Nicolas Endress is the chief executive and founder of ClimEase, a Swiss-based software company providing a platform designed to help businesses comply with the EU’s Carbon Border Adjustment Mechanism.
From the start of this year, the EU’s Carbon Border Adjustment Mechanism (CBAM) started to impose additional tariffs on imports of carbon-intensive products – from aluminium and steel to cement and fertilisers.
Large industrial producers based in the European Union have been paying a carbon price under the EU Emissions Trading System (EU ETS), Europe’s carbon market, for nearly two decades. The CBAM – the world’s first carbon border tariff – extends that carbon cost to goods entering the bloc from abroad.
The logic behind the mechanism is that since EU-based manufacturers have paid for the carbon emissions created during their production of goods using the EU ETS, so too should all the other nations that make the same goods.
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However, as companies begin to prepare for the cost side of the CBAM, many are finding that the biggest savings today do not necessarily come from switching to cleaner production. Instead, they come from replacing default emissions values with verified emissions data using EU-approved methodologies and independent verification.
Moving from the default values can significantly reduce their exposure to carbon tariffs even when verified emissions are not especially low.
That could potentially disadvantage relatively efficient producers that do not have access to accredited auditors. If exporters’ capacity to secure verified data is distributed unevenly, the system risks perpetuating inequalities.
Default values inflate exposure
The CBAM requires all EU importers to report the “embedded” carbon dioxide equivalent (CO2e) emissions – that is, the total amount of greenhouse gas emissions – associated with the imported goods.
They must then compute the actual carbon cost based on the supplier’s reported product-specific emissions data. If no such product-specific emissions data is available, importers must instead apply the default emissions values stipulated by the European Commission.
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To evaluate emissions, manufacturers determine the total amount of fuel and other direct inputs used during the manufacturing process, such as the fuel burned during production at a steel mill.
These inputs are then converted into tonnes of CO2 using EU-approved methodologies. The results are subsequently verified by an independent expert who is accredited under EU rules. This verification process can be expensive and may be difficult to obtain in many developing countries.
CBAM also requires emissions from key precursor materials to be included. This means upstream suppliers’ emissions must also be calculated and verified. If they are not, importers must apply default values for those inputs.
Since these upstream processes can account for up to 80% of a product’s footprint, companies may still face significant exposure to default values even when their direct supplier’s emissions are verified.
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These default values are in general very high and often represent the maximum possible emissions of the most polluting facility within a specific country or region. A highly efficient steel plant in, for example, India, Brazil or Türkiye, would be evaluated as if it was the least efficient plant in that region due to the lack of formally verified emission data which meet EU standards.
Equity at stake
Equity issues exist here as well. Developing-economy suppliers that have actually decreased their emissions will likely see no decrease in their CBAM costs if they have not had their improvements officially recognised by the EU.
However, obtaining third-party verification requires time, expertise and financial resources, which can present practical challenges for some suppliers – especially those with complex supply chains that require multi-stage verification.
EU importers will have to apply the default values when no verified data is available, leading to significantly higher carbon costs even when the manufacturing process is relatively efficient.
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To address this imbalance, the EU could focus on expanding access to accredited verification, particularly in developing markets, while providing clearer guidance and standardised frameworks for emissions reporting across supply chains.
Improving recognition of credible local verification schemes and investing in digital reporting infrastructure would also help reduce reliance on conservative default values.
Without these adjustments, there is a risk that the CBAM rewards those best-equipped to navigate verification requirements, rather than those achieving the lowest emissions in practice.
In this new trade environment, data that proves efficiency – rather than low emissions alone – will determine which producers gain an advantage.
The post EU carbon tax risks penalising efficient producers over data gaps appeared first on Climate Home News.
EU carbon tax risks penalising efficient producers over data gaps
A report from Greenpeace Australia Pacific and Springmount Advisory reveals the untapped green economic opportunity for Western Australia in a declining Asian gas market, which also offers a genuine solution for decarbonisation in Asia.
Is Western Australia clinging to a fading gas industry while a thriving green future passes it by? As major Asian trading partners rapidly pivot away from volatile gas imports toward cheap solar and battery storage, this report exposes a high-stakes choice: risk becoming stranded in an oversupplied fossil fuel market, or harness WA’s unmatched sun and wind to lead the global clean energy transition.
Summary
From Gas to Green: Building Western Australia’s Future State reveals that Western Australia (WA) faces a critical juncture as falling Asian gas demand, geopolitical gas supply volatility and accelerating renewable energy deployment undermine the long-term economic viability of gas exports. By harnessing its world-class wind and solar resources, the report demonstrates that WA can execute an orderly phase-out of gas and pioneer a green commodity export economy that could generate $987 billion in economic value by 2060, create 24,000 ongoing jobs, and drive a 9.6% reduction in global greenhouse gas emissions.
Key Findings
- Gas demand is falling in Asia – WA can no longer rely on gas exports: Gas demand in core Asian markets fell in 2025 and is projected to continue to decline in 2026. Legislated energy plans in Japan, South Korea, and China now prioritise renewables and nuclear over gas.
- Asia is increasing renewables, importing gas just gets in the way: Evidence from markets like Thailand suggests that gas imports are increasingly crowding out cheaper renewable energy investments and battery storage rather than displacing coal, locking in more emissions over time.
