How to calculate CBAM embedded emissions: a step-by-step guide
To calculate CBAM embedded emissions, you attribute an installation's monitored emissions to each production process, add the embedded emissions of the precursors that process consumed, and divide by the tonnes of good produced. The result is the specific embedded emissions (SEE) in tonnes of CO2e per tonne of product, calculated for the calendar year of production. This guide walks through the steps with an illustrative steel example.
The CBAM calculation in one formula
The Commission's methodology for the definitive period (Implementing Regulation (EU) 2025/2547, with guidance for non-EU operators published in August 2026) builds everything on one relationship for each production process:
SEE of the good = (attributed emissions of the process + embedded emissions of precursors consumed) ÷ activity level
- Attributed emissions are the emissions of the installation that belong to that production process: fuel combustion, process emissions, and adjustments for heat, waste gases and any electricity produced.
- Precursor emissions are the tonnes of each relevant precursor consumed multiplied by that precursor's own SEE.
- Activity level is the tonnes of good produced by the process in the reporting period.
For a simple good, with no relevant precursors, the precursor term is zero. For a complex good, the precursor term is often the largest part of the result. Direct and indirect emissions are calculated separately with the same structure.
For what this means commercially and where CBAM sits in 2026, see the CBAM definitive period overview.
Step-by-step: how to calculate CBAM embedded emissions
Step 1: Define the installation and production processes
Draw the boundary of the installation and split it into production processes, each linked to an aggregated goods category (for example crude steel, iron or steel products, unwrought aluminium). Processes that share the same physical steps can be grouped, and installation maintenance activities are outside the boundary.
Step 2: Write the monitoring plan
The definitive period requires a monitoring plan, in English, using the Commission's template. It sets out each source stream and emission source, the monitoring approach (calculation-based or measurement-based), the data sources, and how emissions are attributed to processes. Monitoring data must be kept for six years.
Step 3: Monitor installation emissions for the calendar year
The reporting period is now the calendar year of production, not a financial year. Under the calculation-based approach, emissions from each source stream are activity data (fuel or material quantity) × emission factor × oxidation or conversion factor. Mass balance is used where carbon flows through inputs and outputs, as in integrated steelworks. Measurement-based approaches use continuous emissions monitoring.
Step 4: Attribute emissions to each production process
Allocate the installation's direct emissions to processes. Add emissions of measurable heat imported or consumed, deduct heat exported to other processes, and handle waste gases and on-site electricity generation as the methodology prescribes. Nothing should be counted twice or left out.
Step 5: Identify CBAM precursors and their values
List every relevant precursor each process consumed, with tonnes and source. Examples for steel are pig iron, direct reduced iron, ferro-alloys and crude steel; for aluminium, unwrought aluminium. Precursors made inside the same installation carry the SEE you calculate for them. Purchased precursors need a value from the supplier:
- an actual value, only if backed by an accredited verifier's report covering the period the precursor was produced; or
- the Commission default value for that precursor and country, including the mark-up.
Where a precursor comes from several suppliers, use a weighted average unless you can show which precursor went into which process. EU-produced precursors are counted at zero but their quantities are still reported.
Step 6: Calculate SEE per good
Apply the formula process by process, upstream first, so each precursor's SEE is known before it is used downstream. Report direct and indirect results separately.
Step 7: Direct and indirect emissions
Indirect emissions are the emissions from producing the electricity a process consumes. In the definitive period they count towards the certificate obligation for cement and fertilisers, but not for iron and steel, aluminium or hydrogen (sintered ore precursors in steel are an exception). Where indirect emissions count, use the default grid factor unless you can evidence an actual factor, for example through a direct technical link or a qualifying power purchase agreement.
Step 8: Verify and share
Actual values must be verified by an accredited verifier before an importer can use them. Then share the result with customers through the operator emissions report summary.
An illustrative worked example: hot-rolled coil
All numbers below are illustrative, chosen to show the arithmetic. They are not benchmarks, defaults or real installation data.
An installation runs three processes in calendar year 2026: direct reduced iron (DRI), crude steel in an electric arc furnace (EAF), and hot rolling. It also buys pig iron from another producer, with a verified actual value.
| Process (illustrative) | Attributed direct emissions (tCO2e) | Precursors consumed | Output (t) | SEE (tCO2e/t) |
|---|---|---|---|---|
| DRI | 48,000 | None | 40,000 | 48,000 ÷ 40,000 = 1.20 |
| EAF crude steel (slabs) | 40,000 | 40,000 t DRI × 1.20 = 48,000; 30,000 t pig iron × 1.90 = 57,000 | 100,000 | (40,000 + 48,000 + 57,000) ÷ 100,000 = 1.45 |
| Hot rolling (coil) | 9,500 | 97,000 t slabs × 1.45 = 140,650 | 95,000 | (9,500 + 140,650) ÷ 95,000 ≈ 1.58 |
Scrap fed to the EAF is not a CBAM precursor and adds no embedded emissions of its own; its handling still has to follow the methodology. Because coil is an iron and steel good, the EAF's large electricity use does not enter the certificate calculation, though the operator should still monitor it if customers or other regimes ask for it.
If an EU customer imported 1,000 t of this coil, the embedded emissions would be about 1,580 tCO2e (illustrative). The importer then applies the free allocation adjustment and any eligible carbon price paid before working out the certificates to surrender.
Common mistakes in CBAM calculations
- Using financial-year data instead of the calendar year.
- Double counting precursors produced inside the same installation.
- Applying a supplier's precursor value without a verification report covering the right period.
- Counting indirect emissions for steel or aluminium in the certificate figure.
- Allocating emissions to products by revenue or by gut feel, rather than by process and activity level.
- No evidence behind activity data, which fails at verification.
How EKOTRACE helps
EKOTRACE models installations, production processes and precursors, and calculates specific embedded emissions per good in the correct order, upstream to downstream. Precursor values are tagged as actual or default, emission factors are versioned, and each figure carries attached evidence and a maker-checker approval, so a verifier can follow the calculation from meter to SEE. Importers can collect the results from suppliers through the supplier portal.
See our CBAM compliance page, compare default values with actual data, or read our guide for Indian steel and aluminium exporters.
Frequently asked questions
What are specific embedded emissions under CBAM?
Specific embedded emissions are the greenhouse gas emissions released in producing one tonne of a CBAM good, including the emissions of relevant precursors. They are expressed in tCO2e per tonne and calculated separately for direct and indirect emissions.
What is a precursor in CBAM?
A precursor is a CBAM good used as an input to make another CBAM good, such as pig iron in crude steel or clinker in cement. Its own embedded emissions are added to those of the product it goes into.
Which period should CBAM embedded emissions cover?
In the definitive period, the reporting period is the calendar year of production. Imported goods are presumed to have been produced in the year of import unless there is evidence otherwise.
Do indirect emissions count for CBAM steel?
Not towards the certificate obligation. In the definitive period indirect emissions count for cement and fertilisers, while iron and steel, aluminium and hydrogen count direct emissions only, with a narrow exception for sintered ore precursors.