The European Commission has opened a public consultation on draft rules clarifying how carbon prices paid outside the European Union will reduce importers' obligations under the Carbon Border Adjustment Mechanism (CBAM). The proposal recognises, for the first time, a limited role for Paris Agreement-backed carbon credits in determining what counts as an effective carbon price in exporting countries.
A worker entering compliance data on a tablet while overseeing container operations at a busy European port, showing how carbon pricing rules are integrated into global trade under EU CBAM. AI generated picture.
Published on 13 May and open for feedback until midnight Brussels time on 10 June, the draft implementing regulation would allow importers of carbon-intensive goods to reduce CBAM liabilities using certain credits issued under Article 6 of the Paris Agreement. Their use would be capped at 10% of reported and confirmed emissions at facilities producing goods exported into the EU.
Domestic carbon costs paid under a third country's emissions trading system or carbon tax will be fully deductible, with no additional EU quality requirements. Internationally Transferred Mitigation Outcomes (ITMOs) authorised under Articles 6.2 and 6.4 of the Paris Agreement will also be accepted, subject to the 10% cap.
The Commission said the restriction was designed to safeguard environmental credibility and limit reliance on low-integrity credits. ‘Where a third-country carbon price mechanism allows for the use of offset credits generated outside the domestic jurisdiction, those international carbon credits should meet the standards set under the Paris agreement,’ the draft regulation states. The cap is also intended to encourage exporters to cut their own emissions through new technologies.
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The move marks a shift from the European Parliament's earlier position, which had removed provisions recognising international credits over concerns about market integrity. Nick Ogilvie, CBAM Product Manager at CarbonChain, said the headline benefit for third-country suppliers is clarity. ‘They now know exactly how a domestic carbon price converts into a CBAM deduction, including how free allowances, rebates, and indirect cost compensation get netted off,’ he told Trade Finance Global.
Under CBAM, importers of carbon-intensive goods must surrender allowances reflecting the emissions embedded in their products, unless they can demonstrate that an equivalent carbon price has already been paid in the country of origin. Article 6 credits are not currently recognised by the European Commission for this purpose. The consultation forms part of the EU's broader effort to finalise operational rules for CBAM, whose definitive phase began in January 2026.
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