CBAM and Carbon Price Paid in the Country of Origin

For operators exporting goods covered by the Carbon Border Adjustment Mechanism (CBAM), calculating the Specific Embedded Emissions (SEE) of their products is not the only important consideration. Another key question is:

“If we have already paid a carbon price in Thailand or another country of origin, can it be used to reduce the EU importer’s CBAM obligation?”

Understanding the Three Key Components of the EU CBAM Obligation

During the CBAM Definitive Period, the number of CBAM certificates that an importer must surrender is not determined solely by embedded emissions. Three key components are taken into account:

1. Total Embedded Emissions

The embedded greenhouse-gas emissions of goods imported into the EU, which may be calculated using Actual Values or Default Values, subject to the applicable conditions.

2. Free Allocation Adjustment (SEFA)

An adjustment reflecting the free allocation of EU ETS allowances that EU producers of equivalent goods continue to receive.

3. Carbon Price Paid in the Third Country

The carbon price paid in the country of origin of the goods, which may be taken into account to reduce the number of CBAM certificates the importer must surrender.

 

How Can a Carbon Price Paid in the Country of Origin Reduce the CBAM Obligation?

A central principle of EU CBAM is the consideration of the “Carbon Price Effectively Paid”—that is, the carbon price that has actually been paid.

Under Article 9 of the CBAM Regulation, where embedded emissions are determined on the basis of actual emissions, an Authorised CBAM Declarant may claim a reduction in the number of CBAM certificates to be surrendered in order to reflect a carbon price effectively paid in the country of origin for the relevant emissions.

The term “effectively paid” is important. The EU does not consider only the carbon-price rate stated on paper; it considers the actual carbon cost incurred after deducting any rebate or other form of compensation received.

In addition, the carbon-price-paid information must be supported by evidence and certified by an independent person in accordance with the applicable requirements before it can be used to support a reduction in the number of CBAM certificates to be surrendered.

 

How Do the EU CBAM and UK CBAM Approaches Differ?

At present, the EU CBAM has not published a country-by-country list of recognized carbon-pricing schemes. The EU approach focuses instead on demonstrating the effective carbon price paid in accordance with the conditions of the CBAM Regulation.

By contrast, on 27 August 2026, the UK CBAM published a list of Qualifying Carbon Pricing Schemes (QCPS), allowing importers to make an initial assessment of whether the carbon-pricing mechanism in the country of origin is recognized.

Examples of schemes included on the UK CBAM list are:

  • China National Emissions Trading System
  • Korea Emissions Trading System (K-ETS)
  • Japan GX-ETS
  • Singapore Carbon Tax

 

Can Thailand’s Carbon Price Be Deducted under the EU CBAM?

Thailand has introduced a carbon-pricing mechanism within the excise-tax structure for petroleum and petroleum products, referred to as a Carbon Tax. The initial carbon price is set at THB 200 per tonne of carbon dioxide equivalent (tCO₂e), and the mechanism has been designed to operate within the existing excise-tax structure.

At present, the EU has not clearly confirmed whether Thailand’s carbon-pricing mechanism can be used to reduce the CBAM obligation.

Even if Thailand’s carbon-pricing mechanism becomes eligible for consideration in the future, this would not automatically allow operators to deduct the full Thai carbon-price rate from the CBAM obligation. The producer would need to demonstrate the amount of carbon price actually incurred and paid in connection with the production of the CBAM goods, and to trace and attribute that cost to those goods in accordance with EU rules.

 

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