The European Commission recently released a draft implementing regulation concerning the deduction of carbon prices paid in third countries from CBAM certificate obligations. This will be one of the most critical supporting regulations for the official operational phase of CBAM.

The most significant aspect of the draft regulation is that it comprehensively clarifies the methodology for carbon price deductions under CBAM, including calculation methods, supporting documentation, verification procedures, and supply chain traceability requirements.

According to the draft, companies wishing to offset carbon taxes, carbon fees, or carbon trading costs already paid in the country of production against their CBAM certificate obligations must meet several stringent conditions. These include ensuring that carbon costs are directly related to product emissions, do not include government subsidies or rebates, and are backed by verifiable and traceable data.