The European Union has released a critical CBAM update that reshapes how metal exporters will navigate the world’s most ambitious carbon-border mechanism. According to the latest announcements, the EU will keep indirect emissions out of CBAM for metals, focusing reporting obligations only on direct process emissions for steel, aluminium, and other covered products.
This decision, paired with new rules for classifying pre-consumer scrap, will directly influence how exporters prepare for CBAM emission reporting updates, manage supply-chain documentation, and adapt to the next phase of CBAM regulation.
For sustainability teams, climate strategists, and exporters preparing for 2026, this is not just an administrative change. It is a signal about where climate-linked trade is headed and how quickly compliance expectations are evolving.
Why the EU’s Decision Matters for the Metals Sector?
Under current EU CBAM rules for metals, only direct emissions will be counted for iron & steel, aluminium, and related inputs. Electricity-related emissions, a major part of the footprint for energy-intensive producers, are excluded, at least for now.
This exclusion has major implications:
- Metals remain only ‘partially priced’ for carbon. Aluminium smelting and certain steelmaking routes derive a huge share of their emissions from electricity use. Excluding these means CBAM underestimates true climate impact.
- Uneven incentives for decarbonization. Producers powered by renewable electricity aren’t fully rewarded; those reliant on carbon-heavy grids aren’t fully accountable.
- Carbon leakage risks persist. Without energy-based emissions reporting, some exporters retain cost advantages even when operating on dirtier grids.
Also read: How to Become CBAM Audit-Ready Before 2026: Compliance with CBAM Solution
Scrap Under CBAM: A New Layer of Compliance
Beyond indirect emissions, the EU has introduced a second major change: Pre-consumer scrap will now be treated as a separate CBAM good. This aims to prevent scrap-based resource shuffling where producers export scrap to lower-carbon jurisdictions or re-route material flows to minimise CBAM exposure.
What this means for exporters:
- A new wave of CBAM new compliance requirements.
- Detailed documentation to distinguish pre-consumer vs post-consumer scrap.
- Stronger verification protocols.
- More complex CBAM reporting for scrap-intensive metal producers.
The EU has also signalled that if differentiation becomes technically or administratively unfeasible, this classification may be reevaluated — underlining CBAM’s iterative and experimental nature.
Also read: 5 Reasons exporters need a CBAM reporting tool
Three immediate implications for exporters:
1. CBAM reporting becomes stricter, deeper, and more data-intensive
The EU is tightening scrutiny around emissions declarations, verifiable data, scrap origins, and activity-level reporting. Even if indirect emissions are out-of-scope, traceability expectations are rising.
2. The advantage for “low-carbon metals” remains incomplete
Producers with low direct emissions (e.g., EAF steel, hydro-powered smelters) gain some competitive edge but without counting indirect emissions, true clean producers don’t get full credit.
3. Exporters must prepare early for future expansions
Several working groups in Brussels continue assessing models for calculating power-related emissions. Indirect emissions may re-enter CBAM scope in future reforms and exporters caught unprepared will face steep compliance shocks.
Implications for Global Decarbonization and Trade
The exclusion of indirect emissions reflects a practical compromise: balancing feasibility with climate ambition.
Yet it raises important questions:
- Can carbon pricing truly work if major emissions sources remain unaccounted?
- Will partial emissions reporting slow the global push for cleaner industrial energy systems?
- Does this create inequity between producers with green grids and those without?
From a sustainability perspective, CBAM moves the needle, but does not yet capture the full footprint of metal production. From a trade perspective, it signals that carbon accountability is now embedded in market access, even if imperfectly.
Also Read: How to select a CBAM reporting software? 5 things to consider
This CBAM update reaffirms that CBAM is not a static policy — it is an evolving system that will continue adjusting its scope, methodologies, and enforcement mechanisms. Metal exporters across India, Southeast Asia, MENA, Latin America, and Africa must prepare for a future where:
- carbon becomes a core component of cost
- emissions reporting becomes more granular
- supply-chain transparency becomes non-negotiable
The TSC Netzero: CBAM solution tool helps in automating data collection for each input and output of every process in a CBAM product’s production route. TSC NetZero’s CBAM reporting software ensures accurate product-embedded emission calculations at every level. It also assists in quarterly emission report generation by digitising the entire process. It also supports the tracking of carbon taxes paid along the supply chain.
In addition to these, our platform ensures digital auditing of reports with accurate trails. There is also an integrated facility for third-party and first-party verification, as well as digitising the third-party audits by inviting EU-accredited auditors via TSC Netzero’s assurance modules.
