Understanding Your Emissions
Understanding CBAM emissions is a bit like running a pizza restaurant. When you make a pizza, you care about what happens in your kitchen – the gas your oven uses and the electricity that powers your lights and fridges. You also need to track certain processed ingredients that come from other factories on the CBAM list, similar to tracking specialty ingredients with certificates. However, you don’t need to trace back to where the basic ingredients came from, like the farm where tomatoes grew or how ingredients were transported to your door.
This same principle applies to manufacturing under CBAM. For example, if you’re making steel, you track emissions from your furnace (like the pizza oven), your factory’s electricity usage (like the restaurant’s power), and specialized CBAM-listed materials like pig iron (like those certified ingredients). You don’t need to account for mining the iron ore or transportation emissions. This focused approach helps you concentrate on what matters most: the carbon created in your facility and from CBAM-listed materials you use.
How to Calculate Your Emissions
The EU provides two primary methods for tracking carbon emissions. The calculation-based approach works like following a recipe – you multiply the amount of fuel and materials you use by their established carbon values. This method offers two variations: the standard method, which separately accounts for fuel burning and production processes, and the mass balance method, which tracks all carbon entering and leaving your facility, particularly useful for complex operations like steel mills.
Alternatively, the measurement-based approach involves installing specialized meters on your factory chimneys to directly measure carbon emissions. While this method provides greater accuracy, it requires more significant investment. Some products, such as nitric acid, specifically require this measurement method.
During the transitional period through 2025, the EU allows flexibility in reporting methods. You can either implement their complete methodology, use another approved carbon tracking system, or rely on standard values (though this last option expired in July 2024). Regardless of your chosen method, the key is maintaining reliable, verifiable data that will stand up to scrutiny.
What to Do Now
Although CBAM payments don’t begin until 2026, preparation should start immediately. Begin by thoroughly mapping your supply chain: identify material sources, transportation methods, and energy usage throughout your production process.
Engage with your suppliers early.They’ll need to provide detailed emissions data, and some may need assistance in setting up proper tracking systems.
Need Help with CBAM and Emissions?
Want to know which method would work best for your business? Contact me at isco@c-metrics.com or book a call to discuss your options. At CMetrics, we specialize in helping businesses navigate the complexities of CBAM and emissions tracking.
