The European Union’s proposed overhaul of the Carbon Border Adjustment Mechanism (CBAM) is increasing focus on how emissions claims are calculated and substantiated, as well as which imported goods are covered. Policymakers are seeking to prevent carbon-related costs from being reduced through accounting practices that do not correspond to cuts in global emissions.
A key concern is resource shuffling, where a producer directs its lowest-emission output to EU customers while selling higher-emission material in other markets. This approach can make individual EU shipments appear cleaner without reducing emissions across the producer’s overall operations. Allocating production to specific shipments is not described as inherently unlawful, but regulators are pursuing stronger safeguards against misleading allocations and unverifiable claims.
Negotiations on anti-circumvention safeguards
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 ongoing talks on additional anti-circumvention measures. Possible changes include closer scrutiny of actual-emissions data in higher-risk circumstances and stronger requirements related to material composition.
The conditions that would trigger additional scrutiny, the evidence needed to support claims, and the powers available to reject or replace claimed emissions data have not been finalised. For producers and importers, the outcome could influence how emissions information is collected, allocated and assessed before it is used in CBAM declarations. Companies are therefore expected to distinguish between proposed safeguards and requirements already set under the current framework.
Metal scrap treatment in CBAM emissions calculations
Metal scrap is identified as a separate accounting issue within the broader debate. Pre-consumer scrap generated during manufacturing can have a different emissions history and regulatory treatment than post-consumer recycled material. The way 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 is described as oversimplifying the accounting challenge. The appropriate treatment depends on the applicable methodology and on characteristics of the material and production process. Clear records covering scrap origin, quantities, processing and use could become increasingly important as the EU develops its approach to emissions accounting and circumvention risks.
CBAM certificate prices raise compliance stakes
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 of 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. Variations in emissions per tonne of metal may affect costs when applied across large shipment volumes. This increases the importance of separating genuine emissions reductions from changes in allocation or presentation of existing production, with data credibility becoming commercially significant alongside reported values.
Verification focus on production records and material flows
For producers, stronger controls would increase reliance on plant-wide mass balances, meter records, scrap procurement registers and documented product-allocation methods. These records can help show whether reported emissions figures align with actual movement of materials and with the production process.
For verifiers, the proposed approach would place greater emphasis on tracing emissions claims through production and material flows rather than relying only 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 also affect how quickly manufacturers and importers respond to verification requests and demonstrate that reported emissions reflect relevant production activities.
Steel origin traceability under a separate EU quota regime
The issue is also described as intersecting with rules governing origin for imported steel. A separate EU steel quota regime includes traceability provisions intended to identify where steel was melted and poured. These provisions are stated to serve a trade-defence purpose rather than 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 not to assume that a particular recycling practice, contractual arrangement or emissions-allocation method will automatically qualify for favourable treatment. Instead, they are expected to maintain a documented, verifiable methodology that can be updated once anti-circumvention provisions are adopted.
The negotiations could make the evidential basis for emissions claims increasingly important within CBAM compliance, alongside product coverage and calculation of financial liabilities.