Introduction to the CBAM
Climate change is a global problem that needs global solutions. As the EU raises its own climate ambition, and as long as less stringent climate policies prevail in many non-EU countries, there is a risk of so-called ‘carbon leakage‘.
Carbon leakage occurs when companies based in the EU move carbon-intensive production abroad to countries where less stringent climate policies are in place than in the EU, or when EU products get replaced by more carbon-intensive imports.
The EU’s Carbon Border Adjustment Mechanism (CBAM) is the landmark tool to put a fair price on the carbon emitted during the production of carbon intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries.
On 1 October 2023, the CBAM entered into application in its transitional phase, with the first reporting period for importers ending 31 January 2024.
The CBAM will initially apply to imports of certain goods and selected precursors whose production is carbon intensive and at most significant risk of carbon leakage: cement, iron and steel, aluminum, fertilizers, electricity and hydrogen. With this enlarged scope, CBAM will eventually – when fully phased in – capture more than 50% of the emissions in ETS covered sectors.
As reported in a BCG Carbon Management Survey of executives across nine major industries globally, carbon emissions are top of mind with 85% concerned about reducing greenhouse gas emissions.
The emissions data struggle is real:
The relation between LCA, Carbon footprint and CBAM
The concept of embedded emissions, for the purposes of the CBAM, is based on, but not fully aligned with the principles and requirements for a carbon footprint of products (CFP). A CFP is usually understood as an number of GHG-emissions (expressed as kg or t CO2e) per declared unit, (e.g. a tonne of good) based on a life cycle perspective covering, all significant emissions from upstream and downstream processes (called life cycle stages), from mining and production to transport, use and end-of-life.
The system boundaries of emissions covered by the CBAM, are narrower than those in a CFP. Downstream emissions (emissions from the use and end-of-life) of the products are outside the scope of the CBAM.
Comparison of product environmental footprint, product carbon footprint, and the specific partial carbon footprint that are to be used for determining embedded emissions in the CBAM.
The perfect solution
By conducting LCA of your products, you get all the environmental impacts + the carbon footprint of the products, and from these you can derive the emboded emissions that are relvent to the CBAM.
SO, here is what you get:
BCG Carbon Management Survey