Calculating CBAM Specific Embedded Emissions
In our previous post, “What is the EU Carbon Border Adjustment Mechanism?”, we discussed what the EU CBAM regulation is, and what responsibilities it places on importers. This article discusses the details of how to calculate specific embedded emissions to be used in EU CBAM reporting.
The EU CBAM regulation provides a detailed methodology on embedded emissions quantification in the three key legislative documents:
More important and useful for supplier installations, however, are the EU’s template worksheet, called the CBAM Communication Template for Installations, which provides input fields to enter data, and which calculates specific embedded emissions data results in a standard format. (The EU Commission also provides example calculations for reference.)
Each supplier installation facility can complete this spreadsheet and use it to calculate the specific embedded emissions used by importers. While a variety of data is collected, the key outputs of this spreadsheet are calculated for each individual product sold:
Product name and its accompanying Combined Nomenclature (CN) Code. (Products are defined in terms of their CN code.)
“Direct” Specific Embedded Emissions for each product, released during production, from combustion of fossil fuels and fugitive emissions.
“Indirect” Specific Embedded Emissions for each product, from the production of electricity that is consumed during production.
“Total” Specific Embedded Emissions for each, the sum of the direct and indirect emissions.
Additional metrics of significance include the Embedded electricity (MWh/ton), the Source for electricity Emission Factor, and the Share of emissions calculated using default values (instead of facility-specific values).
A snapshot of the CBAM Communication Template for Installations.
This CBAM Communications template contains all of the data required for an EU Importer to calculate their total embedded emissions. The EU also provides an online portal, where suppliers can upload and share emissions data in a central location, instead of submitting to each importer separately.
Data Required to Calculate Specific Embedded Emissions
In most cases, three types of data inputs are required to calculate Specific Embedded Emissions for a supplier facility:
Consumption of fossil fuels at the facility site. For example, any consumption of Natural Gas and/or Heavy fuel oil must be recorded, including the consumption amount, energy density of the fuel (GJ/ton), and fuel emission factor (tons CO2e / GJ). (Supplier installations can also elect to complete the calculation using direct measurements of flue gas, as an option.)
Electricity consumption, including MWh, along with the emission factor of the electricity (tons CO2e / MWh).
Precursor Material consumption, including the amount purchased and the direct and indirect emissions associated with each material.
Each of these data inputs must be provided for each “production process” at a facility, which corresponds to the smallest subdivision of processes within a facility where individual inputs can be tracked. In practice, most supplier installations will only have one production process, and so the three data inputs will correspond to totals for each facility.
Where relevant, supplier installations will also need to report on fugitive emissions, and emissions of PFCs.
Calculating the Emissions
In brief, the calculation includes the following steps:
Calculating the GHG emissions arising from consumption of fossil fuels, by multiplying the consumption amount by its energy density and emission factors (which are fortunately provided in one of the Annexes to the implementing regulation).
Adding up the individual GHG emissions amounts from each fossil fuel type; this is added to the total sum of the direct specific embedded emissions.
Calculating the GHG emissions arising from electricity use, by multiplying the electricity consumption (in MWh) by the emission factor of the electricity in the region, using data from the International Energy Agency (IEA).
The electricity-related emissions are added to calculate the indirect specific embedded emissions.
Calculating the GHG emissions associated with precursor material production. Suppliers should request direct and indirect specific embedded emissions data from their own suppliers, which can be provided to them using the same CBAM communications template for installations.
The specific embedded emission of each precursor is then multiplied with the precursor material consumption, itself subdivided into direct and indirect specific embedded emissions.
The direct and indirect specific embedded emissions associated with precursor material purchases are summed up, and then added to the existing subtotals calculated in earlier steps.
Specific Embedded Emissions for Precursor Materials
This is the most challenging part of the exercise, as suppliers of precursors may be unwilling or unable to provide data. In such cases, the burden falls on the EU importer to establish that reasonable efforts were done to gather this data. If it is unavailable, the EU Commission provides default factors for precursor materials which can be used.
Need help in calculating Specific Embedded Emissions?
If you need support in your EU CBAM specific embedded emissions calculations, see our EU CBAM consulting services page.
Or you can contact us directly, at info@novacreatio-sustainability.com or visit our Contact Us page.