CBAM Part 3: A Practical Preparation Plan for Australian Exporters
CBAM can look complicated when you first encounter the regulations, but an Australian company preparing to export to Europe does not need to build an entire carbon-trading system.
The best approach is to deal with CBAM as part of normal export preparation.
Start with the product, not the carbon calculation
The first question is:
Is the product actually covered?
CBAM is currently relevant to specific products within the iron and steel, aluminum, cement, fertilizer, hydrogen, and electricity industries.
The coverage is based on the product’s European CN customs classification. Before proceeding with any spending on emission measurements, verify the accurate code for the goods you plan to export. Next, communicate with the European importer.
Keep in mind that the formal CBAM responsibility typically lies with the EU importer.
Therefore, it is crucial to engage them early on to avoid any surprises when the goods reach customs. Inquire about the type of emissions information they require from you and whether they plan to use default or actual emissions values.
Decide whether proving your actual emissions is worthwhile
Next, compare your expected emissions performance with the relevant EU default.
The European Commission has released CBAM default values, which include figures for several Australian products.
For facilities with lower carbon emissions, utilizing verified actual emissions data might offer a cost benefit compared to depending on the default values.
This advantage may become increasingly significant, as the default-value mark-up for the majority of key CBAM sectors will rise to 30% starting in 2028.
Build a CBAM-ready data trail
If you decide to use actual emissions, identify where the necessary information already exists within your business.
Your operations, finance, engineering, sustainability and production teams may collectively hold most of it already.
A sensible preparation checklist is:
Verify your product and its CN code,
identify the production facility and processing route, and organize data on fuel, electricity, materials, and production processes.
Identify relevant precursor materials, prepare a monitoring methodology for CBAM, establish record-keeping and internal controls, arrange independent CBAM verification, and agree with your EU importer on how the verified information will be transferred.
This approach is more akin to establishing a comprehensive industrial MRV system rather than conducting a traditional cradle-to-grave Life Cycle Assessment.
Choose the verifier early
Emissions counted under the CBAM system must be verified by an independent verifier approved by an EU national accreditation body.
The EU mandates that these verification organizations show technical expertise, independence, and have trustworthy verification processes.
Non-EU companies are also allowed to apply for EU CBAM accreditation. This is significant for Australian industries, as eventually, local carbon or environmental auditing firms in Australia could provide CBAM verification services.
It is crucial not to delay verification. Verifiers may need to grasp the production process, assess monitoring systems, and review supporting records, instead of just verifying the final calculation.
Check whether a carbon price has already been paid
Emission measurement and carbon pricing are distinct topics. Initially, it's essential to determine the amount of carbon embedded in the products.
Separately, it's necessary to verify if a recognized carbon price has been paid on those emissions within Australia.
If the EU importer can prove that an eligible carbon price has been paid in the production country, that cost may be deducted from the CBAM obligation.
Therefore, companies should maintain solid documentation of any related carbon costs instead of relying on their European clients to piece together this information afterwards.
Finally, put CBAM into the commercial conversation
The biggest mistake might be viewing CBAM solely as a compliance matter. It can affect pricing, contracts, supplier choices, and dealings with European clients.
An Australian exporter should clarify who assumes the CBAM-related costs, who provides emissions data, whether actual or default will be used and the course of action if the necessary information is missing, before quoting an EU client.
Australian companies with genuinely lower-carbon production could see CBAM not just as a hurdle but as an opportunity to showcase that their products have a lower carbon footprint compared to competing imports.
The companies best placed to benefit will be those that can measure their emissions accurately, have them independently verified and communicate the result confidently to their European customers.
That is the practical meaning of being CBAM-ready.
Sources
PwC: Understanding the CBAM and Omnibus Simplification for Australia
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