CBAM
CBAM Compliance Statement: Precision Machined Nuts and Washers
Official Regulatory Context
This statement confirms the status of fasteners (specifically nuts and washers) manufactured by bar turning and mechanical machining under the Carbon Border Adjustment Mechanism (CBAM) per Regulation (EU) 2023/956 and Commission Implementing Regulation (EU) 2023/1773.
CBAM and the Fastener Industry: What Manufacturers Need to Know
What is CBAM?
The EU Carbon Border Adjustment Mechanism (CBAM), established by Regulation (EU) 2023/956, is a carbon pricing measure applied to greenhouse gas emissions embedded in goods imported into the customs territory of the European Union. It exists to solve one specific problem: carbon leakage.
Carbon leakage occurs when EU manufacturers, facing the cost of the EU Emissions Trading System (EU ETS), are undercut by cheaper imports produced with fewer environmental constraints. Without a mechanism to equalise that cost at the border, EU climate policy simply shifts emissions overseas rather than reducing them.
CBAM works in tandem with the EU ETS, which created a cap-and-trade carbon market in the EU. EU importers buy CBAM certificates corresponding to the carbon price that would have been paid had the goods been produced under EU carbon pricing rules. Where a non-EU producer has already paid a carbon price in a third country, the corresponding cost can be fully deducted from the CBAM obligation.
Where are we now?
The definitive stage of CBAM, including financial obligations, commenced on 1 January 2026, following the expiration of the transitional three-year reporting phase.
The timeline in brief:
| 1 October 2023 - 31 December 2025 | Transitional phase. EU importers were required to report embedded emissions quarterly, but no financial payment was due. |
|---|---|
| 1 January 2026 | Definitive phase begins. Financial obligations apply. EU importers must purchase and surrender CBAM certificates to cover the carbon embedded in their imports. |
| 30 September 2027 | Deadline for the first annual CBAM declaration, covering goods imported throughout 2026. |
| 1 February 2027 | CBAM certificates become available for purchase through the EU's central platform. |
| 2026–2034 | CBAM is phased in progressively alongside the gradual phase-out of free EU ETS allocations for covered sectors, with full application commencing on 1 January 2035. |
Who is directly obligated?
The legal obligation under CBAM falls on the EU importer — the party releasing goods for free circulation in the EU. Only an authorised CBAM declarant — either an importer or indirect customs representative who has successfully applied to their national competent authority for that status — may import covered goods in the definitive period.
However, the practical burden reaches much further up the supply chain. Non-EU producers, whilst not directly subject to CBAM obligations, are essential to effective CBAM compliance in practice. They must calculate embedded emissions using EU-prescribed methodologies and provide accurate, complete, and verifiable emissions data to EU importers.
Put plainly: if you manufacture goods covered by CBAM and export them to EU customers, your customer will need your emissions data. If you cannot provide it, they will either pay more — or, increasingly, source from suppliers who can.
The de minimis threshold
Under Regulation (EU) 2025/2083, adopted as part of the EU's Omnibus simplification package, a single mass-based threshold now exempts importers who bring in 50 tonnes or less (cumulative net mass) of CBAM-covered goods into the EU per year. According to the Commission, this new threshold exempts approximately 90% of importers whilst still covering 99% of embedded emissions from CBAM-covered goods imported into the EU.
The 50-tonne figure is assessed at the importer's level across all CBAM goods combined — not per product or per supplier. Small-volume importers below this threshold are exempt from authorisation and reporting obligations.
What goods are currently in scope?
CBAM presently covers six sectors: cement, fertilisers, iron and steel, aluminium, electricity, and hydrogen. The specific goods are defined by their Combined Nomenclature (CN) code at the point of import, as listed in Annex I of Regulation (EU) 2023/956. What matters legally is the CN code of the article crossing the EU border — not the materials it was made from.
CN 7318: the position for steel and stainless steel nuts — confirmed in scope
CN 7318 — screws, bolts, nuts, coach screws, screw hooks, rivets, cotters, cotter pins, washers (including spring washers) and similar articles of iron or steel — is explicitly listed in Annex I of Regulation (EU) 2023/956. It has been within the formal CBAM scope since the transitional phase commenced on 1 October 2023. Financial obligations on imports of CN 7318 goods apply from 1 January 2026. No amendment to Annex I is required or pending for CN 7318.
