Insights / CBAM
CBAM and the Phase-Out of Free Allocation, Year by Year
How does the phase-out of EU ETS free allocation change the number of CBAM certificates surrendered each year?
The CBAM obligation is reduced to reflect the free allocation EU producers of the same goods still receive (Article 31 of Regulation (EU) 2023/956), and that free allocation shrinks each year under Article 10a(1a) of Directive 2003/87/EC: the CBAM factor is 97,5 percent in 2026, 95 in 2027, 90 in 2028, 77,5 in 2029, 51,5 in 2030, 39 in 2031, 26,5 in 2032 and 14 in 2033, and from 2034 there is none. So the share of embedded emissions you pay for rises every year until it is the whole.
What the act says
- Article 31 (CBAM): Certificates to surrender are adjusted to reflect the extent of EU ETS free allocation for the same goods.
- Article 10a(1a) (EU ETS): The CBAM factor on free allocation: 97,5 % (2026), 95 % (2027), 90 % (2028), 77,5 % (2029), 51,5 % (2030), 39 % (2031), 26,5 % (2032), 14 % (2033), none from 2034.
What to do
- Model your CBAM cost year by year: the same tonnage costs more each year as free allocation falls.
- Weigh supplier switches against the 2030 and 2034 steps, not only against 2026.
Sources
- Regulation (EU) 2023/956 (CBAM), consolidated text (CELEX 32023R0956)
- Directive 2003/87/EC (EU ETS), as amended by Directive (EU) 2023/959 (CELEX 32003L0087)
Last checked against the act text on 2026-10-20. For information only, not legal advice.