CBAM for Steel Exporters: How to Calculate Embedded Emissions Step by Step
A practical, step-by-step guide for Indian steel exporters on calculating embedded emissions under the EU Carbon Border Adjustment Mechanism (CBAM) — production routes, data sources, default values and how to cut your certificate cost.
How do you calculate embedded emissions for CBAM on steel exports?
Embedded emissions for a CBAM steel shipment equal direct process emissions (from fuel and process chemistry at the installation) plus indirect emissions (from purchased electricity, using the applicable grid or supplier factor) plus the embedded emissions of relevant precursor materials, all expressed per tonne of product. Without installation-level verified data, the EU applies conservative default values instead — which usually cost exporters more than their real footprint would.
Steel is one of the six goods categories currently covered by the EU Carbon Border Adjustment Mechanism (CBAM), and among the most exposed for Indian exporters given trade volumes to the EU. Since CBAM's definitive phase began, exporters must report actual embedded emissions — or pay for the EU's conservative default assumption instead.
Why steel is a priority CBAM category
2 main routes
Blast furnace (BF-BOF) vs electric arc furnace (EAF)
Scope 1 + 2
Both direct process and purchased-electricity emissions count
Default = costlier
Unverified exporters get conservative EU default values
Steel production is emissions-intensive by nature — whether from coke-based reduction chemistry in a blast furnace or the electricity load of an electric arc furnace. Because CBAM's certificate cost is priced against the EU carbon price, every tonne of unaccounted or overestimated embedded emissions has a direct, calculable cost to an exporter's competitiveness.
Step 1: identify your production route
Embedded emissions differ sharply by route, so this determines your entire calculation approach.
| Route | Primary emission source | Typical relative intensity |
|---|---|---|
| Integrated (BF-BOF) | Coke combustion and reduction chemistry in the blast furnace | Higher |
| Electric arc furnace (EAF), scrap-based | Electricity consumption; minimal process chemistry | Lower, but grid-dependent |
| EAF, direct reduced iron (DRI)-based | Natural gas or coal-based reduction plus electricity | Intermediate |
Step 2: gather installation-level activity data
CBAM requires actual, installation-specific data, not industry averages, once the transitional period ends. This means:
- Fuel consumption records (coal, coke, natural gas) at the specific plant.
- Electricity consumption and its source (grid mix or a specific power purchase agreement).
- Production output for the exact CN-code product line being exported.
- Precursor material inputs (e.g., embedded emissions of purchased pig iron or DRI, if not produced on-site).
Step 3: apply the CBAM calculation methodology
- Direct emissions = fuel and process emissions at the installation, calculated using EU ETS-aligned monitoring methodology, divided by product output to get a per-tonne intensity.
- Indirect emissions = electricity consumption × the applicable emission factor (India's grid average, unless a specific verified lower factor applies to a direct renewable supply arrangement).
- Precursor emissions = embedded emissions of purchased inputs, carried forward from the precursor's own CBAM calculation or a default value if unavailable.
- Total embedded emissions = direct + indirect + precursor, expressed as tCO2e per tonne of the finished product.
Default values are not a safe fallback
When verified data isn't submitted, the EU applies a default value benchmarked against the worst-performing installations for that product route — deliberately conservative. For most well-run Indian plants, this means paying for emissions well above what they actually produce. Verified data is not paperwork; it is a direct cost reduction.
Step 4: get it verified
CBAM requires embedded emissions data to be verified by an accredited verifier before it can be used instead of default values. Building this verification into routine reporting cycles — rather than treating it as a one-off exercise — keeps ongoing declarations current as production mix and electricity sourcing change.
Step 5: use the number to find reduction opportunities
Once an exporter has an accurate, verified per-tonne figure, the same data usually reveals the cheapest levers to cut it — a higher share of scrap input, a renewable power purchase agreement to cut the indirect component, or process efficiency improvements at the furnace. Reducing embedded emissions reduces the CBAM certificate cost directly, tonne for tonne. For the broader CBAM timeline and obligations, see our guide on CBAM for Indian exporters.
Carbon Credit Consulting helps Indian steel exporters calculate, verify and reduce embedded emissions under CBAM. Explore our CBAM advisory service and steel and aluminium industry page, or talk to us about your export exposure.
Frequently asked questions
Embedded emissions are the greenhouse gas emissions released in producing a specific quantity of a CBAM-covered good, expressed in tonnes of CO2e per tonne of product. For steel, this includes direct emissions from the production process (Scope 1) and, for certain routes, indirect emissions from electricity used in that process, plus embedded emissions of key precursor materials.
Exporters calculate direct emissions from fuel and process data at the installation level, add indirect emissions from purchased electricity using the applicable emission factor, and add precursor emissions for inputs like scrap-based inputs or coke where relevant, following the EU's CBAM implementing regulation methodology, which mirrors the EU Emissions Trading System's monitoring approach.
The EU applies default values instead, calculated from the average emissions intensity of the worst-performing installations for that product route in the exporting country or a comparable benchmark. These default values are set conservatively high, which typically means a higher CBAM certificate cost than an exporter's actual, verified emissions would produce.
Electric arc furnace (EAF) routes using scrap generally have substantially lower embedded emissions than integrated blast furnace-basic oxygen furnace (BF-BOF) routes, because they avoid most of the coke-based reduction chemistry that drives blast furnace emissions. The gap narrows if the EAF route runs on a carbon-intensive electricity grid, which is why India's grid emission factor matters directly to the calculation.
About the author
Carbon Credit Consulting
Carbon advisory team
The Carbon Credit Consulting advisory team writes on India’s carbon markets — CCTS, CBAM, offset projects, GHG accounting and ESG/BRSR — turning fast-moving rules into practical guidance for businesses, exporters and FPOs.
- CCTS & CBAM advisory
- GHG Protocol & ISO 14064
- Verra & Gold Standard project experience
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