This is a point that has caused significant confusion in the fastener industry. CN 7318 is not a downstream extension awaiting adoption — it is current law.
The proposed 2028 expansion
On 17 December 2025, the European Commission published a proposal (COM 2025/0419) to expand CBAM to approximately 180 additional downstream product categories from 1 January 2028, subject to adoption by the European Parliament and Council. This proposal concerns goods not currently covered — it does not affect CN 7318, which is already in scope. The expansion targets further downstream articles where steel or aluminium is a functional component, such as certain machinery parts, cables, and construction products.
What this means for UK manufacturers exporting to the EU
As a UK-based manufacturer supplying customers who export to the EU, you sit in the middle tier of a CBAM-affected supply chain. Your legal obligations under EU CBAM are indirect — your EU customer bears the formal CBAM declaration and certificate obligation — but your commercial exposure is real.
Your EU customers will ask you for:
- The embedded greenhouse gas emissions (direct and indirect) associated with your products, expressed in tonnes of CO₂-equivalent per tonne of goods
- The production route and facility (installation) data
- A breakdown of precursor material emissions — i.e. the carbon embedded in the steel or stainless steel bar from which your parts are machined
- Evidence that any carbon price has already been paid upstream (e.g. under a third-country carbon pricing scheme)
What happens without verified data: Default values are standardised emissions intensities published by the European Commission for each CBAM product category. They are set by country and production route and are designed to reflect the higher end of emissions for that product type. From 2026, relying on defaults instead of verified actuals will significantly increase a customer's CBAM cost exposure. If you cannot provide verified emissions data, your EU customer will be assessed against conservative default values — costing them more. That creates a direct procurement incentive to switch to suppliers who can demonstrate lower verified emissions.
Key dates summary
| 1 January 2026 | CBAM definitive phase begins; financial obligations apply to CN 7318 imports |
|---|---|
| 31 March 2026 | Deadline for EU importers to apply for authorised declarant status |
| 1 February 2027 | CBAM certificates available for purchase |
| 30 September 2027 | First annual declaration due (for 2026 imports) |
| 1 January 2028 | Proposed expansion to ~180 additional downstream products (subject to legislative adoption; does not affect CN 7318) |
| 1 January 2035 | Full CBAM application; EU ETS free allocations fully phased out |
Our reporting position and manufacturing emissions boundary
Regulatory background and scope
The EU Carbon Border Adjustment Mechanism is established under Regulation (EU) 2023/956. It applies to imports of certain carbon‑intensive goods into the EU. We do not import goods into the EU and therefore we are not CBAM declarants. Where our products are supplied to EU customers, the EU importer is the CBAM declarant and may require emissions data from us.
The Regulation defines embedded emissions as greenhouse gases released during the production of goods "up to the time of import into the customs territory of the Union". This includes:
- Upstream emissions from metal production
- Indirect emissions from electricity used in manufacturing
- Any direct process emissions from the production of the CBAM good
Because our operations involve mechanical machining only, we do not generate metallurgical process emissions. Our contribution to embedded emissions is primarily electricity use.
Annex I of the Regulation lists the CN codes currently in scope. These include iron and steel, aluminium, cement, fertilisers, electricity and hydrogen. Within iron and steel, the listed goods include both primary materials such as bars, rods, wire and flat products, and downstream articles of iron or steel — including CN 7318 (screws, bolts, nuts, washers and similar articles).
CN 7318 scope — confirmed in force
CN 7318 — screws, bolts, nuts, coach screws, screw hooks, rivets, cotters, cotter pins, washers (including spring washers) and similar articles of iron or steel — is explicitly listed in Annex I of Regulation (EU) 2023/956. It has been within the formal CBAM scope since the transitional phase commenced on 1 October 2023. Financial obligations on imports of CN 7318 goods apply from 1 January 2026. No amendment to Annex I is required or pending for CN 7318.
The European Commission published a proposal on 17 December 2025 (COM 2025/0419) to expand CBAM to approximately 180 additional downstream product categories from 1 January 2028, subject to adoption by the European Parliament and Council. This proposal concerns goods not currently covered — it does not affect CN 7318, which is already in scope.
Our manufacturing process and emissions sources
We manufacture nuts from:
- Carbon steel bar
- Stainless steel bar
- Aluminium bar
using CNC turning, drilling, tapping and other subtractive machining processes. We do not melt, cast, forge, roll or otherwise metallurgically transform metal.
