CBAM Transitional Period: What India’s Quarterly Reports Revealed About Industry Readiness
The CBAM transitional period ran for eight quarters — October 2023 to December 2025. EU importers of Indian steel, aluminium, and fertilisers had to file quarterly reports. Most used EU default values, not actual Indian producer data. Default values significantly overstate most Indian producers’ actual emission intensity. In the definitive period, defaults are no longer permitted. The gap between what was reported and what must now be provided is the compliance problem Indian exporters face today.
Key Takeaways
- The CBAM transitional period — from 1 October 2023 to 31 December 2025 — required EU importers of CBAM-covered goods to file quarterly reports with the European Commission’s CBAM Registry disclosing the embedded emission intensity of imported goods. During this period, importers had two options for the embedded emission data: actual emission intensity values provided by the non-EU exporter, calculated according to the CBAM Implementing Regulation methodology, or EU Commission-published default emission values, which were calculated as the 90th percentile intensity of EU ETS-covered facilities in the same product category — specifically designed to be the worst-performing EU facilities, creating a strong incentive to use actual data where the actual emission intensity was below the 90th percentile EU benchmark.
- The pattern of default value usage during the transitional period reveals a stark readiness gap in India’s export community. European Commission analysis of Q1 to Q4 2024 CBAM transitional reports indicates that approximately 70 to 80 percent of CBAM reports covering imports from developing countries — including India — used default values rather than actual emission data. For Indian steel and aluminium specifically, where actual BF-BOF and coal-CPP emission intensities are high but still below the 90th percentile EU default for many product categories, the use of defaults does not necessarily overstate the CBAM liability — but the assumption that defaults are available in the definitive period is incorrect and financially dangerous.
- The EU default values for steel — published by the Commission for the transitional period — are approximately 2.1 to 2.5 tCO₂/t for different flat product categories. India’s BF-BOF actual emission intensity is approximately 2.1 to 2.3 tCO₂/t — broadly in the same range, meaning that Indian BF-BOF exporters that used default values during the transitional period were not significantly over-reporting relative to their actual intensity. But for Indian DRI-EAF producers — whose actual emission intensity is approximately 0.8 to 1.1 tCO₂/t — using the steel default of 2.1 to 2.5 tCO₂/t overstated their CBAM liability by approximately 100 to 200 percent. DRI-EAF producers that did not provide actual emission data during the transitional period were voluntarily overstating their CBAM exposure to their EU customers.
- For aluminium, the divergence between default and actual values is even more dramatic. The EU’s transitional period default for primary aluminium was approximately 20 to 22 tCO₂/t — the 90th percentile EU facility intensity. India’s coal-CPP-based primary aluminium actual intensity is approximately 16.5 to 17.0 tCO₂/t — below the EU default, meaning Indian aluminium exporters that used the default were overstating their CBAM liability. India’s EAF-scrap secondary aluminium actual intensity is approximately 0.5 to 0.8 tCO₂/t — using the 20–22 tCO₂/t default was an overstatement by a factor of 25 to 40 times. Secondary aluminium producers that provided actual emission data during the transitional period were demonstrating a CBAM liability that is a fraction of what EU importers assumed when using defaults.
- In the definitive period (from January 2026), default emission values are not available for most CBAM product categories. The CBAM Implementing Regulation for the definitive period requires actual emission intensity data calculated from production-level monitoring data, verified by an accredited third-party verifier, and submitted to the CBAM Registry by the EU authorised declarant. The only exception is for de minimis quantities (below the 50-tonne Omnibus threshold) where defaults may continue. Indian exporters that were comfortable using defaults during the transitional period have experienced a regulatory cliff change — their EU customers are now requesting actual verified emission data that most Indian exporters have not yet established the monitoring systems to provide.
- The readiness gap is largest among India’s smaller and mid-tier exporters. Large integrated producers — Tata Steel, JSW Steel, JSPL, Vedanta, Hindalco — have or are building CBAM emission data infrastructure in their export operations. The gap is concentrated in the mid-tier: wire rod exporters, tube and pipe manufacturers, ferro-alloy producers, and specialty steel makers that export to the EU at volumes above the 50-tonne threshold but have not established plant-level GHG monitoring systems. These companies have two options: rapidly establish their own CBAM-compliant emission monitoring (a 6 to 12 month implementation process at minimum), or use a third-party CBAM data service that uses industry-average emission factors for their product type — which may or may not be accepted by EU authorities as equivalent to plant-level actual data.
The CBAM transitional period served a dual purpose: it gave EU importers time to build the administrative infrastructure for CBAM compliance, and it served as a diagnostic exercise revealing which third-country exporters had — and had not — established the emission monitoring systems necessary for CBAM-compliant reporting. India’s performance in this diagnostic was mixed. Large Indian producers in the steel and aluminium sectors established CBAM compliance programmes, engaged European customs brokers and CBAM advisors, and began providing actual emission data to their EU customers by Q3 or Q4 of 2024. But the mid-tier and smaller exporter community — which accounts for a significant share of India’s EU-bound steel and specialty metal exports — largely relied on the transitional period’s default value option, creating the appearance of compliance without the underlying data infrastructure that the definitive period requires.
The consequence of this readiness gap is now visible in early 2026. EU importers of Indian material are requesting CBAM Implementing Regulation-compliant emission data from their Indian suppliers for January 2026 onwards — data that must be based on plant-level monitoring, use the CEA GEF (0.710 tCO₂/MWh) for Scope 2 calculations, and be verifiable by an accredited third-party verifier. Indian exporters without this infrastructure are either losing EU business to competitors who have it (European, Korean, or Japanese producers with established emission monitoring) or delaying their EU customers’ CBAM compliance by providing incomplete or unverified emission data.
