CBAM for steel: how to calculate embedded emissions
How are CBAM embedded emissions calculated for steel goods? Covered CN codes, the 2026 direct-emissions-only rule, EAF and rolling mill boundaries, precursor data, default value mark-ups and the parameters importers need.
How are CBAM embedded emissions calculated for steel? In short: you add up the direct emissions of the relevant production process at your installation (fuels, process emissions, electrodes, measurable heat), add the embedded emissions of the precursors you consume (crude steel, billets, wire rod, pig iron, DRI, ferro-alloys) and divide the total by the tonnes of product made. The result, in tonnes of CO₂e per tonne of product, is passed to the importer in the EU. Since the definitive period began in 2026, indirect emissions from electricity are no longer counted for most iron and steel goods, which is the biggest change from the transitional period.
This guide is based on the European Commission's sector guidance for the definitive period (Guidance Document 5D on iron and steel, 14 August 2026), the Methodology Act (Implementing Regulation (EU) 2025/2547) and the Default Values Act (Implementing Regulation (EU) 2025/2621). It is written for steel producers and processors outside the EU, particularly in Turkey, and for EU buyers who need to understand what their suppliers will send them. For the wider picture, start with our CBAM overview.
Which steel goods are covered by CBAM?
CBAM groups iron and steel goods into aggregated goods categories, each with its own system boundary and possible precursors:
| Category | Main CN codes | Examples |
|---|---|---|
| Sintered ore | 2601 12 00 | Pellets, sinter |
| Pig iron | 7201 (and part of 7205) | Blast furnace output |
| Ferro-alloys | 7202 1, 7202 4, 7202 6 | FeMn, FeCr, FeNi |
| DRI | 7203 | Sponge iron, HBI |
| Crude steel | 7206, 7207, 7218, 7224 | Billets, slabs, blooms |
| Iron or steel products | 7205, 7208–7217, 7219–7223, 7225–7229, 7301–7311, 7318, 7326 | Flat products, wire rod, rebar, sections, tubes, wire, screws and nuts, structures |
Ferrous scrap (7204) and some ferro-alloys such as ferro-silicon are outside the scope. Most steel shipped from Turkey to the EU, including rebar, wire rod, sheet, pipes and fasteners, falls into the last category, iron or steel products.
The 2026 change: direct emissions only
During the transitional period (2023–2025), steel producers reported direct and indirect emissions separately. In the definitive period, for iron and steel goods listed in Annex II to the CBAM Regulation ("goods for which only direct emissions are taken into account"), embedded emissions cover direct emissions only. Emissions from grid or self-generated electricity are not added.
- Exception: sintered ore (2601 12 00) is not listed in Annex II, so its indirect emissions are included.
- Precursor effect: if your steel good uses a precursor whose indirect emissions count (for example sintered ore), those indirect emissions carry over into the final good.
- Electricity data are still needed: MWh consumed, source and emission factor should still be recorded for precursors and energy balance purposes.
This matters most for electric arc furnace (EAF) producers. Electricity is the main energy input of the route, yet it no longer appears in CBAM embedded emissions for these goods.
The core formula: simple and complex goods
A good made only from inputs with zero embedded emissions (ore, limestone, post-consumer scrap) is a simple good. A good that consumes a CBAM precursor is a complex good. The specific embedded emissions (SEE) of a complex good are:
SEE = (direct emissions attributed to the process + Σ precursor mass × precursor SEE) ÷ quantity of goods produced
A hypothetical example (figures only illustrate the method and are not real default values): a wire drawing and annealing plant buys 1,000 t of wire rod a year with verified embedded emissions of 2.00 t CO₂e/t. Natural gas burned in the annealing furnaces emits 150 t CO₂, and the plant produces 950 t of wire.
| Item | Value |
|---|---|
| Direct emissions of the process | 150 t CO₂e |
| Precursor emissions (1,000 t × 2.00) | 2,000 t CO₂e |
| Total | 2,150 t CO₂e |
| Output | 950 t of wire |
| SEE | 2,150 ÷ 950 = 2.26 t CO₂e/t |
Note that precursor mass is the mass entering the process. If 1,000 t go in and 950 t come out because of cutting losses, the emissions of the lost 50 t are carried by the remaining product. The Commission's screws-and-nuts example states this directly: if 20% of the mass is cut away, 100 t of rod count as precursor for 80 t of product.
System boundaries by production route
Which emissions are counted depends on the route. A summary based on the Commission guidance:
| Route / process | Inside the boundary | Possible precursors |
|---|---|---|
| Crude steel — basic oxygen furnace (integrated works) | Fuels and waste gases (blast furnace, coke oven, converter gas), carbonates, carbon inputs; mass balance method | Pig iron, DRI, ferro-alloys, crude steel from other installations |
| Crude steel — electric arc furnace | Fuels, electrode and electrode paste consumption, limestone and other carbonates, carbon in scrap and alloys; mass balance method; primary hot rolling to semi-finished products | Pig iron, DRI, ferro-alloys, crude steel from other installations |
| Iron or steel products | Re-heating, re-melting, casting, hot and cold rolling, forging, annealing, coating, galvanising, wire drawing, pickling | Crude steel, pig iron, DRI, ferro-alloys, other iron or steel products |
Where an EAF uses only post-consumer scrap, that scrap is assumed to have zero embedded emissions. You must still report to the importer the tonnes of scrap used per tonne of product and the share that is pre-consumer scrap.
