CBAM and Indian carbon pricing: what counts as a deduction

Article 9 of Regulation (EU) 2023/956 allows an authorised CBAM declarant to claim a reduction in the number of CBAM certificates to be surrendered, to reflect a carbon price effectively paid in the country of origin in respect of the embedded emissions of the imported goods. The Commission's May 2026 Q&A confirms a strict reading of this provision. What qualifies. The carbon price must be levied by a public authority and applied to the relevant installation or activity. It must be paid (or otherwise discharged) in respect of the embedded emissions of the goods in question. The amount must be evidenced and verified by an accredited verifier. Rebates, refunds or free allocations reduce the eligible amount on a one-for-one basis. What does not qualify. Voluntary carbon credits, offsets and similar instruments do not qualify, because they are not a price levied by a public authority. Internal corporate carbon prices, however rigorously applied, do not qualify. A price levied on inputs to a process, but not on the emissions of the process itself, does not qualify in respect of those emissions. The Indian position is evolving. The Carbon Credit Trading Scheme provides for the issuance of carbon credit certificates and is moving towards a compliance market with sector-specific emission intensity targets. As and when an entity is subject to a binding intensity target and incurs a cost to acquire certificates to meet that target, there is a plausible case that the cost of those certificates is a carbon price levied on the installation in respect of its emissions. The detail of the eligibility conditions will matter, and verification of the claim under the CBAM framework will be essential. Until the Indian instruments are operational and the conditions are documented, Indian exporters and their EU customers should not build any deduction into commercial pricing. The position will be revisited as the Indian scheme matures.