Stop Using Default Values: The Real Cost of CBAM — And a One-Time PCF Path
Stop Using Default Values: The Real Cost of CBAM — And a One-Time PCF Path
Default values aren't a shortcut. They look convenient, but they tend to push up costs, attract customs scrutiny, and stall your working capital. The practical alternative is to build a once-and-reusable PCF model and reuse it across customs, buyers, and audits.
In this article: default-value costs · HS code data checklist · one-time PCF path · cost model · quick checklists
1) The cost of default values
- Systematically higher tax. Transitional default values published by the European Commission are coarse “world-average” intensities; from 2026 the regime moves to country-average + mark-up defaults. If your real process is cleaner than those benchmarks, you overpay when certificates are due. See: CBAM overview and Default values note.
- Audit/inspection risk. Declarants relying on estimates/defaults face higher review and re-filing risk as customs tighten data expectations; rework locks working capital and can delay shipments.
- Lost commercial upside. Buyers with SBTi commitments want product-level emissions. With defaults you get no credit for lower-carbon SKUs, weakening pricing power and tender win-rates. See SBTi guidance.
- Management takeaway: Default values are a bridge, not a strategy. Use them only as a stop-gap while you build a specific, evidence-backed PCF.
2) HS codes and a minimal data pack
Higher-risk HS/CN segments under CBAM today:
Iron & steel (HS 72, parts of 73), Aluminium (76), Cement (HS 2523), Fertilisers (31), Hydrogen (2804), Electricity (sector). Sector pages: Commission overview · Per-sector info.
Note on batteries (HS 85): not in current CBAM scope, but high-scrutiny for buyers/DPP-ESPR/Batteries Regulation. Treat as priority for PCF readiness even if not CBAM-taxed today. See ESPR.
Minimal data pack per HS/CN (cradle-to-gate):
- Boundary (modules/stages covered) & 12-month reference window
- Materials/BOM (weights, grades, scrap)
- Process energy by step (electricity, fuels)
- Main logistics legs (inbound key feedstocks, outbound to border)
- Factor provenance (factor source, version, unit; electricity grid factor or supplier-specific)
Rejection traps → fixes:
- Boundary mistakes → show a simple boundary diagram and module list
- Unit inconsistency → unit checks + standard templates
- Missing factor sources → cite factor source/version right in the table; keep a factor register
3) A one-time PCF path you can reuse everywhere
Inputs: product spec / BOM / energy / logistics. If a field is missing, use industry factors with clearly labeled assumptions and uncertainty.
80/20 coverage: model the top emitters first (e.g., hot metal, calcination, electrolysis power, primary ingot, key routes); iterate the long tail later.
Deliverables (make them reusable):
- Result + method (functional unit, system boundary, allocation)
- Factor table (source, version, unit), lineage/provenance
- Data-quality rating (DQR) and uncertainty bands
- Evidence pack (redacted invoices/meters/screenshots)
Reuse targets:
- Customs (CBAM registry uploads)
- Buyer tenders (supplier-specific Scope 3)
- Audits/assurance
- Easy upgrades to DPP/ESPR, PEF/EPD later. See PEF methods · EN 15804 explainers.
4) Economics: default values vs. one-time modeling
*Default values behave like an annual fee that scales with volume.
- Liability formula (simplified):
CBAM cost ≈ Embedded tCO₂e × Certificate price - From 2026, importers purchase CBAM certificates linked to EU ETS prices (definitive period). See Commission CBAM FAQ.
- If defaults exceed your real intensity, you pay the spread every year.
One-time PCF model ≈ upfront + light refresh.
- Capex-like: build once, then quarterly/annual refresh when energy mix, yields, or suppliers shift.
- Benefits: lower tax, faster clearance, fewer rejections, stronger pricing/credentialing with buyers.
5) Quick checklists
Internal prep
- Owners: compliance · finance · production · procurement · logistics
- Templates: BOM · energy · logistics · factor register (source/version/unit)
- Quality gates: unit checks · boundary/time consistency · assumption flags
- Evidence policy: minimal set · electronic · versioned
External deliverables
- Human-readable: method · boundary · result · DQR · uncertainty · assumptions
- Machine-readable: CSV/JSON mapped to buyer/customs fields
- Audit pack: sources · screenshots/redacted docs · lineage export · change log
- Verification access: QR/link with controlled permissions
What Climate Seal does (in one page)
- Faster: ingest BOM/energy/logistics, auto-map rules & factors, run batch PCF, and output one-click customs/buyer reports (CBAM-ready).
- Credible: every model ships with data-quality scoring, uncertainty bands, and evidence packs, aligned to ISO 14067/GHG Protocol Product Standard.
- Reusable: the same PCF feeds customs, tenders, audits, and upgrades to DPP/ESPR, PEF/EPD.
- Actionable: compare materials/process/suppliers to cut emissions and* cost.
Call to action: Want a once-and-reusable PCF for your top SKU? Book a Climate Seal walkthrough — we'll build a pilot and hand you the evidence pack.
