On 31 July 2026, the European Commission released Commission Implementing Regulation (EU) 2026/1740. It entered into force on 3 August and applies retroactively from 1 January 2026.

The regulation replaces Annex I and Annex IV. New annexes contain the country and product default values for imported CBAM goods and the values used for precursors when their country of production is unknown.

The Commission issued the replacement after identifying omissions, transcription errors, incorrect production-route indicators and classifications that were too broad to select the intended default. Some errors could prevent the free-allocation adjustment from being calculated correctly. A full replacement was therefore clearer than a series of individual amendments across the annexes.

Any 2026 estimate based on the original annexes now uses a superseded legal dataset. The correction can change the emissions value selected for an import, the production route used in the free-allocation adjustment and, for selected cement and clay products, the customs code needed to identify the correct default.

We are updating PATCHWORK to reflect the corrected legal dataset. Book a demo to see how the revised values affect your CBAM import costs.

The Registry will calculate annual marked-up defaults

The previous annex contained separate columns for 2026, 2027 and 2028 onwards. The corrected annex retains the direct, indirect and total-emissions values but removes the precomputed annual columns. The CBAM Registry will calculate the effective default from the total-emissions figure:

effective annual default = total-emissions default x (1 + annual mark-up)

The percentages have not changed. Cement, iron and steel, aluminium and hydrogen carry a 10% mark-up in 2026, 20% in 2027 and 30% from 2028. Fertilisers retain a 1% mark-up. The legal text specifies that direct and indirect columns are informational for this calculation; the mark-up is applied to total emissions.

Calculating from one total-emissions value avoids discrepancies created when separate components or annual values are rounded independently. A calculation engine should begin with the corrected total base value and apply the mark-up for the relevant sector and year. Each calculation should retain the origin, product code and production route used because they determine the applicable row and benchmark.

MATERIA's row-level comparison found 12,823 rows in the corrected table. Among 12,814 matched records, 837 change at least one direct, indirect or total emissions value. Many move by only 0.01 tCO2e per tonne, but several corrections are large enough to change sourcing comparisons and 2026 provisions.

Production routes can change the benchmark deduction

Regulation 2026/1740 says that missing or incorrect route indicators prevented the free-allocation adjustment from being calculated correctly. The route codes connect the default-emissions row to the right CBAM benchmark. Steel mappings can distinguish blast furnace/basic oxygen furnace, direct reduced iron/electric arc furnace and scrap/electric arc furnace production. Aluminium mappings distinguish primary and secondary production.

The corrected regulation also resolves a hierarchy problem. Some default values sit at four- or six-digit Harmonised System level and carry a route indicator, while a specific eight-digit Combined Nomenclature (CN) product inside that group has a route-independent benchmark. In that case, the CN8 benchmark must remain route-independent. Software that automatically inherited the broader route could select the wrong benchmark and produce an incorrect free-allocation deduction.

An unchanged total-emissions value can therefore lead to a different certificate obligation after the route correction. The emissions default establishes the gross embedded emissions; the benchmark mapping determines part of the deduction that reflects continuing free allocation under the EU Emissions Trading System (EU ETS).

Why the regulation uses ten-digit TARIC codes

The Harmonised System classifies products internationally at six digits. The European Union extends it through the eight-digit Combined Nomenclature. TARIC adds two EU digits and links the customs declaration to measures including tariff preferences, tariff quotas, anti-dumping duties and safeguards.

The new regulation uses TARIC only where CN8 is too broad for the CBAM distinction. White and grey clinker share CN 2523 10 00 but have different defaults, so the corrected annex uses 2523 10 00 10 for white clinker and 2523 10 00 90 for other clinker, including grey. White and other hydraulic cement are separated under 2523 90 00 10 and 2523 90 00 90. Calcined kaolinic clay moves from the broad CN 2507 00 80 to TARIC 2507 00 80 80, aligning the table with the amended CBAM scope.

The ten-digit references narrow the legal row to the product already intended to be covered; they do not extend CBAM to every product under the broader CN heading. Regulation 2026/1384 remains the legal basis for the EU steel measure, with annual tariff quotas of 18,345,922 tonnes across 26 categories and a 50% out-of-quota duty when the relevant quota is unavailable or exhausted.

TARIC is the common customs layer through which those measures are applied. A steel import can be covered by CBAM and the steel quota regime at the same time: its classification, origin and quota position determine the trade measure, while its embedded emissions and production route determine the CBAM calculation. Regulation 2026/1740 changes the second calculation and selected cement/clay classifications; it does not change steel quota volumes or duty rates.

Recalculating 2026 exposure

The full replacement of Annexes I and IV calls for a complete data reload with an effective date of 1 January 2026. Applying only the headline numerical corrections would miss the deleted annual columns, corrected route indicators, TARIC subdivisions and country-name standardisation.

Every 2026 transaction calculated with defaults should be rerun against the corrected annex. Cement and clay declarations need the affected ten-digit TARIC code, while route inheritance should be retested wherever a default sits at HS4 or HS6 level. Systems that join countries by name should move to stable customs or ISO identifiers because several names were aligned with the EU trade-statistics nomenclature.

The retroactive effect will reach pricing, carbon-cost accruals and contractual true-ups before the first surrender deadline. Certificate sales for 2026 emissions begin in February 2027, so importers still have time to correct calculations before purchasing certificates, but supplier comparisons and margin estimates may already contain the superseded values.

The Commission is due to review the definitive default values by December 2027 at the latest. From 3 August 2026, the replacement annexes are the legal source for every default-based calculation covering imports made since 1 January.