{"id":2938,"date":"2025-07-17T08:55:31","date_gmt":"2025-07-17T08:55:31","guid":{"rendered":"https:\/\/climease.com\/?p=2938"},"modified":"2025-07-24T06:18:57","modified_gmt":"2025-07-24T06:18:57","slug":"cbam-emission-calculation-explained-supplier","status":"publish","type":"post","link":"https:\/\/climease.com\/en\/cbam-emission-calculation-explained-supplier\/","title":{"rendered":"CBAM Emission Calculation Explained \u2013 A Supplier\u2019s must read"},"content":{"rendered":"\r\n<h2 class=\"wp-block-heading\">What is CBAM? \u2013 In short<\/h2>\r\n\r\n\r\n\r\n<p>Between October 1st, 2023, and June 30th, 2024, EU importers of the before-mentioned products were required to track their imported goods using CN codes and compile <a href=\"https:\/\/climease.com\/comprehensive-guide-to-cbam-carbon-border-adjustment-mechanism\/\">CBAM<\/a> reports, mapping each product to a default emission factor provided by the EU. This meant no action from suppliers was required.<\/p>\r\n\r\n\r\n\r\n<p>Starting July 1st, 2024, however, CBAM reports based on EU default values will no longer be accepted. International manufacturers must calculate their CBAM emissions using locally approved standards for Q2 and Q3 2024. After that, they will have to smoothly transition to the CBAM-specific EU method, mandatory from 2025 onwards.<\/p>\r\n\r\n\r\n\r\n<p>The overall macroeconomic objective of CBAM is to fill the emission data gap of carbon-intensive imports flowing into the EU. This allows the EU to kickstart a fair pricing of emissions starting from 2026, covering both local EU production and imports equally protecting the EU local industry and eliminating untracked carbon leakage.<\/p>\r\n\r\n\r\n\r\n<h2 class=\"wp-block-heading\"><br \/>Necessary data requirements for CBAM emission calculation<\/h2>\r\n\r\n\r\n\r\n<p>Manufacturers must collect the following data, necessary to calculate and report their CBAM emissions before the end of October 2024:<\/p>\r\n\r\n\r\n\r\n<ol class=\"wp-block-list\">\r\n<li><strong>Fuel and gas <\/strong>consumption (in tons) of their factory or, better, separately for each process.\u00a0<\/li>\r\n\r\n\r\n\r\n<li><strong>Other input materials<\/strong> (in tons, e.g., coke, scrap, mineral elements) used in each production process.\u00a0<\/li>\r\n\r\n\r\n\r\n<li><strong>Electricity <\/strong>consumption (in kWh) related to the production of the goods, separately for each production process and excluding office consumption, if possible.<\/li>\r\n<\/ol>\r\n\r\n\r\n\r\n<p>&nbsp;<\/p>\r\n\r\n\r\n\r\n<figure class=\"wp-block-image size-large\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1024\" height=\"618\" class=\"wp-image-2941\" title=\"Abstract map illustration with cartography, world map ,generative AI\" src=\"https:\/\/climease.com\/wp-content\/uploads\/2024\/07\/Image-1-1024x618.png\" alt=\"\" srcset=\"https:\/\/climease.com\/wp-content\/uploads\/2024\/07\/Image-1-1024x618.png 1024w, https:\/\/climease.com\/wp-content\/uploads\/2024\/07\/Image-1-300x181.png 300w, https:\/\/climease.com\/wp-content\/uploads\/2024\/07\/Image-1-768x463.png 768w, https:\/\/climease.com\/wp-content\/uploads\/2024\/07\/Image-1-1536x927.png 1536w, https:\/\/climease.com\/wp-content\/uploads\/2024\/07\/Image-1-2048x1236.png 2048w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\r\n\r\n\r\n\r\n<p>Once this data is available, the following production parameters will need to be retrieved too:<\/p>\r\n\r\n\r\n\r\n<ul class=\"wp-block-list\">\r\n<li>Total production output of the factory or each process, in tons per year or quarter.\u00a0<\/li>\r\n\r\n\r\n\r\n<li>The single net weight and CN code of each product sold to the EU.\u00a0<\/li>\r\n\r\n\r\n\r\n<li>Possible deductions, if available: electricity from office use.<\/li>\r\n<\/ul>\r\n\r\n\r\n\r\n<p><br \/>The reference period of all mentioned datapoints can be either yearly or quarterly, as both options are allowed by the CBAM regulation. Quarterly reporting is the preferred option in the short term as it stimulates ongoing and trusted communication between importers and exporters, thereby decreasing the risk of fines.\u00a0<\/p>\r\n\r\n\r\n\r\n<ol class=\"wp-block-list\">\r\n<li><strong>Best-in-class<\/strong>: prepare Q2\/2024 data now and repeat the procedure at the beginning of October with Q3 data and then submit the data to EU clients.