Steel and aluminium manufacturers sourcing materials from other industrial installations will need reliable, independently verified emissions evidence to use actual precursor values under the European Union’s Carbon Border Adjustment Mechanism (CBAM). New European Commission guidance clarifies how upstream emissions data must be documented and incorporated into the verification of complex goods.
The requirements are set out in the Commission’s CBAM Questions and Answers, updated on 15 October 2026. The guidance addresses how emissions from precursors manufactured at separate installations must be accounted for when calculating the embedded emissions of a finished or complex CBAM product.
Actual emissions require independent verification
Manufacturers have two options for determining precursor emissions: apply the relevant default values or use actual emissions that have been independently verified.
Where a downstream operator chooses actual values, the operator producing the precursor must provide the verified emissions information to the manufacturer of the complex good. Only actual values included in an appropriate verification report can be used in the calculation.
The verifier responsible for the final product must be able to examine the report supporting the precursor data and establish whether the figures can legitimately be incorporated into the final embedded-emissions calculation. A commercially supplied emissions figure, without the required supporting verification evidence, is not sufficient.
This requirement makes upstream emissions documentation part of the formal CBAM verification process, particularly in steel and aluminium supply chains involving multiple installations and companies before products enter the EU market.
Missing supplier evidence can increase CBAM exposure
For exporters in Serbia and other Southeast European countries, compliance increasingly depends on information obtained beyond their own production facilities. Steel processors purchasing inputs from other mills and aluminium manufacturers using externally produced precursor materials may need installation-specific verified data from their suppliers if they intend to apply actual values.
If an upstream supplier cannot provide acceptable verified emissions information, the downstream manufacturer may need to use the applicable default values instead.
The financial implications depend on the emissions attributed to the precursor. Where default values exceed the precursor’s actual carbon intensity, the resulting CBAM liability for the final product may be higher, even if the downstream installation operates efficiently.
As a result, supplier assessments may need to account for emissions-data quality alongside conventional purchasing criteria, including price, product grade, delivery reliability and product certification.
CBAM Registry exchange planned for 2028
The Commission has also clarified the expected arrangements for transferring verified precursor emissions information between operators.
From 2028, operators are expected to be able to exchange actual verified precursor emissions directly through the CBAM Registry. During 2027, however, the information will have to be exchanged outside the Registry.
This makes bilateral information-sharing arrangements particularly important during the first compliance cycle. Suppliers and downstream manufacturers may need agreements covering emissions data, the corresponding verification reports, installation identifiers, reporting periods and supporting evidence required by the verifier of the complex good.
Contracts will also need to address situations in which a supplier has committed to providing actual emissions data but subsequently fails to obtain the necessary verification.
Reporting periods determine which precursor evidence applies
The guidance establishes a default approach for matching precursor verification reports to the reporting period of the complex good. The verifier will normally assess the report corresponding to the reporting period, or production year, of the final product.
An alternative is permitted where sufficient evidence establishes the precursor’s actual production period. In that case, the verifier may use the report associated with the period in which the precursor was produced.
This distinction increases the importance of traceability at lot or batch level, particularly where inventories move between reporting periods. Manufacturers need to be able to connect precursor materials with the relevant production periods and supporting emissions documentation.
Supplier due diligence extends to carbon-data reliability
The evidence requirements create an additional supply-chain risk for industrial buyers and their financing partners. A manufacturer may maintain an effective internal monitoring, reporting and verification (MRV) system but still face greater CBAM exposure if an upstream supplier cannot produce acceptable verified emissions data.
Carbon-data availability may consequently become relevant to supplier due diligence, procurement agreements and working-capital planning. Contractual provisions may also be needed to address the commercial consequences of missing or unverifiable emissions information.
The implications could extend further if CBAM coverage expands to additional downstream products. Each additional manufacturing stage may require verified emissions information to remain traceable as materials move from primary production through processing and into finished goods.
For Southeast European steel and aluminium exporters, the requirements link the commercial value of lower-carbon production to the quality of the supporting evidence. A precursor’s actual emissions performance must be documented and verified through the supply chain if downstream manufacturers are to rely on those values under CBAM.