What actual versus default emission data means financially
EU Default vs Indian Actual Emission Intensity — CBAM Certificate Cost Impact · April 2026
| Product | EU Transitional Default | Indian Actual (typical) | CBAM Cost at Default | CBAM Cost at Actual | Overstatement if Default Used |
|---|---|---|---|---|---|
| HRC / CRC (BF-BOF) | ~2.20 tCO₂/t | ~2.15 tCO₂/t (similar) | ~€62–70/t | ~€62–70/t | Minimal — actual ≈ default for BF-BOF |
| DRI-EAF structural steel | ~2.20 tCO₂/t (same default) | ~0.85 tCO₂/t (nat. gas DRI) | ~€62–70/t | ~€0/t (below benchmark) | 100%+ overstatement — DRI-EAF using default pays CBAM it doesn’t owe |
| Primary aluminium (coal CPP) | ~20–22 tCO₂/t | ~16.5–17.0 tCO₂/t | ~€1,280–1,440/t | ~€1,000–1,040/t | ~25–35% overstatement — still high |
| Secondary aluminium (post-consumer scrap) | ~20–22 tCO₂/t (if using primary default) | ~0.5–0.8 tCO₂/t | ~€1,280–1,440/t | ~€0–32/t | 3,900–5,600% overstatement — catastrophically wrong default |
| Urea / Fertiliser (grey ammonia) | ~2.6 tCO₂/t urea | ~2.3–2.5 tCO₂/t | ~€152–168/t | ~€136–160/t | Modest overstatement — broadly comparable |
The secondary aluminium producer who never told their EU customer they were near-zero carbon. Perhaps the most commercially consequential readiness failure during the transitional period is the Indian secondary aluminium producer that exported scrap-based aluminium to an EU buyer — using post-consumer scrap with actual embedded emissions of approximately 0.5 to 0.8 tCO₂/t — but allowed the EU importer to use the default emission value of 20 to 22 tCO₂/t (the 90th percentile EU primary aluminium facility) in the quarterly report. The EU importer filed the report with a CBAM liability of approximately €1,440/t — when the actual CBAM liability at real emission data was approximately €32/t. The EU importer overpaid on a transitional report basis and, more importantly, has not discovered that their Indian secondary aluminium supplier is one of the lowest-carbon aluminium sources available globally. In the definitive period, this gap becomes financially critical — the EU importer will face a real €1,440/t certificate purchase obligation unless the Indian producer quickly establishes actual emission data and provides it for 2026 imports. This situation — commercially irrational but entirely avoidable — is the direct consequence of the transitional period’s passive compliance culture in India’s mid-tier export community.
Frequently Asked Questions
Can EU importers continue to use default values for any portion of their CBAM reporting in the definitive period?
Under the CBAM Implementing Regulation for the definitive period, default emission values are not available as a standard reporting option. However, there is a limited exception: for imports from facilities where the EU importer genuinely cannot obtain actual emission data despite good-faith efforts — and where a request was made to the non-EU exporter in writing with no response within a defined timeframe — the Commission may allow the use of a defined worst-case default value as a last resort, with a financial penalty premium above the standard certificate price. This worst-case default is designed to be more punitive than actual reporting, ensuring that importers have a strong financial incentive to obtain actual data. The transitional period’s default was calculated at the 90th percentile EU facility intensity. The definitive period worst-case default for non-compliant importers may be set at a higher punitive level by the Commission implementing act.
What verification standard applies to actual emission data in the definitive period?
The CBAM Implementing Regulation for the definitive period requires that actual embedded emission data be calculated according to the CBAM Regulation’s methodology (Annexes III and IV of the original Regulation and corresponding sections of the Implementing Regulation), and verified by an EU-accredited verifier or by a verifier accredited in the third country under an equivalence arrangement with the EU. India does not currently have a bilateral equivalence arrangement for CBAM verifiers — meaning that Indian-accredited ACVAs (BEE’s Carbon Verification Agencies) are not automatically recognised for CBAM purposes. Indian exporters must either use an EU-accredited verifier (such as TÜV SÜD Europe, Bureau Veritas, SGS) for their CBAM verification, or work through an arrangement where a BEE-accredited ACVA partners with an EU-accredited entity for the cross-border verification function.
What should an Indian exporter that has not established CBAM monitoring infrastructure do immediately?
The immediate priority is to establish a plant-level GHG emission monitoring system aligned with the CBAM Implementing Regulation’s methodology — specifically covering Scope 1 direct emissions by source category, and Scope 2 electricity emissions using the CEA WAEF (0.710 tCO₂/MWh for the current period). This monitoring system should be operational and collecting data from January 2026 — since the first CBAM annual declaration in September 2027 covers 2026 calendar year imports. In parallel, the exporter should engage an EU-accredited verifier (or a BEE-ACVA-EU partnership arrangement) to plan the 2026 data verification, which typically requires a site visit, document review, and verification opinion — taking 8 to 14 weeks for a large industrial plant. Exporters that begin this process in April 2026 can complete 2026 verification in time for the September 2027 declaration deadline. Those that begin in late 2026 may not.
Sources
- European Commission — CBAM Registry — transitional period quarterly report guidance and default values
- European Commission — CBAM Implementing Regulation 2023/1773 — default value methodology and definitive period requirements
- European Commission — CBAM transitional period implementation report — default vs actual usage statistics, 2024
- Ministry of Commerce and Industry — India’s CBAM preparedness assessment — export sector readiness survey 2025
Related Reclimatize.in Research
How CBAM Works: A Practical Guide for Exporters CBAM Compliance Operations: MRV and Embedded Emissions Guide CBAM Omnibus 2025: What Changed for Indian Exporters CBAM Product Classification: Which HS Codes Are Covered Secondary Aluminium: The 10-Fold CBAM Advantage of the Scrap Route