Reclimatize.in  ·  7 July 2026  ·  CBAM  ·  Transitional Period  ·  Industry Readiness

CBAM Transitional Period: What India’s Quarterly Reports Revealed About Industry Readiness

The CBAM transitional period ran from 1 October 2023 to 31 December 2025, with EU importers required to file quarterly reports on embedded emissions for CBAM-covered goods. For Indian exporters, the main lesson from that period is simple: many buyers relied on default values rather than supplier-specific emissions data, and that left a large compliance gap once the definitive regime began in January 2026.

What defaults meant

EU default values were used when importers could not obtain supplier-specific emissions data. During the transitional phase, those defaults were intended to keep trade flowing while nudging exporters toward better data quality.

The problem is that defaults can overstate or understate actual emissions depending on the product and the producer. For lower-carbon Indian manufacturers, especially DRI-EAF steel and scrap-based aluminium, the default values were often much higher than actual emissions, creating a misleading picture of carbon exposure.

That difference matters because CBAM is not just a reporting exercise anymore. The same data that were treated as approximate during the transitional phase now feed directly into certificate obligations in the definitive regime.

Steel and aluminium

For steel, the gap between default values and actual emissions is modest for BF-BOF producers, but much larger for DRI-EAF producers. A BF-BOF exporter may sit relatively close to a CBAM default, while a gas-based DRI-EAF plant could be far below it.

For aluminium, the risk of distortion is even greater. Primary aluminium is carbon-intensive, but scrap-based secondary aluminium can be far cleaner, so using a primary-aluminium default for a secondary producer can dramatically inflate the apparent CBAM liability.

That is why the readiness gap is commercially important. A supplier that has not built plant-level emissions tracking can end up appearing far dirtier than it really is, which can distort pricing, negotiations, and sourcing decisions.

Verification requirements

Under the definitive CBAM framework, actual emissions data must be verified by an accredited verifier operating under the CBAM verification rules. The Commission’s framework is built around independent verification, accreditation by EU national accreditation bodies, and registry-based reporting.

The framework requires verifiers to be recognised within the EU CBAM accreditation system, rather than demanding only specific brand-name validation firms. Local verification bodies can participate if they meet the equivalence and accreditation criteria.

For exporters, that means MRV systems must be built at the installation level, with clear methodology, traceable records, and enough documentary support for a verifier to test the numbers.

Financial impact

Using default values can materially change the estimated CBAM cost of a shipment. For BF-BOF steel, the difference may be limited if the producer is already close to the default; for DRI-EAF steel or scrap-based aluminium, the difference can be enormous.

This is especially true for secondary aluminium, where a scrap-based producer may have actual emissions far below the primary-aluminium default. In those cases, relying on defaults can make a low-carbon product look far more carbon-intensive than it actually is.

The key commercial lesson is that exporters who invested early in verified emissions data will be better placed to defend value, while those who relied on transitional defaults may now face pricing pressure or delayed sales.

Indian readiness gap

The readiness gap is most acute among mid-tier and downstream exporters. Large integrated groups have generally moved earlier on CBAM monitoring, but smaller tube, pipe, wire-rod, and specialty alloy exporters often still lack the data systems needed for definitive compliance.

That does not mean they are excluded from the EU market. It means they need to accelerate emissions accounting, verifier engagement, and product-level mapping now, rather than waiting until the first annual declaration deadline arrives.

For exporters that have never run an installation-level emissions inventory, the immediate priority is to map Scope 1 and Scope 2 data to the CBAM methodology and to prepare for verification under the definitive rules.