Upstream processes include ore extraction, smelting, casting and rolling of bar stock. These stages generate the majority of embedded emissions. Our downstream machining stage:
- Does not chemically alter the metal
- Does not generate metallurgical emissions
- Consumes electricity as the primary emissions source
The carbon intensity of our nuts is determined mainly by the upstream production route of the bar (e.g. BOF, EAF, primary or secondary aluminium). Our machining adds only electricity‑related emissions.
How CBAM applies to our nuts
Our finished nuts are classified under CN 7318 and are CBAM goods under Annex I of Regulation (EU) 2023/956. The CBAM good is the finished nut. Embedded emissions include:
- Upstream emissions from bar production
- Electricity used in our machining operations
- Any minor direct emissions from site energy use
There is no separate metallurgical emission factor for machining. Our operations shape the metal; they do not re‑make it.
Where steel, stainless steel or aluminium bar is separately imported into the EU, the bar itself is also a CBAM good under its own CN code. In that case, the embedded emissions are assessed at the bar level. Our machining of bar into nuts occurs prior to EU import and is not a post-import processing step — the CBAM good crossing the EU border is the finished nut, and embedded emissions are calculated accordingly.
When this position applies and when it may change
This position applies where:
- Production consists solely of mechanical machining
- No melting, casting, forging, rolling or extrusion occurs
- The product is made from pre‑produced bar
- The finished product is classified under CN 7318
A different assessment may be required if:
- We introduce metallurgical processes
- We begin importing CBAM goods into the EU
- The EU changes the treatment of indirect emissions or system boundaries
UK CBAM from 1 January 2027
The UK will implement a domestic CBAM from 1 January 2027 UK CBAM Design. Key features include:
- £50,000 annual import threshold
- Coverage of iron and steel, aluminium, cement, fertilisers and hydrogen
- Registration and reporting obligations for UK importers
The UK CBAM will initially exclude indirect emissions. Electricity used in our machining operations is therefore not subject to the UK levy in the early years.
As with the EU CBAM, the dominant emissions source is upstream metal production. Our machining adds only electricity‑related emissions.
Summary
We do not import goods into the EU and are not CBAM declarants. We manufacture nuts by machining pre‑produced steel, stainless steel and aluminium bar. CN 7318 — covering our finished nuts — is listed in Annex I of Regulation (EU) 2023/956 and has been in formal CBAM scope since 1 October 2023, with financial obligations applying from 1 January 2026. Embedded emissions are dominated by upstream metal production, with our machining contribution limited to electricity use. Under the UK CBAM from 2027, indirect emissions are initially excluded.
Key legal and policy references
Regulation (EU) 2023/956
European Commission CBAM homepage
COM 2025/0419 — Proposed downstream extension
UK CBAM policy design
1. Product Scope and Material Applicability
Only goods listed in Annex I of Regulation (EU) 2023/956 are subject to CBAM. The following table identifies the status of our predominantly manufactured goods:
| MATERIAL SUBSTRATE | RELEVANT CN CODES | CBAM SCOPE | SOURCE REFERENCE |
|---|---|---|---|
| Iron and Steel | 7318 (Nuts, Washers) | In Scope | Listed in Annex I — Regulation (EU) 2023/956 (consolidated) |
| Stainless Steel | 7318 (Nuts, Washers) | In Scope | Listed in Annex I — Regulation (EU) 2023/956 (consolidated) |
| Aluminium | 7616 10 (Nuts/Washers) | In Scope | Listed in Annex I — Regulation (EU) 2023/956 (consolidated) |
| Brass/Copper/Bronze | 7415 (Fasteners) | Out of Scope | Not listed in Annex I |
| Nylon (polymers) | 3926 90 | Out of Scope | Not listed in Annex I |
Note on aluminium fasteners:CN 7616 10 00 covers finished aluminium nuts, washers and similar articles. It is listed in Annex I of Regulation (EU) 2023/956 and is a CBAM-covered good. For the aluminium bar we use as raw material (CN 7604), this is also in scope under Annex I. Both the bar and the finished aluminium fastener can independently trigger CBAM obligations at different points in the supply chain. For both CN 7616 and CN 7604, only direct embedded emissions are taken into account under Annex II.
