CBAM reveals its cards: How emission benchmarks for steel and aluminum are changing the rules of the game in ESG

The European Union remains firmly committed to achieving carbon neutrality, with the Carbon Border Adjustment Mechanism (CBAM) representing a key pillar of this strategy. The CBAM aims to protect European companies from so-called "carbon leakage" by charging emissions contained in imported products at the same rate as European manufacturers pay under the EU ETS.

In recent weeks, preliminary emission benchmark values have been leaked, which will come into effect from the definitive phase of CBAM on January 1, 2026. These values provide the first concrete insight into the financial commitments awaiting steel and aluminum importers. For companies with ESG commitments, this is a signal that investments in decarbonization are becoming a direct business advantage. This data fundamentally changes the calculation of import costs in key industries:

• Aluminum: Benchmarks are strictly differentiated, creating an almost tenfold difference in fees between primary aluminum and aluminum produced from recycled scrap.

• Steel: Costs will vary significantly depending on the specific production technology, with the lowest fees applying to low-emission routes such as electric arc furnace steel.

Importers who do not provide verified data on actual emissions will be forced to use standardized "default values." These default values are generally set to be less favorable than the emissions achieved by best manufacturing practices, representing a cost premium for insufficient transparency. This shift means that companies will be incentivized to start the following activities:

• Auditing your own supply chain: It is necessary to know the emission intensity of imported materials and to ensure verified data.

• Supporting low-carbon technologies: It is advisable to actively switch to purchasing materials produced through recycling or low-emission production processes.

• Perceiving CBAM as an opportunity: Proactive investment in a sustainable supply chain is becoming a key competitive advantage.

Benchmarks for aluminum imports

The most significant finding concerns aluminum, where CBAM clearly rewards low-carbon production. The benchmarks are set as follows:

Type of imported aluminum	Benchmark (tCO2e per ton)	Difference
Primary aluminum (raw, unwrought)	1,464	Standard (in line with previous EU ETS)
Secondary aluminum (from recycled scrap)	0,139	Almost 10x lower

This huge difference is a key signal of how much importance the EU attaches to the circular economy and recycling.

The proposal attempts to address concerns about the so-called "scrap loophole." It is now stipulated that if more than 50% of the precursor aluminum used consists of scrap, production is automatically classified as secondary aluminum and subject to a significantly lower benchmark. This step is intended to lead to more accurate charging for actual emissions.

Benchmarks for steel imports

For steel, benchmarks vary according to the specific production route, which directly encourages the transition to more sustainable technologies:

Production route	Production details	Benchmark (tCO2 per ton)
BF/BOF	Traditional blast furnace/oxygen furnace	1,530
DRI/EAF	Direct reduction iron/electric arc furnace	1,033
EAF	Electric arc furnace from scrap	0,288

These figures confirm the EU's push to transition from carbon-intensive production (BF/BOF) to technologies using electricity and potentially hydrogen (DRI/EAF) and, above all, recycling (EAF).

Real data as the key to cost optimization

Although benchmarks provide essential guidance, the ultimate cost advantage will depend on the quality of importers' data. Importers have a choice of which values to use when reporting emissions.

• Default Values: These will be applied if verified actual data is not available. As mentioned, they are expected to be less favorable and result in higher fees.

• Actual Emission Factors: Companies that demonstrate lower emission intensity than the standard benchmark may achieve lower CBAM costs.

CBAM thus rewards data transparency and investment in accurate emissions reporting. For importers of more complex products, using actual data on precursor materials will be much more advantageous than relying on standardized and more costly default values.