How to Calculate CBAM Embedded Emissions, With a Worked Example

CBAM embedded emissions are calculated at the producing installation, process by process, and then divided by the quantity of goods produced to give a figure in tonnes of CO2e per tonne of product. This guide follows the method in Implementing Regulation (EU) 2025/2547, which applies from 1 January 2026, and ends with a worked cement example. All numbers in the example are hypothetical and are there only to show the arithmetic.

What embedded emissions mean under CBAM

Embedded emissions are the greenhouse gas emissions released during the production of a good, including the emissions embedded in the precursors it contains. CBAM counts direct emissions for all goods and adds indirect emissions from electricity for cement and fertilisers. The result per tonne of product is called the specific embedded emissions (SEE).

Greenhouse gases covered are CO2 for all sectors, plus nitrous oxide (N2O) for nitric acid and some fertilisers, and perfluorocarbons (PFCs) for primary aluminium. These are converted to CO2e with the global warming potentials set in the rules.

Step 1. Define the installation and reporting period

The installation is the stationary technical unit where production takes place, together with directly associated activities. The reporting period is normally the calendar year, so 2026 data covers 1 January to 31 December 2026. Write down the installation address, the operator's legal name and the site boundary on a plan. The verifier will start from this.

Step 2. List production processes and match them to CN codes

Group the goods by aggregated goods category (for example clinker, cement, crude steel, iron or steel products, ammonia) and define one production process per category. Then match every product sold to the EU to its CN code and to the process that makes it. A product that is in Annex I but is never sold to the EU still needs to be handled if it is a precursor for a product that is.

Step 3. Choose a monitoring approach for each source stream

Each fuel or material that releases emissions is a source stream. For each one, choose a method:

• Calculation-based, standard method. Activity data (tonnes or Nm3 of fuel) times net calorific value times emission factor times oxidation factor, or for process emissions, the quantity of carbonate or raw meal times the emission factor times the conversion factor.
• Calculation-based, mass balance. Carbon in all inputs minus carbon in all outputs, converted to CO2. Common in iron and steel and in aluminium.
• Measurement-based. Continuous emission monitoring of concentration and flue gas flow. Required for N2O in nitric acid production.

Data quality depends on the meters and laboratory analyses behind each parameter. Invoices from fuel suppliers, calibrated weighbridges and analyses to recognised standards are what a verifier will look for.

Step 4. Calculate direct emissions and attribute them to processes

Sum the emissions from all source streams for the installation, then attribute them to the production processes. Emissions from a kiln go to clinker. Emissions from a hot gas generator drying cement additives go to cement grinding. Where a shared boiler supplies steam to several processes, the emissions follow the measurable heat delivered to each one.

Heat and waste gases crossing process or installation boundaries need special care. Imported measurable heat brings emissions into a process, exported heat takes them out, and waste gases from steel processes are treated with specific rules so the same carbon is not counted twice. Sector guidance documents 5a to 5f published by the Commission in August 2026 show how each sector handles these flows.

Step 5. Calculate indirect emissions

Indirect emissions equal the electricity consumed by each process, in MWh, times an emission factor in tCO2/MWh. The default is the grid emission factor published for the country of production. An actual factor is possible only where the installation has a direct technical connection to a generating plant or a power purchase agreement that meets the conditions in the rules. Sub-metering by process makes this step much easier to verify.

Step 6. Add precursors and calculate specific embedded emissions

For a simple good with no relevant precursors, SEE equals attributed emissions divided by activity level (the tonnes produced in the process). For a complex good, add the embedded emissions of precursors consumed.

SEE of good g = (attributed emissions of g + embedded emissions of input materials) / activity level of g

Embedded emissions of input materials = sum over each precursor of (tonnes consumed times SEE of that precursor)

Calculate direct and indirect SEE separately. Purchased precursors use the supplier's SEE, ideally verified. If supplier data is not available, the rules allow default values for precursors in defined cases, which usually raises the result.

Worked example for a cement plant

Illustrative figures only. The plant, quantities, emission factors and adjustment below are invented to show the method. They are not real data, not Commission default values and not EU benchmarks.

A hypothetical Turkish plant makes clinker in one kiln line and grinds it into Portland cement (CN 2523 29 00). It sells part of its cement to an EU importer. Data for the 2026 reporting year:

Clinker as the precursor

Direct SEE of clinker = 680,000 / 800,000 = 0.850 tCO2/t.

Indirect emissions of clinker = 72,000 MWh times 0.45 = 32,400 tCO2, so indirect SEE = 32,400 / 800,000 = 0.0405 tCO2/t.

Cement as the complex good

Direct SEE of cement = (10,000 + 750,000 times 0.850) / 1,000,000 = (10,000 + 637,500) / 1,000,000 = 0.6475 tCO2/t.

Indirect emissions of grinding = 40,000 times 0.45 = 18,000 tCO2. Indirect SEE of cement = (18,000 + 750,000 times 0.0405) / 1,000,000 = (18,000 + 30,375) / 1,000,000 = 0.0484 tCO2/t.

Total SEE of cement = 0.6475 + 0.0484 = 0.6959 tCO2e/t, reported as 0.696.

From the plant figure to the importer's certificates

The EU importer brought in 20,000 tonnes of this cement during 2026. Embedded emissions are 20,000 times 0.6475 = 12,950 tCO2e direct and 20,000 times 0.0484 = 968 tCO2e indirect, a total of 13,918 tCO2e.

Assume, purely for illustration, a free allocation adjustment of 0.58 tCO2e per tonne of cement for 2026, or 11,600 tCO2e for the shipment. Assume also that no carbon price was paid in the country of origin. The importer would surrender 13,918 minus 11,600 = 2,318 certificates. At the Q2 2026 price of EUR 75.28, that is about EUR 174,500.

Now assume the plant cannot supply verified data and the importer has to use a default value. Take a hypothetical default of 0.80 tCO2e/t before mark-up, which becomes 0.88 with the 10% mark-up for 2026. Embedded emissions would be 17,600 tCO2e and, using the same illustrative adjustment for simplicity, the importer would surrender 6,000 certificates, about EUR 451,700. In practice the adjustment depends on the production route and on whether actual or default values are declared, so treat this only as an indication of scale.

The gap between the two cases grows each year, as the mark-up rises to 30% from 2028 and the free allocation adjustment falls to zero by 2034.

Differences in other sectors

Step 7. Communicate the results and prepare for verification

Send each EU customer the SEE for the products it bought, split into direct and indirect, with the production route and the reporting period. The Commission's communication template for installations is the usual format. Keep the calculation workbook, the monitoring documentation and the evidence for every input together, because a verifier accredited under Delegated Regulation (EU) 2025/2551 will need to see them, and the first verification needs a site visit.

The common errors we find are emissions from shared utilities left unallocated, precursors bought from other plants left out, electricity measured at site level only, and CN codes that do not match the customs declaration. Each one either inflates the result or stops the verifier signing it off.

If you want us to run this for your plant, see our CBAM embedded emissions calculation service. For the legal background, read what is CBAM, and for the 2026 rule changes, CBAM definitive period changes. The legal text of the calculation rules is Implementing Regulation (EU) 2025/2547.