CBAM: free allocation cuts speed up from 2029

Spherical Insights, in a piece reposted by Klaus Steven, places BHP, Rio Tinto, SSAB and LKAB in the race for low-emission iron and steel and notes that the EU CBAM entered its definitive phase on 1 January 2026, with iron and steel among the covered products.

The pace of that charge is written into law. Directive (EU) 2023/959 of 10 May 2023 sets the factor that reduces free allowances for CBAM sectors: 97.5% in 2026, 95% in 2027, 90% in 2028, 77.5% in 2029, 51.5% in 2030 and 14% in 2033. From 2034, no factor applies.

For anyone selling low-emission iron and steel into Europe, the carbon cost borne by conventional competitors rises slowly until 2028 and speeds up from 2029. Until then, the extra revenue depends more on contracts with buyers willing to pay the premium than on the other side's carbon bill.

The schedule is public and the dates are fixed. A project starting operation around 2030 meets a European market with nearly half of the free protection already withdrawn.