Steel processors supplying covered goods to the European market need to consider emissions data from upstream production alongside the physical characteristics and quality of the metal they purchase. The emissions associated with finished products can depend on both the processor’s own operations and the production of the steel used as an input.
The European Commission’s steel guidance illustrates this relationship using screws and nuts manufactured from purchased steel rods. The embedded emissions of these finished goods include emissions from the relevant processing activities as well as those associated with the steel rods used in production. Material losses also influence the relationship between precursor inputs and finished output.
Precursor Emissions and Finished Steel Products
The example highlights the importance of CBAM steel precursors in determining the emissions associated with covered downstream products. Where steel rods are used as production inputs, their emissions contribute to the embedded emissions of the resulting screws and nuts.
Consequently, steel rods embedded emissions cannot be assessed independently of the processing stage and the quantities of material required to manufacture the finished goods. Material losses affect how precursor quantities relate to final production, making the underlying production records relevant to the emissions assessment.
Supplier Data and Processor Compliance
For fabricators and rerollers, the implications extend beyond the efficiency of their own operations. Improvements at the processing stage may leave a substantial share of the product’s emissions dependent on the upstream steelmaking process.
Effective steel processor compliance therefore requires access to information from the installations producing the relevant intermediate materials. These records must remain traceable and usable as the steel moves through subsequent processing stages and into the sale of finished goods.
Traders can facilitate the exchange of upstream steel emissions information between producers and downstream customers. However, a commercial invoice alone does not establish the emissions figure associated with the upstream material.
For a reroller supplier data process, purchasing teams need to consider whether suppliers can provide the production information required to support the relevant emissions assessment. Supplier selection may consequently take account of documentation quality alongside price and delivery terms.
A processor’s ability to substantiate the emissions of goods supplied to Europe can depend on production records maintained by a steel mill several transactions upstream in the supply chain.