If an installation produces several of these goods and none of the intermediate precursors is sold separately, the guidance allows one joint production process, or "bubble", for all of them. For integrated works this reduces the monitoring effort considerably.
Rolling mills, galvanisers and fastener makers
Many exporters do not make steel themselves; they buy billets or coil and process them. For these plants the rule is clear: plating, cutting, welding and finishing are outside the system boundary and their emissions are not reported. Heat treatment, galvanising, annealing and wire drawing are inside.
Even an installation that only performs excluded processes such as cutting must be verified if it wants to use actual values. The monitoring plan can be short, but the verifier will confirm that only excluded processes take place, that precursor mass is taken before cutting, and that precursor embedded emissions, including country of origin, are correct. Because cutting creates losses, SEE per tonne rises even though no process emissions are reported.
Missing precursor data: default values and mark-ups
For processors, the largest item is usually the embedded emissions of purchased steel. Actual data for a precursor bought from another installation may only be used if they come from a verification report by an accredited verifier covering the period in which the precursor was produced. Otherwise default values apply:
- If the country of production is known: the country-specific value in Annex I of the Default Values Act (2025/2621), or the "other countries and territories" value if the country is not listed.
- If the country is unknown: the highest values in Annex IV.
- Default values are increased by a mark-up of 10% in 2026, 20% in 2027 and 30% from 2028 (1% for fertilisers).
- Precursors produced in the EU or in exempted countries count as zero.
Where the same precursor comes from several suppliers or production years, values are tracked per supplier installation and year and then weighted-averaged. Actual and default values can be mixed batch by batch. As the mark-up rises, verified supplier data become more valuable every year.
Additional parameters to send to the importer
Alongside the embedded emissions figure, the authorised CBAM declarant reports these iron and steel parameters in the annual declaration, and the producer supplies them:
- The main reducing agent used in precursor production, if known
- Mass % of Mn, Cr, Ni and total other alloy elements
- Tonnes of scrap used per tonne of product
- Percentage of scrap that is pre-consumer scrap
These data travel in the Commission's operator emissions report template. Where actual values are used, the operator's emissions report and its summary are prepared in English.
Monitoring plan, verification and records
Any installation using actual values prepares a monitoring plan in English, keeps records for at least six years and has its report verified by an accredited verifier. Claims that a monitoring method would incur unreasonable costs are justified in the monitoring plan and assessed against a reference price of EUR 80 per tonne of CO₂e and an accumulated limit of EUR 4,000 per year. The reporting period is the calendar year in which the good was produced; for imports, the default is the year of import.
On timing, the first annual CBAM declaration and certificate surrender for 2026 imports is due on 30 September 2027. Importers will ask for verified supplier data months before that. See our definitive period guide for the full timeline. We work through the cost with examples in our CBAM certificate price article.
Step-by-step preparation for steel exporters
- List the CN codes of goods sold to the EU and assign each to its category (crude steel or iron or steel products).
- Map the production processes and system boundary; separate excluded steps (cutting, welding, finishing).
- List direct emission sources: natural gas, LPG, electrodes, carbonates, measurable heat.
- Record precursors by supplier, country of origin and production year; request verified SEE data from suppliers.
- Track scrap quantities and the pre-/post-consumer split; take alloy percentages from quality records.
- Write the monitoring plan and talk to a verifier early.
- Send results to the importer using the operator emissions report template.
The same fuel and energy data also feed your corporate carbon footprint; we explain the difference in our Scope 1, 2 and 3 guide.
Carbonet is CBAM and carbon footprint software developed by LNA Soft in Izmir, Turkey. It tracks precursors by supplier and year, combines default and actual values batch by batch, and calculates the embedded emissions per product that your importer needs. Read more on our CBAM embedded emissions calculation page. To try it with your own steel products, request a demo or write to info@carbonet.com.tr or on WhatsApp (+90 533 368 05 99).
Frequently asked questions
Are electricity emissions included in CBAM embedded emissions for steel?
In the definitive period starting 2026, iron and steel goods listed in Annex II to the CBAM Regulation count direct emissions only; indirect emissions from electricity are not added. Sintered ore is the exception, and if a precursor whose indirect emissions count is used, those emissions carry over into the final good.
What does a company that buys billets or wire rod and processes them calculate?
It adds the direct emissions of its own process (re-heating, annealing, galvanising and similar) to the embedded emissions of the purchased precursor and divides by the tonnes produced. Cutting, welding, plating and finishing are outside the boundary, but precursor mass is taken as the mass entering the process.
What if my supplier does not provide embedded emissions data?
If the precursor's country of production is known, the country-specific default value from Implementing Regulation (EU) 2025/2621 applies; if not, the highest values apply. Default values carry a mark-up of 10% in 2026, 20% in 2027 and 30% from 2028. Actual data may only come from an accredited verifier's report.
How does scrap affect embedded emissions?
Where only post-consumer scrap is used, it is assumed to have zero embedded emissions, while the carbon it contains enters the mass balance. The tonnes of scrap per tonne of product and the pre-consumer share are reported to the importer separately.
When is the first CBAM declaration and when should data be ready?
The first annual declaration and certificate surrender for 2026 imports is due on 30 September 2027. The authorised declarant in the EU files it, so the exporter's verified data must be ready well before; monitoring plans and verifier contact should start during 2026.