- Green commodities offer a real solution to decarbonise Asia – this is a major win for WA: With world-class renewables, WA can lead Australia’s green commodity exports, which by 2060 could be worth almost a trillion dollars ($987 billion) and support a genuine 9.6% reduction in global emissions.
Recommendations to WA government
Recommendation 1: Plan an orderly gas phase-out aligned with a trading partner pivot plan
Implement a managed, orderly phase-out of gas exports aligned with trading partners’ decarbonisation pathways, rather than waiting for demand to collapse, by:
- Developing and implementing a staged phase-out of gas facilities aligned with feedstock supply expiry or typical end of facility lifespans.
- Committing to no new gas development for gas expansion, including Browse and Kimberley fields.
- Developing new, reciprocal trade relationships with existing gas trade partners, structured to progressively replace gas exports with green commodities – integrated with recommendation 2.
Recommendation 2: Develop an integrated green commodity export strategy, positioning WA as a global green iron manufacturing hub
Establish an integrated green commodity export strategy that immediately prioritises green iron development, positioning WA as a global green iron manufacturing hub, by:
- Committing to green commodity export targets to give industry and investors a clear demand signal.
- Prioritising green iron as the lead sector within the broader green commodity strategy, given WA’s iron ore endowment and first-mover potential.
Recommendation 3: Reject false solutions such as carbon dumping (CCS) and blue hydrogen
Reject carbon dumping (also described as carbon capture and storage, or CCS) and blue hydrogen as viable decarbonisation technologies, and prioritise green hydrogen and proven renewables for clean energy and fuel production by:
- Excluding blue hydrogen projects (and CCS-dependent projects) from all government support programs.
- Requiring existing hydrogen-based production (including ammonia, methanol, synthetic fuels) to have clear, near-term transition timelines to switch to green hydrogen production.
What you can do
Together, we can push for a prosperous green future.
You can help by:
- Sending an email to Environment Minister Murray Watt and Prime Minister Anthony Albanese, calling on them to reject Browse.
- Sharing this story to help more Australians understand what’s at stake.
- Encouraging your friends and family to take action.
REPORT: “From Gas to Green” Building Western Australia’s Future State
Cleaner cooking projects in the UN carbon market will have to set aside a share of their credits to insure against the risk that the trees they save are lost to fire, drought or logging, after the market’s regulator rejected calls to exempt the sector.
The requirement is part of a new rulebook that the Paris Agreement carbon market regulator – the Article 6.4 Supervisory Body – approved last Friday for programmes that aim to cut emissions by distributing new and cleaner cookstoves in regions that still burn wood or charcoal for cooking.
These are the UN mechanism’s first rulebooks for cookstoves, one of the carbon market’s most popular credit types and also one of its most criticised for overstating climate benefits.
They consist of two methodologies: one for programmes that aim to cut greenhouse gas emissions by distributing more efficient cookstoves that burn less wood or charcoal, and a separate methodology for projects shifting households to lower-emissions cookers running on electricity or liquid petroleum gas (LPG).
Mkhuthazi Steleki, the South African chair of the Supervisory Body, said “this decision gives cleaner cooking projects a new pathway under the UN carbon market, with clear rules to ensure that each credit represents a real and credible emission reduction”.
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Exemption push rejected
More efficient cookstove projects earn credits based on the amount of carbon they save by preserving trees that would have otherwise been cut down and burned for fuel. But if those trees later burn in a wildfire or are logged, the carbon stored would be released anyway, erasing the climate benefits of the credits.
Several carbon credit developers, conservation NGOs and the UN Environment Programme (UNEP) disputed that cookstove projects face this risk, in what critics described as a “coordinated lobbying campaign”.
They argued that, unlike forest protection schemes, this type of credit represents a “flow” of avoided emissions rather than a “stock” of stored carbon that can be released. They also warned that requiring a buffer would impose disproportionate costs and undermine the financial viability of these activities.
But the UN carbon market regulator was not persuaded by the argument. It decided that projects would have to protect against this reversal risk by handing over a percentage of credits to a so-called “buffer pool” instead of selling them.
‘New paradigm’
The amount of credits to be given up is calculated by applying different methods for natural risks, like wildfires, droughts or hurricanes, and human-caused ones, such as logging or land clearing.
For natural risks, project developers will need to apply local risk values derived from new modelling published by a group of independent scientists.
Campaigners have broadly welcomed the decision. Federica Dossi, an expert at Brussels-based advocacy group Carbon Market Watch, said it sets a new paradigm for calculating reversal risk based on empirical data. “This approach is grounded in science and we hope to see this now being adopted by other carbon crediting mechanisms in the voluntary market,” she added.
Backers claim this method is more rigorous than current practice in the voluntary carbon market, which largely relies on expert guesswork.
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Pushback over science
As Climate Home News previously revealed, the same industry and NGO groups that sought an exemption from the “buffer pool”, along with some corporate buyers, criticised the use of a study backed by the UN carbon market’s experts that recommended the new risk assessment approach.
The groups pushed for more flexible rules that would have allowed natural risk values drawn from other sources, including national databases, or from the project developers themselves.
While the Supervisory Body rejected this approach, it gave project developers and countries the option to propose alternative values that would first need to be vetted by the mechanism’s expert panel and then approved by the regulator.
A carbon market expert told Climate Home News that, while it is too early to say how this provision will be used, they expect requests will have to be backed up with solid scientific evidence, lowering the risk of unfounded claims.