2. CN codes for CBAM-specific Material
This table provides a consolidated reference of EU CN 10‑digit codes for CBAM‑covered aluminium, stainless steel, and steel bar materials used in the manufacture of precision fasteners. Each CN code is mapped to the specific engineering grades supplied as round, square, or hexagon bars, ensuring accurate classification for CBAM reporting, customs declarations, and supply‑chain compliance.
By grouping multiple grades under each CN code, this dataset offers a fast, authoritative lookup for materials such as 230M07, 11SMnPb30, C45, 606M36T, 709M40T, 817M40T, 303, 304, 316, 6026T9, 2011T3, 6082T6, and more. All listed CN codes fall within the official CBAM scope for iron, steel, and aluminium products, making this table a reliable resource for manufacturers, importers, and compliance teams seeking correct tariff classification.
| CN CODE | MATERIALS | DESCRIPTION |
|---|---|---|
| 7604219000 | 6026T9, 2011T3, 6011, 6082T6 | Aluminium bars and rods alloyed square (other shapes) |
| 7604291000 | 6026T9, 2011T3, 6011, 6082T6 | Aluminium bars and rods alloyed round |
| 7604211000 | 6026T9, 2011T3, 6011, 6082T6 | Aluminium bars and rods alloyed hexagonal |
| 7222111100 | 303, 304, 310, 316 | Stainless steel bars and rods cold-finished round |
| 7222202000 | 303, 304, 310, 316 | Stainless steel bars and rods square |
| 7222302000 | 303, 304, 310, 316 | Stainless steel bars and rods hexagonal |
| 7215909000 | 230M07, 230M07Pb, 11SMnPb30 | Non-alloy steel bars cold-finished round |
| 7215509000 | 230M07, 230M07Pb, 11SMnPb30 | Non-alloy steel bars cold-finished square |
| 7215519000 | 230M07, 230M07Pb, 11SMnPb30 | Non-alloy steel bars cold-finished hexagonal |
| 7214999000 | 080A15, 070M20, 080A42, 080M40, C45 | Non-alloy steel bars hot-rolled round |
| 7214919000 | 080A15, 070M20, 080A42, 080M40, C45 | Non-alloy steel bars hot-rolled square |
| 7214929000 | 080A15, 070M20, 080A42, 080M40, C45 | Non-alloy steel bars hot-rolled hexagonal |
| 7228102000 | 212A42, L7/B7 | Other alloy steel bars hot-rolled round |
| 7228202000 | 212A42, L7/B7 | Other alloy steel bars hot-rolled square |
| 7228302000 | 212A42, L7/B7 | Other alloy steel bars hot-rolled hexagonal |
| 7228702000 | 605M36T, 606M36T, 709M40T, 817M40T | Other alloy steel bars cold-finished round |
| 7228502000 | 605M36T, 606M36T, 709M40T, 817M40T | Other alloy steel bars cold-finished square |
| 7228602000 | 605M36T, 606M36T, 709M40T, 817M40T | Other alloy steel bars cold-finished hexagonal |
3. System Boundaries and Excluded Processes
Per Implementing Regulation (EU) 2025/2547 (which governs embedded emissions calculation methodology for the definitive phase from 1 January 2026), system boundaries determine which processes are included in the calculation of embedded emissions.
- Process definition: Our production constitutes mechanical machining of bar stock — specifically CNC bar turning, drilling, and tapping. These are subtractive, mechanical operations. No smelting, casting, forging, rolling, or chemical transformation of metal takes place.
- System boundary scope: Under Article 3(2) of Implementing Regulation (EU) 2025/2547, system boundaries cover direct emissions, indirect emissions (for goods not listed in Annex II to Regulation (EU) 2023/956), and the embedded emissions of any precursor. Iron and steel goods — including CN 7318 — are listed in Annex II, so only direct emissions apply (see Section 3 below).
- Excluded operations: The system boundary for iron and steel goods focuses on energy-intensive upstream production steps. Downstream mechanical operations — including cutting, machining, drilling, tapping, finishing, and plating — are not production processes within the CBAM system boundary. They do not alter the metal chemically or metallurgically and do not generate direct process emissions.
