The European Union’s proposed overhaul of the Carbon Border Adjustment Mechanism (CBAM) places greater emphasis on how emissions claims are calculated and substantiated, alongside which imported goods fall within its scope. Policymakers are seeking to prevent carbon-related costs from being reduced through accounting practices that do not deliver corresponding cuts in global emissions. The changes are being developed through ongoing negotiations on additional anti-circumvention measures.
Resource allocation scrutiny under CBAM
A central concern is resource shuffling, where a producer directs its lowest-emission output to EU customers while selling higher-emission material in other markets. This can make individual EU shipments appear cleaner without reducing emissions across the producer’s overall operations. Allocating production to specific shipments is not inherently unlawful, but regulators are seeking stronger safeguards against misleading allocations and claims that cannot be verified.
The European Commission’s December 2025 proposal, the Council’s June 2026 negotiating mandate and the European Parliament’s September 2026 position are part of the negotiations on further anti-circumvention measures. Potential changes include closer scrutiny of actual-emissions data in higher-risk circumstances and stronger requirements concerning material composition. The precise triggers for additional scrutiny, the evidence required and the powers to reject or replace claimed emissions data have not been finalised.
For producers and importers, the outcome could affect how emissions information is collected, allocated and assessed before it is used in CBAM declarations. Companies are expected to distinguish between safeguards proposed for future rules and requirements already established under the current framework. The evolving approach is therefore relevant to how emissions data will be handled for compliance purposes.
Metal scrap inputs and embedded emissions calculations
Metal scrap presents a separate accounting challenge in the CBAM context. Pre-consumer scrap generated during manufacturing can have a different emissions history and regulatory treatment from post-consumer recycled material. How these inputs are treated in emissions calculations affects the apparent carbon benefit of secondary production and an exporter’s ability to substantiate low-emission claims.
Treating all scrap inputs as automatically carrying zero emissions would oversimplify the accounting challenge. The relevant treatment depends on the applicable methodology and the characteristics of the material and production process. Clear records of scrap origin, quantities, processing and use could therefore become increasingly important as the EU develops its approach to emissions accounting and circumvention risks.
Certificate prices raise the impact of emission differences
The proposed controls are linked to financial incentives created by CBAM for importers to establish lower embedded-emissions values where those values can be properly substantiated. The third-quarter 2026 CBAM certificate price was €82.32 per tonne of CO₂ equivalent, about 9.4% higher than the second-quarter price. As benchmark-related deductions decline over coming years, differences in calculated emissions could carry greater commercial consequences.
Even relatively small variations in emissions per tonne of metal may affect costs when applied across large shipment volumes. This increases the importance of distinguishing genuine emissions reductions from changes in allocation or presentation of existing production. The credibility of emissions data could become as commercially significant as the reported value itself.
Verification focus on production records and material flows
For producers, stronger controls would increase the importance of plant-wide mass balances, meter records, scrap procurement registers and documented product-allocation methods. These records can help establish whether reported emissions figures align with actual movement of materials and the production process. The approach also affects how evidence is assembled for compliance.
For verifiers, the proposed approach would place greater emphasis on tracing emissions claims through production and material flows rather than relying solely on declarations prepared for individual shipments. EU importers would remain responsible for the accuracy of information used in their CBAM declarations under applicable rules. The quality of supporting evidence could influence how quickly manufacturers and importers respond to verification requests.
Steel origin traceability and links to supply-chain records
The issue intersects with rules governing origin of imported steel under a separate EU steel quota regime. That regime includes traceability provisions designed to identify where steel was melted and poured. These provisions serve a trade-defence purpose and should not be confused with a complete methodology for calculating embedded emissions under CBAM.
Some underlying production and supply-chain records may still be relevant to both systems. Companies preparing for final CBAM legislation are advised to avoid assuming that a particular recycling practice, contractual arrangement or emissions-allocation method will automatically qualify for favourable treatment. A documented, verifiable methodology is expected to be maintained so it can be updated once anti-circumvention provisions are adopted.
The negotiations could make the evidential basis for emissions claims an increasingly important part of CBAM compliance alongside product coverage and calculation of financial liabilities.