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 should be documented and incorporated into the verification of complex goods. The guidance also covers how emissions from precursors manufactured at separate installations must be accounted for when calculating embedded emissions.
The requirements are set out in the Commission’s CBAM Questions and Answers, updated on 15 October 2026. The document specifies that precursor emissions can be determined either by applying relevant default values or by using actual emissions that have been independently verified. It links the use of actual precursor data to the availability of verification evidence that can be examined during the final product assessment.
Using actual versus default precursor emissions
Where a downstream operator chooses to apply actual values, the operator producing the precursor must provide 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. A commercially supplied emissions figure without the required supporting verification evidence cannot be accepted for this purpose.
The verifier responsible for the final product must be able to examine the report supporting the precursor data. The verifier then determines whether the figures can be legitimately incorporated into the embedded-emissions calculation for the finished or complex CBAM product. This approach places upstream documentation within the formal CBAM verification process, particularly in steel and aluminium supply chains involving multiple installations and companies before products enter the EU market.
Supplier evidence gaps and downstream compliance exposure
For exporters in Serbia and other Southeast European countries, CBAM compliance increasingly depends 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 intend to apply actual values. If an upstream supplier cannot provide acceptable verified emissions information, downstream operators may need to rely on applicable default values instead.
The financial implications depend on the emissions 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. Supplier assessments may therefore need to consider emissions-data quality alongside conventional purchasing criteria such as price, product grade, delivery reliability, and product certification.
Transfer of verified data via 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 transition makes bilateral information-sharing arrangements important during the first compliance cycle. Suppliers and downstream manufacturers may need agreements covering emissions data, corresponding verification reports, installation identifiers, reporting periods, and supporting evidence required by the verifier of the complex good. Contracts may also need provisions addressing cases where a supplier commits to providing actual emissions data but fails to obtain the necessary verification.
Reporting periods and traceability of precursor batches
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 permitted when sufficient evidence establishes the precursor’s actual production period.
In that alternative case, the 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, particularly where inventories move between reporting periods. Manufacturers need to connect precursor materials with relevant production periods and supporting emissions documentation.
Carbon-data reliability in 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 provide acceptable verified emissions data. Carbon-data availability may become relevant for 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, since each additional 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. This applies when precursors are manufactured at separate installations and embedded emissions calculations depend on installation-specific verified information provided through appropriate verification reports.