Verified upstream emissions data could influence financing costs and supplier selection as CBAM reporting requirements expand through 2027 and 2028.
Verified Precursor Emissions Support Lower CBAM Values
The European Commission has confirmed that actual emissions from precursors produced at another installation can be used when calculating embedded emissions for a complex good under the Carbon Border Adjustment Mechanism (CBAM) only if the values are supported by a verification report on which the verifier of the downstream installation can rely.
The requirement makes verified carbon data an increasingly important supply-chain asset. Steel, aluminium, cement and fertiliser producers may operate effective internal monitoring systems but still be unable to use lower actual-emissions values if an upstream supplier cannot provide adequately verified precursor information.
Default Values Increase the Cost of Missing Data
Where the required evidence is unavailable, producers can use the applicable default values. For most non-fertiliser goods, these values include a 10% mark-up in 2026, 20% in 2027 and 30% from 2028. Fertilisers are subject to a lower 1% mark-up.
The increasing mark-ups create a stronger commercial incentive to obtain verified actual-emissions data when a supplier’s real emissions are below the applicable default value.
Data Exchange Requirements Expand Through 2028
During 2027, operators will need to exchange verified precursor information outside the CBAM Registry. Direct operator-to-operator sharing of actual verified precursor emissions through the Registry is expected to become available from 2028.
Companies therefore need to establish controlled contractual arrangements for exchanging emissions data before the planned digital infrastructure is fully available. These arrangements must allow downstream producers and their verifiers to obtain the evidence needed to support actual-emissions calculations.
Implications for Financing and Procurement
The financing implications follow from the potential effect of missing precursor data on a manufacturer’s CBAM costs. Weak upstream evidence can lead to higher and less predictable liabilities, putting pressure on gross margins from EU sales and increasing working-capital requirements.
Banks assessing industrial borrowers may therefore need to examine not only the borrower’s own emissions reporting but also whether critical suppliers can substantiate the emissions assumptions used in financial forecasts and business plans.
Long-term procurement contracts may increasingly include obligations to maintain verified emissions data, supply verification reports, identify the installation of origin and compensate buyers where a failure to provide evidence results in the use of a higher default value.
Verified Suppliers Could Gain a Competitive Advantage
For Southeast European exporters, the requirements create both compliance costs and commercial opportunities. Suppliers with robust monitoring, reporting and verification (MRV) systems and independent verification may become preferred partners for manufacturers supplying the EU market, even where competing materials have similar physical characteristics.
CBAM is consequently introducing an additional dimension of industrial credit quality: the ability of suppliers to substantiate the carbon content of the goods they provide.
