CBAM is meant to equalise carbon costs, not to charge twice. Article 9 of the CBAM Regulation lets an authorised declarant claim a reduction in the number of certificates for a carbon price effectively paid in the country of origin for the declared embedded emissions. The catch is in the word “effectively”.
What counts
- A carbon price actually paid — a carbon tax, or allowances bought under an emissions trading system — for the emissions embedded in the goods.
- Net of any rebate, compensation or free allocation that offsets it. A system that hands out most allowances for free produces a small deductible amount.
- Documented: the declarant must be able to show the price paid and that it relates to the declared goods, normally with evidence from the producer.
An emissions trading system with mostly free allocation can cover a lot of emissions and still deduct very little from a CBAM bill.
Country by country
China €2.80 bn exposure 2026
China's national ETS, which started with power generation, was extended in 2025 to steel, cement and aluminium smelting. Allocation is intensity-based and largely free in the first years, so the carbon price effectively paid per tonne of product is low.
Türkiye €1.76 bn exposure 2026
Türkiye adopted a climate law in 2025 that creates a national ETS. Its pilot phase for 2026–2027 targets power, cement, steel, aluminium and fertiliser installations above 50 000 tCO₂e a year — closely mirroring the CBAM scope.
South Korea €390 m exposure 2026
South Korea has run the K-ETS since 2015, covering most heavy industry including steel and cement. A large share of allowances is allocated free of charge.
United Kingdom €342 m exposure 2026
The UK runs its own ETS, and its own CBAM starts on 1 January 2027. The EU and UK are negotiating to link their ETSs; once a link is in force, the EU has said CBAM would not apply to goods originating in the UK. Until then, UK goods are subject to EU CBAM.
India €1.17 bn exposure 2026
India's Carbon Credit Trading Scheme sets greenhouse gas emission-intensity targets for energy-intensive sectors. It is an intensity-based credit system rather than a cap with a price on every tonne, so its value for the CBAM deduction is uncertain.
South Africa €196 m exposure 2026
South Africa has levied a carbon tax since 2019, but with large tax-free allowances for industry, so the effective rate per tonne is far below the EU price.
Canada €50.3 m exposure 2026
Canada prices industrial emissions through output-based pricing systems for large emitters. Much of Canada's aluminium is produced with hydropower, which is reflected in a lower default value.
Japan €88.4 m exposure 2026
Japan's GX-ETS moves from voluntary to mandatory participation for large emitters from fiscal year 2026.
Ukraine €629 m exposure 2026
Ukraine levies a CO₂ emissions tax at a very low rate and has been preparing an ETS as part of EU accession work.
Brazil €113 m exposure 2026
Brazil passed a law in December 2024 establishing a regulated emissions trading system, to be phased in over several years.
United States €315 m exposure 2026
There is no federal carbon price in the United States. A few states run cap-and-trade programmes, mainly for power and fuels.
Russia €1.24 bn exposure 2026
Russia has no carbon price on industrial emissions. Most Russian iron and steel and other CBAM goods are also subject to EU sanctions or tariffs.
What this means in practice
For 2026 imports, few declarants will be able to document a material deduction: the largest schemes in exporting countries allocate most allowances for free and their prices are well below the EU level. The trend runs the other way, though. CBAM gives exporting governments a reason to price carbon themselves — revenue that would otherwise go to EU member states. Türkiye’s new ETS, closely aligned with the CBAM sectors, is the clearest example.
Read the UK case in its own article: linking emissions trading systems is the one route that can take a country out of CBAM altogether.