CBAM Consultation Opens on Third-Country Carbon Price Rules

Importers paying into carbon pricing schemes outside the European Union could see those costs reduce their obligations under the bloc's Carbon Border Adjustment Mechanism (CBAM), under draft rules now open for public consultation. The European Commission's proposal sets out, for the first time, how third-country carbon prices will be recognised—and assigns a limited role to credits issued under Article 6 of the Paris Agreement.

A worker recording compliance data on a tablet while monitoring container operations at a busy European port at sunrise, reflecting how carbon pricing rules are becoming part of global trade under EU CBAM. AI generated picture.

Feedback on the draft implementing regulation, published on 13 May, runs until midnight Brussels time on 10 June. Costs incurred under a third country's emissions trading system or carbon tax would be fully deductible, with no additional quality requirements imposed by the EU.

Recognition extends to Internationally Transferred Mitigation Outcomes (ITMOs) authorised under Articles 6.2 and 6.4 of the Paris Agreement. Their use, however, would be limited to a maximum of 10% of reported and confirmed emissions at facilities producing goods exported into the EU. According to the Commission, the cap is designed to preserve environmental credibility, limit exposure to low-integrity credits, and push exporters to cut emissions through new technologies rather than rely on credit purchases.

The recognition of international credits reverses an earlier position taken by the European Parliament, which had stripped such provisions from draft CBAM legislation over market integrity concerns. For third-country suppliers, the practical takeaway is clarity. Nick Ogilvie, CBAM Product Manager at CarbonChain, said suppliers ‘now know exactly how a domestic carbon price converts into a CBAM deduction, including how free allowances, rebates, and indirect cost compensation get netted off,’ in comments to Trade Finance Global.

CBAM requires importers of carbon-intensive goods to surrender allowances reflecting the emissions embedded in their products, unless an equivalent carbon price has already been paid in the country of origin. Article 6 credits are not currently recognised by the European Commission for this purpose. The consultation is part of the EU's wider work to finalise operational rules ahead of CBAM's definitive phase, which began in January 2026.