Steel and aluminium manufacturers that source materials from other industrial installations may need reliable, independently verified emissions evidence to use actual precursor values under the European Union’s Carbon Border Adjustment Mechanism (CBAM). New European Commission guidance explains how upstream emissions data must be documented and incorporated into the verification of complex goods.
The Commission’s requirements are set out in its CBAM Questions and Answers, updated on 15 October 2026. The guidance addresses how emissions from precursors manufactured at separate installations are accounted for when calculating embedded emissions in a finished CBAM product.
Options for determining precursor emissions under CBAM
Manufacturers can determine precursor emissions using either relevant default values or actual emissions that have been independently verified. The guidance specifies that the choice affects what evidence must be provided for verification purposes.
Where a downstream operator uses actual values, the operator producing the precursor must supply the verified emissions information to the manufacturer of the complex good. Only actual values included in an appropriate verification report can be used in the embedded-emissions calculation.
The verifier responsible for the final product must be able to review the report supporting the precursor data. The verifier then determines whether the figures can be incorporated into the final embedded-emissions calculation, and a commercially supplied figure without required supporting verification evidence is not sufficient.
This approach places upstream emissions documentation within the formal CBAM verification process. It is particularly relevant in steel and aluminium supply chains that involve multiple installations and companies before products enter the EU market.
Supplier evidence gaps and implications for Southeast European exporters
For exporters in Serbia and other Southeast European countries, CBAM compliance may depend on information obtained beyond their own production facilities. Steel processors purchasing inputs from other mills and aluminium manufacturers using externally produced precursor materials may need installation-specific verified data from suppliers if they plan to apply actual values.
If an upstream supplier cannot provide acceptable verified emissions information, downstream manufacturers may need to use applicable default values instead. The guidance links potential financial outcomes to how much carbon intensity is attributed to each precursor.
Where default values exceed a precursor’s actual carbon intensity, CBAM liability for the final product may be higher even if downstream operations are efficient. This can affect how buyers evaluate suppliers alongside conventional criteria such as price, product grade, delivery reliability and product certification.
Transfer of verified precursor data via the CBAM Registry
The Commission also clarified arrangements for transferring verified precursor emissions information between operators. From 2028, operators are expected to exchange actual verified precursor emissions directly through the CBAM Registry.
During 2027, however, information exchange is expected to occur outside the Registry. This timing affects how suppliers and downstream manufacturers prepare for bilateral information-sharing during the first compliance cycle.
Agreements may need to cover emissions data, corresponding verification reports, installation identifiers, reporting periods and supporting evidence required by the verifier of the complex good. Contracts also need provisions addressing cases where a supplier commits to providing actual emissions data but fails to obtain necessary verification.
Matching precursor reports to complex goods reporting periods
The guidance sets out a default method for matching precursor verification reports to the reporting period of the complex good. The verifier will normally assess the report corresponding to the reporting period, or production year, of the final product.
An alternative is allowed when sufficient evidence establishes the precursor’s actual production period. In that case, a verifier may use the report associated with the period in which the precursor was produced.
The distinction increases reliance on traceability at lot or batch level, especially when inventories move between reporting periods. Manufacturers need to connect precursor materials with relevant production periods and supporting emissions documentation.
Carbon-data reliability within supply-chain due diligence
The evidence requirements create additional supply-chain risk for industrial buyers and their financing partners. A manufacturer may maintain an internal monitoring, reporting and verification (MRV) system but still face greater CBAM exposure if an upstream supplier cannot produce acceptable verified emissions data.
Carbon-data availability may become relevant to supplier due diligence, procurement agreements and working-capital planning. Contractual provisions may also be needed to address commercial consequences when emissions information is missing or unverifiable.
The implications could extend further if CBAM coverage expands to additional downstream products. Each added manufacturing stage may require verified emissions information to remain traceable as materials move from primary production through processing into finished goods.
For Southeast European steel and aluminium exporters, requirements link lower-carbon production value to supporting evidence quality. A precursor’s actual emissions performance must be documented and verified through the supply chain if downstream manufacturers are to rely on those values under CBAM.