The European Union’s proposed overhaul of the Carbon Border Adjustment Mechanism (CBAM) is placing greater emphasis on how emissions claims are calculated and substantiated, alongside the question of which imported goods fall within its scope. Policymakers are seeking to prevent carbon-related costs from being reduced through accounting practices that do not deliver corresponding cuts in global emissions.
A central concern is resource shuffling, in which a producer directs its lowest-emission output to EU customers while selling higher-emission material in other markets. This can make individual EU shipments appear cleaner without reducing emissions across the producer’s overall operations. Allocating production to specific shipments is not inherently unlawful, but regulators are seeking stronger safeguards against misleading allocations and claims that cannot be verified.
Proposed safeguards against circumvention
The European Commission’s December 2025 proposal, the Council’s June 2026 negotiating mandate and the European Parliament’s September 2026 position form part of ongoing negotiations over additional anti-circumvention measures.
Potential changes include closer scrutiny of actual-emissions data in higher-risk circumstances and stronger requirements concerning material composition. However, the precise conditions triggering additional scrutiny, the supporting evidence required and the powers available to reject or replace claimed emissions data have not yet been finalised.
For producers and importers, the outcome could affect how emissions information is collected, allocated and assessed before it is used in CBAM declarations. Companies should therefore distinguish between proposed safeguards and requirements already established under the current framework.
Metal scrap presents a separate accounting challenge
Pre-consumer metal scrap is another area of contention. Scrap generated during manufacturing can have a different emissions history and regulatory treatment from post-consumer recycled material. How 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 would oversimplify the accounting challenge. The relevant treatment depends on the applicable methodology and the characteristics of the material and production process.
Clear records of scrap origin, quantities, processing and use could therefore become increasingly important as the EU develops its approach to emissions accounting and circumvention risks.
Carbon prices increase the commercial stakes
The proposed controls come as CBAM creates financial incentives for importers to establish lower embedded-emissions values where those values can be properly substantiated. The third-quarter 2026 CBAM certificate price was €82.32 per tonne of CO₂ equivalent, approximately 9.4% higher than the second-quarter price.
As benchmark-related deductions decline over the coming years, differences in calculated emissions could have greater commercial consequences. Even relatively small variations in emissions per tonne of metal may affect costs when applied across large shipment volumes.
This increases the importance of distinguishing genuine emissions reductions from changes in the allocation or presentation of existing production. The credibility of emissions data could become as commercially significant as the reported value itself.
Production records and verification under greater scrutiny
For producers, stronger controls would increase the importance of plant-wide mass balances, meter records, scrap procurement registers and documented product-allocation methods. These records can help establish whether reported emissions figures are consistent with the actual movement of materials and the production process.
For verifiers, the proposed approach would place greater emphasis on tracing emissions claims through production and material flows rather than relying solely on declarations prepared for individual shipments. EU importers would remain responsible for the accuracy of the information used in their CBAM declarations under the applicable rules.
The quality of supporting evidence could consequently influence how quickly manufacturers and importers can respond to verification requests and demonstrate that reported emissions reflect the relevant production activities.
Steel origin controls remain distinct from CBAM accounting
The issue also intersects with rules governing the origin of imported steel. The separate EU steel quota regime includes traceability provisions designed to identify where steel was melted and poured.
These provisions serve a trade-defence purpose and should not be confused with a complete methodology for calculating embedded emissions under CBAM. Nevertheless, some of the underlying production and supply-chain records may be relevant to both systems.
Companies preparing for the final CBAM legislation should avoid assuming that a particular recycling practice, contractual arrangement or emissions-allocation method will automatically qualify for favourable treatment. A more reliable approach is to maintain a documented, verifiable methodology that can be updated once the anti-circumvention provisions are adopted.
The negotiations could make the evidential basis for emissions claims an increasingly important part of CBAM compliance, alongside product coverage and the calculation of financial liabilities.
