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You do not trade with the EU directly. You have never read an EU regulation. And yet an email has arrived from your buyer asking for "embedded emissions data per tonne" with a deadline.
Here is why, and what they actually need.
How the obligation reaches you
The EU's Carbon Border Adjustment Mechanism places reporting obligations on importers of certain carbon-intensive goods. Those importers cannot report what they do not know - so the requirement travels back down the chain to whoever made the product.
That is you. The regulation never mentions your company, but your customer's compliance depends on your data.
Which goods are covered
- Iron and steel
- Aluminium
- Cement
- Fertilisers
- Electricity and hydrogen
Coverage is defined by CN code rather than by broad category, so two products that look similar can be treated differently. Scope and timelines continue to evolve, so the position for a specific product should be confirmed against the current regulation and with your importer.
The part that trips everyone up
CBAM does not want your company's carbon footprint. It wants emissions embedded in a specific quantity of a specific product. That means allocating site-level emissions down to one production route for one good - which is a different exercise from corporate GHG accounting, and usually a much harder one.
A steel plant might know its total annual emissions precisely and still be unable to say what is embedded in one tonne of a particular product grade, because nobody has ever needed to allocate it that way.
Direct and indirect
Reporting distinguishes direct emissions from the production process itself, and indirect emissions from the electricity consumed. For Indian manufacturers the indirect component is often significant, because grid emission intensity is higher than in much of the EU. That is a commercial fact worth understanding early rather than discovering at submission.
What to prepare
- Confirm scope by CN code with your importer - not by product name
- Map the production route for the goods concerned, including precursor materials
- Define system boundaries and write them down
- Allocate emissions to the product, with a defensible allocation basis
- Document the methodology - your customer's auditor will read it, not just the number
- Agree the data format your importer needs before you start producing it
Start from what you should have anyway
CBAM is far easier where a corporate GHG inventory and a product carbon footprint already exist. If neither does, that is where to begin - and the same work then serves BRSR, EcoVadis and every customer questionnaire that follows.
One thing worth saying to management: exporters who can produce credible embedded emissions data become easier to buy from than competitors who cannot. Right now that is a commercial advantage. Within a few years it will simply be the cost of staying in the market.
Frequently Asked Questions
Does CBAM apply to my company if I only sell to an Indian trader?
The regulatory obligation sits with the EU importer, not with you. In practice the data requirement flows back through the chain to the manufacturer, so it can reach you through a trader as well as through a direct EU customer. Confirm with your buyer whether the goods ultimately enter the EU.
What are embedded emissions?
Emissions attributable to a specific quantity of a specific product, covering the production process and, where required, the electricity consumed. It is not the same as a company's total emissions, which is why corporate GHG data alone is usually insufficient.
Which sectors does CBAM cover?
Iron and steel, aluminium, cement, fertilisers, electricity and hydrogen, defined by CN code rather than broad product description. Scope has been revised since introduction, so the current regulation should be checked for a specific product.
Do we need a full product carbon footprint for CBAM?
Not identical to a PCF, because CBAM uses its own methodology and boundaries. But the underlying work overlaps substantially, and companies that already have a product carbon footprint or a GHG inventory find CBAM reporting considerably faster to produce.
What happens if we cannot provide the data?
The regulatory consequence falls on the importer, who may have to rely on default values. Commercially, the effect lands on the supplier - buyers increasingly prefer suppliers who can provide verified data, and default values are generally less favourable than actual measured figures.
Need expert help with this?
We calculate embedded emissions by production route and document the method so it holds up to your customer’s review.
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