CBAM Steel Calculation: How to Compute Embedded Carbon for EU Customs
CBAM steel calculation requires producers to compute the specific embedded emissions of their steel products in tonnes of CO2 equivalent per tonne of product (tCO2e/t). The methodology depends on the production route: BF-BOF (integrated), EAF (electric arc furnace), or DRI-EAF. Each route has different system boundaries, different precursor inputs, and different default values. This page walks through the CBAM steel calculation method.
CBAM Steel Calculation Formula
For each steel product covered under CBAM Annex I, the specific embedded emissions are:
SEE = (DE + IE + ΣEE_precursors) ÷ AL
where SEE is specific embedded emissions in tCO2e/t of finished product, DE is direct emissions from the installation in tCO2e, IE is indirect emissions from electricity consumption in tCO2e (applicable for some sectors only), EE_precursors is the embedded emissions of each precursor input weighted by mass, and AL is the activity level (production output) in tonnes during the reporting period.
BF-BOF Calculation (Blast Furnace + Basic Oxygen Furnace)
BF-BOF is the dominant integrated steelmaking route globally and the highest-emitting route. The CBAM calculation includes:
- Direct emissions: coke combustion in the blast furnace, lime calcination in the BOF, fuels burned in reheating furnaces, and any natural-gas combustion in downstream operations
- Indirect emissions from electricity: not included for the integrated steel CN codes — system boundary excludes electricity for primary steel
- Precursor inputs: imported pellets, coke, sinter — each carries embedded emissions that must be obtained from the upstream producer or use default values
Typical BF-BOF actual embedded emissions: 1.85–2.20 tCO2e/t. EU default for the relevant CN codes: 2.18 tCO2e/t. The saving from documenting actuals is small per-tonne but large in absolute terms at typical mill volumes.
EAF Calculation (Electric Arc Furnace)
EAF steelmaking primarily melts scrap (and sometimes DRI). For CBAM, EAF steel calculations include:
- Direct emissions: graphite electrode consumption, fuel combustion in any oxy-fuel burners, lime calcination, and reheating furnace fuels
- Indirect emissions from electricity: not in scope for steel CN codes under current CBAM Annex III
- Precursor inputs: scrap typically carries no embedded emissions for CBAM purposes (it is treated as a recycled input). DRI feed carries the embedded emissions of the DRI source.
Typical EAF actual embedded emissions on scrap-only feed: 0.40–0.80 tCO2e/t. The saving versus the 2.18 default is EUR 89–115/t at current ETS prices — the largest per-tonne saving in any CBAM sector.
DRI-EAF Calculation
DRI-EAF combines a direct reduced iron unit (gas-based or coal-based) with an electric arc furnace. The DRI step adds embedded emissions to the EAF baseline:
- Gas-based DRI: 0.80–1.20 tCO2e/t DRI from natural gas reduction
- Coal-based DRI: 1.40–1.80 tCO2e/t DRI from coal-based reduction (predominant in India)
- Hydrogen-based DRI: close to zero direct emissions; full embedded emissions depend on hydrogen source (green hydrogen ~0.10 tCO2e/t, grey hydrogen ~10 tCO2e/t)
The combined DRI-EAF steel actual values typically run 0.80–1.60 tCO2e/t — still well below the 2.18 default for the integrated CN codes.
Reporting and Verification
Calculated values must be verified by an ISO 14065 accredited verification body before they can be used as actual values in CBAM declarations. Without verification, EU default values apply by regulation. The verified calculation produces a verification statement; that statement, plus the underlying data, is what gets stored in your embedded carbon record vault and cited in the EU buyer's declaration.
Frequently Asked Questions
What CN codes does CBAM steel calculation cover?
CBAM Annex I covers iron and steel CN codes 7203 (DRI), 7206–7229 (carbon steel), 7301–7311 (steel structures and tubes), and certain downstream items. The calculation methodology in Annex III applies across all these codes, with the specific system boundary set by the production route.
Do I need to include indirect emissions from electricity for steel?
Not under current CBAM rules for the primary steel CN codes. Electricity-related indirect emissions are excluded from the steel system boundary in Implementing Regulation 2023/1773 Annex III. This is under review and may change in subsequent CBAM revisions.
How are scrap inputs treated in the EAF calculation?
Scrap is treated as a recycled input with zero embedded emissions for CBAM purposes. This is one of the structural advantages of EAF-based steelmaking under CBAM. DRI inputs carry their own embedded emissions and must be accounted for separately.
What is the difference between actual values and default values for CBAM steel?
Default values (e.g. 2.18 tCO2e/t for the integrated steel codes) are EU-set and apply automatically when no verified actual value is provided. Actual values are calculated by the producer per Annex III methodology and must be verified by an ISO 14065 accredited body. See the default vs actual values guide.
How long does the CBAM steel calculation take to set up the first time?
For an integrated mill with established energy and material accounting, 4–8 weeks for data collection and 2–4 weeks for verification. For a smaller mill setting up CBAM-grade reporting from scratch, 12–16 weeks total is realistic. Subsequent quarters are much faster once the methodology and data flows are established.
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