Canada and the EU are looking for “common solutions” to concerns over the CBAM, Prime Minister Mark Carney said after their Montréal summit on 30 October. For Canadian steel and aluminium sold into Europe, one possible outcome is a smaller certificate bill for the European customer.
EU rules already allow eligible carbon payments made abroad to reduce that bill. The summit’s joint statement announced closer cooperation, without a Canadian exemption or an agreed amount to deduct.
What a Canadian mill actually pays
In the jurisdictions covered by Canada’s federal Output-Based Pricing System, a plant owes compensation for emissions above its annual limit. It can earn surplus credits when it emits less than the limit, and sell or bank those credits.
The published carbon price therefore cannot be applied to every tonne the plant emits to work out its payment. Its emissions relative to the limit determine how much it has to cover, which is why two mills can face different bills even under the same pricing system.
Reducing emissions can also create credits to sell or keep, giving the mill an incentive to cut emissions even when its cash payment is small. That benefit is not automatically a payment its European customer can deduct from CBAM.
What comes off the European customer’s bill
For a deduction based on actual payments, EU rules use the carbon price effectively paid on the goods’ embedded emissions, after available rebates and compensation.
The Commission can also set annual default carbon prices for exporting countries from 2027. If an importer uses default emissions, any deduction for a foreign carbon price has to use that country-default route.
An exemption would remove covered Canadian goods from CBAM altogether. Canada remains outside the EU’s exempt-origin list, so importers still face a certificate calculation after any deduction.