\u00a0<\/li>\r\n\r\n\r\n\r\n<li>Second-best: calculate emissions with yearly 2023 data.<\/li>\r\n<\/ol>\r\n\r\n\r\n\r\n<p><br \/><strong>Calculating CBAM emissions<\/strong>\u00a0<\/p>\r\n\r\n\r\n\r\n<p>Before calculating CBAM emissions, an important distinction must be made. CBAM emissions can be calculated by consolidating all processes into one or for each process separately, depending on whether intermediate goods are also exported to the EU.<\/p>\r\n\r\n\r\n\r\n<p><strong>Bubble approach<\/strong>: if, for example, your factory is composed of 2 processes, and 100% of the output of process 1 flows into process 2, then those two processes can be consolidated and considered as one large process. This means quarterly or yearly fuel, electricity, and other input material consumption of both processes can be multiplied by their specific emission factors, retrievable on the <a href=\"https:\/\/taxation-customs.ec.europa.eu\/carbon-border-adjustment-mechanism_en#guidance\" target=\"_blank\" rel=\"noreferrer noopener\">Guidance document on CBAM implementation for installation operators outside the EU.<\/a>\u00a0<\/p>\r\n\r\n\r\n\r\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"471\" class=\"wp-image-2942\" src=\"https:\/\/climease.com\/wp-content\/uploads\/2024\/07\/Image-2-1024x471.png\" alt=\"\" srcset=\"https:\/\/climease.com\/wp-content\/uploads\/2024\/07\/Image-2-1024x471.png 1024w, https:\/\/climease.com\/wp-content\/uploads\/2024\/07\/Image-2-300x138.png 300w, https:\/\/climease.com\/wp-content\/uploads\/2024\/07\/Image-2-768x353.png 768w, https:\/\/climease.com\/wp-content\/uploads\/2024\/07\/Image-2-1536x706.png 1536w, https:\/\/climease.com\/wp-content\/uploads\/2024\/07\/Image-2-2048x941.png 2048w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\r\n\r\n\r\n\r\n<p><strong>Process-by-process<\/strong>: if, for instance, your factory exports to the EU semi-finished products in-between the two\u00a0example processes, meaning less than 100% of the output of process 1 flows into process 2, then two separate calculations need to be done to ensure that each exported product\u2019s carbon footprint\u00a0includes the correct consumption figures of fuels, electricity, and other input materials.\u00a0<\/p>\r\n\r\n\r\n\r\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"471\" class=\"wp-image-2943\" src=\"https:\/\/climease.com\/wp-content\/uploads\/2024\/07\/Image-3-1024x471.png\" alt=\"\" srcset=\"https:\/\/climease.com\/wp-content\/uploads\/2024\/07\/Image-3-1024x471.png 1024w, https:\/\/climease.com\/wp-content\/uploads\/2024\/07\/Image-3-300x138.png 300w, https:\/\/climease.com\/wp-content\/uploads\/2024\/07\/Image-3-768x353.png 768w, https:\/\/climease.com\/wp-content\/uploads\/2024\/07\/Image-3-1536x706.png 1536w, https:\/\/climease.com\/wp-content\/uploads\/2024\/07\/Image-3-2048x941.png 2048w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\r\n\r\n\r\n\r\n<p><strong>Tier 2, 3, etc. Suppliers must report on CBAM too! \u2013 Starting from Q3\/2024<\/strong>\u00a0<\/p>\r\n\r\n\r\n\r\n<p>Starting from October 31<sup>st<\/sup>, importers will need to report real values from suppliers. More precisely, at least 80% of the product emissions (or product carbon footprints, PCF) must be calculated with real factory values, leaving only room for 20% of it being based on default values (EU-based or from other scientific databases). \u00a0<\/p>\r\n\r\n\r\n\r\n<p>In most cases, but especially in the iron, steel, and aluminium industry, tier 1 suppliers will almost never reach the needed 80% threshold alone, as most emissions happen during the production of the raw material itself, thus,\u00a0in the factories of tier 2 suppliers or beyond. \u00a0<\/p>\r\n\r\n\r\n\r\n<p>If upstream suppliers do not track real CBAM emissions, tier 1 suppliers are forced to use EU default values for their raw materials, meaning quite certainly they will not reach the target of 80% of the CBAM product carbon footprint (PCF) being based on real values. This almost certainly leads to liability issues and therefore increased chances of fines in the range of 10 to 50 EUR per ton of greenhouse gas emissions. \u00a0<\/p>\r\n\r\n\r\n\r\n<p><strong>Benefits of reporting on CBAM \u2013 ASAP<\/strong>\u00a0<\/p>\r\n\r\n\r\n\r\n<p>Regular and fully compliant CBAM emission reporting based on real factory data benefits both EU importers and international manufacturers.