[24] ‘Proposal for a Regulation of the European Parliament and of the Council establishing the Temporary Decarbonisation Fund’ Article 3.2 r/w Article 6 and 7. https://eur-lex.europa.eu/resource.html?uri=cellar:95ee45d7-db37-11f0-8da2-01aa75ed71a1.0001.02/DOC_1&format=PDF and ‘Temporary decarbonisation fund’ Page 2 and 3. https://www.europarl.europa.eu/RegData/etudes/BRIE/2026/782666/EPRS_BRI(2026)782666_EN.pdf. A ‘Temporary Decarbonisation Fund’ has been proposed to support EU operators in carbon-intensive sectors such as aluminium, fertilisers, and iron and steel in undertaking decarbonisation efforts, and is to be financed by 25% of the revenues generated from the sale of CBAM certificates.
[25] https://www.europarl.europa.eu/RegData/etudes/BRIE/2026/782666/EPRS_BRI(2026)782666_EN.pdf.
[26] See, Atul Sharma and Sahil Verma, ‘Developing Countries Are Being Asked To Fund EU’s Decarbonisation Efforts’ https://www.ndtvprofit.com/business/developing-countries-are-being-asked-to-fund-eus-decarbonisation-efforts-10831066
[27] ‘Principle of CBDR-RC: Its Interpretation and Implementation Through NDCS in the Context of Sustainable Development’ https://digitalcommons.law.uw.edu/cgi/viewcontent.cgi?article=1133&context=wjelp page 14. The CBDR-RC principle recognizes that countries have differing national circumstances, capacities, and vulnerabilities, which must be considered in designing and implementing climate action.
[28] In particular, ISO 14064, Part 3 specifies principles and requirements and provides guidance for verifying and validating organizational, product-level, and project-level greenhouse gas (GHG) statements by companies, See ISO 14064, Part 3 https://www.iso.org/standard/66455.html.
[29] It contains general principles and requirements for the competence, consistent operation, and impartiality of bodies performing validation/verification as conformity assessment activities, see ISO/IEC 17029:2019 https://www.iso.org/standard/29352.html.
[30] See Greenhouse Gas Protocol https://ghgprotocol.org/about-us. The GHG Protocol establishes comprehensive global standardized frameworks to measure and manage greenhouse gas (GHG) emissions from private and public sector operations, value chains, and mitigation actions.
[31] See generally, Jeffrey L. Dunoff, ‘The Death of the Trade Regime’ (1999) 10(4) European Journal of International Law. https://academic.oup.com/ejil/article-pdf/10/4/733/6922772/100733.pdf