EU CBAM Steel Supply Agreements: Emissions Data and Cost Settlement

Companies supplying steel to EU importers may be asked to provide the basis for calculating product emissions, verification materials, and information on carbon prices paid. If the contract does not specify when and to what extent this information will be provided, disputes over additional verification and costs may arise after delivery.

Statutory obligor: The EU importer or indirect customs representative bears the CBAM declaration and certificate obligations. A Korean supplier does not automatically become the statutory obligor.

Contractual cooperation: Declaring actual emissions may require production facility data and verification evidence, so the scope of data to be provided and verification costs should be set out in the contract.

Cost allocation: Certificate prices, additional costs caused by data errors attributable to a party, and cooperation in evidencing and deducting carbon prices already paid in a third country should each be treated separately.

1. CBAM Obligations and the Role of the Supply Agreement

The EU Carbon Border Adjustment Mechanism (CBAM) entered its definitive period on January 1, 2026. When designated goods such as iron and steel, aluminium, cement, fertilisers, electricity, and hydrogen are imported into the EU, the importer becomes subject to authorization, emissions declaration, and certificate surrender obligations, depending on the scope of coverage and quantity thresholds.

The 2026 amended regulation sets a single annual threshold of 50 tonnes net mass for imports of covered goods. An importer exceeding the threshold may have to declare emissions and surrender certificates for all covered imports in that year, not only the amount above the threshold, so product codes and each importer's annual volume should be checked before signing.

The statutory declaration and certificate obligations rest with the EU importer or its indirect customs representative. However, because the importer needs data from the third-country production installation to declare actual emissions, the Korean supplier's cooperation in providing data becomes an important commercial obligation. Statutory obligations and contractual burdens should not be treated as the same thing.

European Commission — CBAM Definitive Period

EUR-Lex — Amending Regulation (EU) 2025/2083

2. Scope of Emissions Data and Submission Procedures

CBAM declarants may use default values or actual emissions. Using actual emissions may require product-level calculation data and verification evidence. Operators of third-country installations may provide verified emissions and information on carbon prices paid in the third country to CBAM declarants, and a method for sharing data through the European Commission's registry has also been established.

The contract should specify the product classification and origin, production installation identifiers, emissions calculation standards, precursor data, submission format and language, deadlines, and correction procedures. If the underlying data contains trade secrets or process information, the scope of disclosure, purpose of use, confidentiality, and retention and deletion timing should also be restricted.

If data submission is defined broadly, such as "all data requested by the importer," the supplier may become responsible for matters beyond its control. It is safer to reflect a reasonable advance notice period, a list of data that may be requested, the qualifications and access rights of verifiers, and the cost of additional work in the contract.

European Commission — CBAM Registry for Third-Country Installation Operators

European Commission — CBAM Communication and Guidance on Emissions Data

3. Certificate Costs and Price Adjustment

Purchasing and surrendering certificates is the EU importer's obligation, but the parties may share the economic cost through the supply price or a separate settlement method. A single sentence such as "the supplier bears CBAM costs" therefore does not clarify the price, calculation basis, settlement timing, or scope.

The contract should specify the covered products and volumes, the reference date or averaging period for certificate prices, whether actual emissions or default values will be used, currency exchange and tax treatment, and evidence of purchase and surrender. According to European Commission guidance, the certificate price is based on a quarterly average in 2026 and a weekly average from 2027. If price changes will be reflected in the supply price, the parties may agree in advance on an adjustment formula, caps and floors, and a recalculation procedure in case of dispute.

Whether a carbon price paid in Korea can be deducted from EU CBAM costs also depends on evidence and legal requirements. Companies should not assume that paying an amount under a domestic scheme automatically qualifies for deduction. They should confirm the amount actually paid, the covered products, and any refunds or support received, and then define the supporting documents and cooperation obligations.

European Commission — Guidance on Certificate Prices and Deduction of Third-Country Carbon Prices

4. Liability for Data Errors and Additional Costs

If errors are found in emissions data, correction of declarations, purchase of additional certificates, or administrative penalties may become issues. The contract should allocate liability according to each party's area of control and define error notification and correction opportunities, mitigation measures, liability caps, and the scope of indirect damages.

A distinction should be drawn between cases in which the supplier intentionally or through gross negligence provides incorrect production data and cases in which the importer mismanages product codes, declared quantities, or submission timing. Clauses under which the supplier guarantees, without limit, the EU importer's entire declaration process or all penalties should be negotiated in light of the transaction size, insurability, and actual control.

If delayed data submission could lead to suspended deliveries or the application of default values, the importer should clarify the required data and request timing, and the supplier should confirm what data it can submit and the expected schedule. Grace periods and alternative data procedures that account for delays by verifiers or sub-suppliers should also be considered.

5. Materials to Check Before Signing

• CN codes, origin, covered installations, and expected annual volumes of the goods sold
• Actual emissions calculation data, verification reports, precursor data, and evidence of carbon prices paid
• Allocation of roles among the importer, customs representative, and supplier for data submission and CBAM declarations
• Contract price, certificate cost formula, settlement evidence, and error correction procedures
• Confidentiality of data, verifier access, retention period, and scope of disclosure to third parties

Companies should not look at the main agreement alone. They should check whether purchase orders, quality agreements, sustainability annexes, and the importer's CBAM data request forms use the same standards. They should also check whether an annex effectively overrides the liability caps in the main agreement.

Frequently Asked Questions (FAQ)

Does a Korean steel supplier have to purchase CBAM certificates?

In a typical EU import structure, the party obligated to surrender certificates is the EU importer or indirect customs representative. However, the contract may require the supplier to bear all or part of the cost or settle it through the price, so statutory obligations and commercial cost allocation should be reviewed separately.

European Commission — Guidance on CBAM Declarants and Certificates

Can the export contract still be performed if emissions data is not available?

The lack of data alone does not mean that all imports are impossible. Declarants may consider default values where the regulations allow, but actual emissions require verification materials. Which method applies should be confirmed based on the product and the latest regulations.

European Commission — Guidance on Actual and Default Values

Is a clause stating that the supplier bears certificate costs sufficient?

That wording alone does not make the cost calculation or scope of liability clear. The contract should specify the covered products and volumes, the price formula, evidence, responsibility for data errors, the scope of penalties and damages, and liability caps.

Reflecting CBAM Data and Costs in the Contract

With the CBAM definitive period in effect from 2026, the accuracy of emissions data and the settlement of certificate costs have become actual terms of steel import contracts. It is important to distinguish the counterparty's statutory obligations from the supplier's duty to cooperate and to connect data requests, verification, price adjustment, and liability for errors into a single procedure.