\u00a0<\/p>\r\n\r\n\r\n\r\n<p>Firstly, understanding the emission calculation process allows for rapid quarterly measurements <strong>without needing the EU\u2019s complex Excel template<\/strong>, thereby allowing for smooth and 100% regulatory compliance, meaning no fines and a healthy EU client relationship.\u00a0<\/p>\r\n\r\n\r\n\r\n<p>Secondly, as transparency and reliability across the supply chain are\u00a0enhanced by providing actual carbon footprints, <strong>d<\/strong><strong>ecarbonization strategies, <\/strong>and production modifications can be evaluated and plans communicated to EU clients, thereby increasing ESG scores and general quality perception. \u00a0<\/p>\r\n\r\n\r\n\r\n<p>Carbon emissions also often correlate with increased costs and price fluctuations, especially when linked to natural gas or electricity. Adopting renewable energy where possible can lead to long-term <strong>cost reductions<\/strong> as well as better PCF performance and lower CBAM-tax exposure.\u00a0<\/p>\r\n\r\n\r\n\r\n<p>Finally, disclosing real supplier emissions ensures that the 2026 CBAM certificates price is almost certainly lower\u00a0than if it was applied on EU default values, which are taken from the average carbon intensity of the 20% of most carbon-intensive EU manufacturing facilities. On top of that, default values are expected to further increase, to stimulate even more the use of real PCFs. \u00a0<\/p>\r\n\r\n\r\n\r\n<h2 class=\"wp-block-heading\"><br \/>Conclusion<\/h2>\r\n\r\n\r\n\r\n<p>In conclusion, international manufacturers must start reporting CBAM emissions whether they believe in its benefits or not. Suppliers should promptly gather the necessary data\u00a0to avoid fines and to keep a trustworthy relationship with EU clients. \u00a0<\/p>\r\n\r\n\r\n\r\n<p>CBAM emission reporting takes less time, if handled under the guidance of experts, compared to when using the overcomplex EU Excel communication template. \u00a0<\/p>\r\n\r\n\r\n\r\n<p>Therefore, you are welcome to contact us and book a <strong>30-min discovery call <\/strong>and explore our easy-to-use CBAM software. \u00a0<\/p>\r\n\r\n\r\n\r\n<p><strong>A supplier\u2019s Q3\/2024 report is part of a Free trial. <\/strong><\/p>\r\n","protected":false},"excerpt":{"rendered":"<p>Key points:<\/p>\n<p>&#8211; Dual product streams refer to manufacturers producing low-carbon goods for regulated markets like the EU, while maintaining higher-emission production for markets without carbon pricing. This practice can slow global green technology adoption and disincentivize investors from committing to clean technologies due to market uncertainty and inconsistent carbon pricing signals. <\/p>\n<p>&#8211; Dual product streams delay global emissions reductions, heightening the risk of severe climate change impacts, including unpredictable weather events, as the global response to climate goals remains fragmented. <\/p>\n<p>&#8211; Dual product streams may lead to decreased trade flows to the EU as manufacturers shift focus to less regulated markets. As CBAM expands, exporters like China could adapt by maintaining dual production lines to cater to the EU while prioritizing other markets. <\/p>\n<p>&#8211; A coordinated global carbon pricing system could reduce trade tensions and mitigate the risks of dual product streams. Integration of Emission Trading Systems (ETS) between the EU and other nations could streamline carbon pricing and investment, potentially eliminating market exclusions and fostering global decarbonization.  <\/p>\n<p>If you have any questions, feel free to text us on contact@climease.com<\/p>\n","protected":false},"author":19,"featured_media":6309,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","inline_featured_image":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2938","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-e-learning"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.9 (Yoast SEO v26.8) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>CBAM Emission Calculation Explained \u2013 A Supplier\u2019s must read | Climease<\/title>\n<meta name=\"description\" content=\"Learn about CBAM Emission Calculation Explained \u2013 A Supplier\u2019s must read. 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