- Direct emissions status: Our bar turning, drilling, and tapping operations consume electricity but generate no combustion emissions, no process gas emissions, and no metallurgical emissions. Our direct emissions contribution to the embedded emissions of CN 7318 nuts is negligible and arises only from any fossil fuel use on site (e.g. space heating). The dominant embedded emissions are those of the upstream bar production.
- Reference: Implementing Regulation (EU) 2025/2547, Article 3 and Annex I — Regulation (EU) 2023/956 (consolidated)
4. Indirect Emissions (Electricity)
Regulatory position
CN 7318 (iron and steel fasteners including nuts) is listed in Annex II of Regulation (EU) 2023/956. Annex II identifies the goods for which only direct emissions are to be taken into account when calculating embedded emissions. Iron and steel goods — including CN 7318 — appear in this list alongside aluminium and hydrogen.
This means that indirect emissions (i.e. the emissions arising from the generation of electricity consumed during production) are excluded from the embedded emissions calculation for our nuts. This is confirmed by Article 3(2) of Implementing Regulation (EU) 2025/2547, which states that system boundaries cover indirect emissions only for goods not listed in Annex II.
- What this means in practice: The electricity we consume running our CNC lathes, drilling machines, and tapping equipment does not form part of the CBAM embedded emissions figure for CN 7318 nuts. Our EU customers' CBAM declarations for our products are based on direct emissions only — principally the upstream steel production route of the bar we machine.
- Carbon intensity of our nuts: The embedded emissions of our finished nuts are therefore determined almost entirely by the production route of the incoming bar — Basic Oxygen Furnace (BOF) steel carries materially higher embedded emissions than Electric Arc Furnace (EAF) steel. Stainless steel carries its own distinct production-route emissions. This is the data our customers need from us, and which we in turn require from our bar suppliers.
- What we track: In order to support customer CBAM declarations, we record and retain the following for each material batch:
- Country of origin of bar production
- Steel producer and mill identity
- Production route (BOF / EAF / other) where available from mill certificates
- Heat number and material certificate (EN 10204 3.1 or 3.2)
- CN code of finished goods produced from each batch
UK CBAM note: The UK CBAM, commencing 1 January 2027, will initially exclude indirect emissions for iron and steel goods. This is consistent with the EU position. Electricity consumed in our machining operations will therefore not be included in UK CBAM calculations in the early years of that regime either.
5. GLOSSARY
Upstream vs Downstream in Metal Supply Chains
🏭 *Upstream = earlier, primary production stages
Upstream refers to everything that happens before the material reaches us.* These are the stages where the bulk of carbon emissions occur.
For iron, steel and aluminium, upstream processes include:
- Extraction of raw materials (iron ore, bauxite, scrap collection)
- Smelting and reduction (blast furnace, basic oxygen furnace, electric arc furnace)
- Casting, rolling, extrusion of semi‑finished products (slabs, billets, blooms)
- Production of bar, rod, wire, sheet, plate, etc.
These upstream steps create the embedded emissions that CBAM is primarily concerned with.
When we buy steel bar, stainless bar or aluminium bar, all of the emissions from these upstream processes are already "embedded" in that bar.
🔧 *Downstream = later, finishing or fabrication stages*
Downstream refers to everything that happens after the bar, rod, wire or other semi‑finished product has been produced.
Downstream processes include:
Machining (turning, drilling, tapping, milling)
Cutting, threading, deburring
Surface finishing (plating, coating)
Assembly into finished articles (e.g., nuts, bolts, screws)
These processes do not create new metal. They simply shape or finish the metal that upstream producers have already made.
Our turning and bar‑machining operations are downstream.
How this distinction matters for CBAM
1. Upstream emissions dominate
CBAM's embedded emissions are overwhelmingly determined by upstream metal production, not by downstream machining.
This is why the emissions of our nuts are essentially:
- Upstream steel/aluminium production emissions
- Plus any direct on-site emissions (e.g. space heating)
- (With no metallurgical emissions added, because we do not melt nor transform the metal chemically)
- Note: electricity used in machining is excluded from embedded emissions for CN 7318 iron and steel goods under Annex II of Regulation (EU) 2023/956
2. Downstream articles within CBAM scope
CN 7318 — covering nuts, bolts, screws, washers and similar articles of iron or steel — is listed in Annex I of Regulation (EU) 2023/956 and has been within the formal CBAM scope since 1 October 2023. This means:
- The finished article is a CBAM good
- But the embedded emissions still come almost entirely from upstream metal production
- Indirect emissions (electricity) are excluded for CN 7318 goods under Annex II
It does not mean that machining becomes a metallurgical process or that new process‑emission factors suddenly apply.
