Take on a podcast episode from The CDR Policy Scoop, originally published Fri, 15 Ma. Listen: https://shows.acast.com/the-cdr-policy-scoop/episodes/cbam-and-international-credits-whats-just-changed-with-dan-m

TL;DR

  • Draft Carbon Border Adjustment Mechanism implementing act (published 13 May 2026) lets importers deduct carbon costs paid abroad — including, controversially, international credits. First-time clarity worth knowing.
  • Hard cap: international Article 6 credits can offset at most 10% of a CBAM liability. But most third-country ETSs already cap offset use at 5-10%, so binding impact is modest.
  • No quantitative cap on domestic credits used inside a third-country mandatory regime. Maleski can’t justify the asymmetry; nor can the hosts. Genuinely odd policy choice.
  • “Effective” carbon cost is net of free allocation — so Brazil, Turkey, Korea ETSs in ramp-up phase deliver near-zero deduction regardless of headline carbon price. Important reality check.
  • Anti-gaming safeguard is “independent persons” verifying paid prices. Maleski openly notes clients ask how to inflate intra-group credit prices. Thin guardrail.

The CDR Policy Scoop (episode link) reconvened Dan Maleski of Ruby Advisors one day after the Commission dropped its draft implementing act on Article 9 of CBAM — the provision letting importers deduct carbon costs already paid in the country of origin. Sebastian Manhart and Eve Tamme spend 30 minutes parsing what the act actually says about international credits, the 10% cap, and why the consultation (closing early June) still leaves big pieces missing.

The substantive claim worth your time: CBAM is being engineered as a gravitational pull toward EU-ETS-shaped compliance regimes in trading-partner jurisdictions, and the credit rules are the lever. International Article 6 credits get a 10% ceiling on CBAM liability offset; domestic credits inside a partner-country mandatory regime get no EU-imposed cap at all. Maleski’s read is that treasuries prefer ETS revenue over offset flows because they can recycle it into industrial decarbonisation — so the Commission is nudging partners toward auctioned allowances over credits, full stop. For CDR developers, the implication is concrete: durable removal credits embedded in a compliance regime (a Korean ETS pathway, a Turkish ETS methodology) have a clearer route to CBAM-relevant demand than voluntary-market-only credits. As Maleski put it, “if you can align yourself with a compliance demand… the long-term ability there to create revenue is going to increase significantly.”

The second thing worth flagging is the gaming risk. Because “effective cost of carbon” is what counts — not exchange price — and verification rests on accredited “independent persons,” a vertically integrated industrial could in principle sell itself credits at inflated prices through a sister project developer and present the receipts. Maleski says clients already ask how to “circumvent” CBAM. Whether the Commission’s KYC requirements on those verifiers are watertight is unknown; the act doesn’t say.

For broader context: this connects to the parallel debate over Article 6 credits inside the EU ETS itself (where the European Parliament’s ENVI committee has been notably hostile), and to ongoing questions about how durable removals integrate into compliance markets. Maleski’s firm Ruby Advisors tracks the CBAM file closely. Prior Scoop episodes with Maleski covered the December 2025 omnibus and the expansion package — useful prerequisites if you’re new to the file.

Useful for: CDR commercial leads watching compliance-market convergence, policy people tracking CBAM secondary legislation, and anyone selling into Korean, Turkish, or Chinese industrials exposed to EU carbon border costs.