How embedded emissions are calculated

The first question is whether the goods are simple or complex

Point 1 of Annex IV splits the goods in two. Simple goods are produced in a production process requiring exclusively input materials, which the annex calls precursors, and fuels having zero embedded emissions. Complex goods are goods other than simple goods. The split decides which equation applies, so it comes before anything else.

Simple goods take the emissions attributed to the production process

Point 2 divides the attributed emissions of the goods by the activity level, which is the quantity of the goods produced in the reporting period in that installation, and the result is the specific embedded emissions of the goods in carbon dioxide equivalent per tonne.

Attributed emissions are the part of the installation’s emissions during the reporting period caused by the production process that results in those goods, within the system boundaries that the implementing act adopted under Article 7(7) defines. They are the sum of the direct emissions from the production process and the indirect emissions from the production of the electricity consumed in it, each within those same boundaries.

Complex goods carry the emissions of their precursors as well

Point 3 adds the embedded emissions of the input materials consumed in the production process to the attributed emissions before dividing by the activity level. Only input materials listed in Annex I count, and only those originating in third countries and territories that point 1 of Annex III does not exempt.

The embedded emissions of the input materials are the mass of each one multiplied by its specific embedded emissions. For that figure the operator uses the emissions of the installation where the input material was produced, provided that the installation’s data can be adequately measured.

A default value is used where actual data is not

Point 4 requires default values to be determined from actual values, with literature values used only in the absence of actual data, and all of it resting on the best available data, which has to be reliable and publicly available. Default values are revised periodically through the implementing acts adopted under Article 7(7).

For goods other than electricity, point 4.1 sets the default value at the average emission intensity of each exporting country for the goods, increased by a proportionately designed mark-up that the implementing acts determine. Where reliable data for the exporting country cannot be applied to a type of goods, the default value rests instead on the average emission intensity of the ten exporting countries with the highest emission intensities for which reliable data can be applied.

For imported electricity, point 4.2 uses a specific default value set at the carbon dioxide emission factor in the country, group of countries or region, and where no specific value is available it uses an alternative default value set at the carbon dioxide emission factor in the Union. Where electricity transits other countries on its way into the Union, the default value is the one for the place where the electricity was produced.

Actual emissions are allowed only on conditions

Point 5 lets an authorised CBAM declarant use actual embedded emissions instead of default values for imported electricity, and it sets five criteria that all have to be met together. The electricity has to be covered by a power purchase agreement with a producer in a third country. The producing installation has to be directly connected to the Union transmission system, or the absence of physical network congestion between it and that system has to be demonstrable at the time of export. The installation must not emit more than 550 grammes of carbon dioxide of fossil fuel origin per kilowatt-hour. The electricity has to be firmly nominated to the allocated interconnection capacity by every responsible transmission system operator involved, with the nomination and the production referring to the same period, which may not be longer than one hour. An accredited verifier has to certify that those criteria are met, on at least monthly interim reports.

Point 6 lets a declarant use actual emissions for indirect emissions where a direct technical link between the installation and the electricity generation source can be demonstrated, or where the operator has concluded a power purchase agreement for an equivalent amount of electricity.

Default values can be adapted to a region

Point 7 allows default values to be adapted to particular areas and regions within third countries where specific characteristics prevail in terms of objective emission factors, and it allows a declarant to use a region specific adaptation that reliable data shows to be lower than the value the Commission determined.

What the implementing act fixes

Implementing Regulation (EU) 2025/2547 settles two things the annex leaves open, and both of them change what a producer has to count.

Article 3 puts the system boundaries per aggregated goods category, in accordance with Annex I to that regulation, and it makes the boundaries cover direct emissions, indirect emissions for goods not listed in Annex II to the parent regulation, and the embedded emissions of any precursor.

Article 4 fixes the functional unit, which is the unit the emissions are measured against. The general rule is the quantity of goods produced in tonnes under the same CN code, and four cases depart from it.

A producer who measures in tonnes of product where the rule asks for kilograms of nitrogen, or for tonnes of clinker, reports the wrong figure, and the error survives every later step of the calculation.

Article 4 also closes a route around the rules. An installation may be split, so that production routes otherwise belonging to one production process are carried out separately, only where the operator demonstrates valid commercial reasons related to its economic activity, and a reason is valid where circumventing the regulation is not its main purpose or one of its main purposes.

Which period the figures belong to

Article 7 of the implementing regulation settles the period a figure describes. For a good imported during 2026 the reporting period is the year 2026. For a good imported in another year the period is by default the calendar year of import, and where there is sufficient evidence to identify the actual time of production the period is the one during which the good was produced. For electricity imported into the customs territory of the Union the period is the year of import.

A precursor follows its own rule. Article 13 makes its default reporting period the year of production of the complex good, and where the operator gives the verifier sufficient evidence of the actual time of production, the period is the one during which the precursor was produced.

How precursors are counted when they come from more than one place

Article 14 handles the ordinary case of a plant buying the same precursor from several suppliers or across several periods. Where precursors under one CN code come from different reporting periods, or from several installations, the embedded emissions of the complex goods take the weighted average for that CN code.

Where the operator gives the verifier sufficient evidence that a particular production process used precursors from a single installation, or from a subset of installations, the figure rests on that installation or that subset instead. Keeping that evidence is therefore worth money to a producer whose best supplier is cleaner than its average.

Actual and default values can be mixed

Article 15 allows the specific embedded emissions of complex goods to be calculated by determining actual emissions for the production processes inside the installation producing them, and default values for one or more of their precursors. A producer who can measure its own process but cannot obtain data from a supplier is not forced onto default values for the whole good.

Article 11 sets where those default values come from, which is Annex IV to the parent regulation, and Article 12 allows alternative default values where the conditions in the implementing regulation’s own annexes are met. The Commission conducts a review of the default values by December 2027 at the latest.