3. Our process remains downstream as a CN 7318 CBAM good
CN 7318 is listed in Annex I of Regulation (EU) 2023/956. Our nuts are CBAM goods. Our production process nonetheless remains:
- Downstream
- Mechanical
- Non‑metallurgical
The emissions calculation follows the same logic: upstream bar production emissions dominate; our machining adds no metallurgical emissions and its electricity consumption is excluded under Annex II.
In CBAM language, upstream and downstream describe where in the supply chain a process sits. The terms are simple once you see them in the context of metal production and fastener manufacturing.
- Major source of embedded emissions
- Determines the carbon intensity of steel, stainless steel, or aluminium
- All emissions generated here become embedded in the metal bar
- Classified under iron, steel or aluminium CN codes — all CBAM goods under Annex I of Regulation (EU) 2023/956
- CBAM obligations arise when these materials are imported into the EU/UK
- Embedded emissions = upstream production emissions (indirect/electricity excluded for iron, steel and aluminium under Annex II)
- Purely mechanical, subtractive machining
- No melting, casting, forging, rolling or metallurgical transformation
- Electricity consumption excluded from embedded emissions for CN 7318 goods under Annex II of Regulation (EU) 2023/956
- No metallurgical emissions are created
- CN 7318 is listed in Annex I of Regulation (EU) 2023/956 — our finished nuts are CBAM goods
- Embedded emissions = upstream metal production only (machining electricity excluded under Annex II)
- Machining does not alter the metal's production route or carbon intensity
| Term / Acronym | Definition | Detailed Definition |
|---|---|---|
| Activity Data | Measured quantities used to calculate emissions. | Technical definition: Quantitative data such as fuel use, material inputs, production volumes or process parameters used to calculate actual emissions under Annex IV. Official wording: Defined in Annex IV as data on the level of an activity resulting in emissions. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Actual Emissions | The real measured emissions from producing a CBAM good. | Technical definition: Emissions calculated using primary data from the installation producing the CBAM good or precursor, following the rules in Annex IV. Actual emissions replace default values when available and verified. Official wording: Defined in Annex IV as emissions determined using activity data and emission factors. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Allocation | How total emissions are fairly split between different products made in the same process. | Technical definition: Method used to distribute total embedded emissions across multiple products, co-products or by-products, typically based on mass, energy content or economic value. Essential when an installation produces several CBAM goods and/or precursors from shared processes. Official wording: Not explicitly defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex IV; ISO 14040/44. |
| Aluminium (CBAM category) | The group of aluminium products that fall under CBAM rules. | Technical definition: Product group in Annex I of Regulation (EU) 2023/956 covering specific aluminium goods including CN 7601, 7604, 7605, 7606, 7607. Embedded emissions must be calculated according to Annex IV aluminium rules. Official wording: Not defined beyond Annex I listing. Source: Regulation (EU) 2023/956 Annex I; Implementing Regulation (EU) 2025/2547 Annex IV. |
| Aluminium Alloy Bar (CN 7604) | Aluminium bar or profile made from alloyed aluminium that is covered by CBAM. | Technical definition: Bars, rods and profiles of aluminium alloys classified under CN 7604. Embedded emissions include alumina refining, primary or secondary aluminium production, casting and extrusion. Official wording: Not defined in CBAM. Source: Regulation (EU) 2023/956 Annex I; CN Chapter 76. |
| Aluminium Bars and Profiles (CN 7604) | Aluminium bar and profile products that are directly in scope of CBAM. | Technical definition: Aluminium bars, rods and profiles classified under CN 7604. Emissions include alumina refining, smelting, casting and forming. Official wording: Not defined in CBAM. Source: Regulation (EU) 2023/956 Annex I. |
| Alumina Refining | The step where aluminium ore is turned into alumina before smelting. | Technical definition: Conversion of bauxite into alumina (Al₂O₃), typically via the Bayer process. Included in CBAM embedded emissions for aluminium goods. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex IV Aluminium. |
| Annual CBAM Declaration | The yearly statement an EU importer files showing emissions and certificates owed. | Technical definition: Yearly declaration submitted by authorised CBAM declarants stating total embedded emissions and required CBAM certificates. Official wording: Not quoted here but defined in Articles 6 and 22–24. Source: Regulation (EU) 2023/956. |
| Annex I (CBAM) | The official list of product codes that CBAM applies to. | Technical definition: Annex listing all CN codes covered by CBAM including iron and steel, aluminium, cement, fertilisers, electricity and hydrogen. Official wording: Annex I of Regulation (EU) 2023/956. Source: Regulation (EU) 2023/956 Annex I. |
| Annex II (System Boundaries) | The rules that define which production steps are included or excluded when calculating embedded emissions for CBAM goods. | Technical definition: Annex II of Implementing Regulation (EU) 2025/2547 sets the system boundaries for each CBAM product category. It specifies which upstream metallurgical processes must be included (e.g., ironmaking, steelmaking, casting, rolling) and which downstream operations must be excluded (e.g., machining, cutting, drilling, tapping, welding, plating, finishing, assembly). These boundaries determine which emissions count toward the embedded emissions of the imported good. Source: Implementing Regulation (EU) 2025/2547 Annex II (definitive phase system boundaries). |
| Annex IV (Calculation Rules) | The detailed rulebook for calculating CBAM emissions. | Technical definition: Defines emissions calculation rules for each CBAM product category including required process steps and precursors. Official wording: Annex IV of Implementing Regulation (EU) 2025/2547. Source: Implementing Regulation (EU) 2025/2547, Annex I (which replaced Implementing Regulation (EU) 2023/1773 for the definitive phase from 1 January 2026). |
| Authorised CBAM Declarant | The importer formally approved to submit CBAM declarations and manage CBAM certificates. | Technical definition: A person authorised by the competent authority of an EU Member State to import CBAM goods, submit annual CBAM declarations, and purchase/surrender CBAM certificates. Authorisation is mandatory from 2026. Official wording: “An authorised CBAM declarant as referred to in Article 5.” Source: Regulation (EU) 2023/956 Article 3(13) and Article 5. |
| Bar Turning | Machining bar material on a lathe to make parts like nuts. | Technical definition: Subtractive machining of bar stock using lathes or CNC machines. Explicitly excluded from CBAM system boundaries.Official wording: Cutting and finishing operations are excluded. Source: Implementing Regulation (EU) 2025/2547 Annex II. |
| Batch Traceability | Tracking which batch of metal each part came from. | Technical definition: Ability to trace finished products back to specific bar heats and supplier batches. Essential for emissions allocation. Official wording: Not defined in CBAM.Source: Industry practice. |
| Billet (Steel) | A semi-finished steel block rolled into bars. | Technical definition: Semi-finished steel product used as feedstock for bar rolling. Emissions included in CBAM. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Blast Furnace | A furnace that turns iron ore into molten iron. | Technical definition: Furnace producing molten iron from ore. Emissions included in CBAM. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Bloom (Steel) | A large steel block before rolling into shapes. | Technical definition: Large semi-finished steel product used for structural shapes. Emissions included in CBAM. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| BOF (Basic Oxygen Furnace) | A common way of making steel from molten iron. | Technical definition: Steelmaking process using oxygen to refine molten iron. High emissions included in CBAM. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Calculation-Based Method | A method that calculates emissions using activity data and emission factors. | Technical definition: Method where emissions are determined by multiplying activity data (e.g., fuel consumed) by emission factors. Used when direct measurement is not available. Official wording: Defined in Annex IV as a method based on activity data and emission factors. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Carbonate Inputs | Materials containing carbonates that release CO₂ during processing. | Technical definition: Inputs such as limestone or dolomite that release CO₂ during thermal decomposition. Relevant for cement and metallurgical processes. Official wording: Defined in Annex IV for process emissions. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Carbon Intensity | The amount of CO₂e emitted per unit of product. | Technical definition: A measure of greenhouse gas emissions per tonne (or other unit) of product. Used in both EU and UK CBAM to compare production routes and determine embedded emissions. Official wording: Not defined in CBAM; widely used in LCA and emissions reporting. Source: ISO 14067; GHG Protocol. |
| Carbon Leakage | When production moves to countries with weaker climate rules. | Technical definition: The risk that companies relocate production to jurisdictions with lower or no carbon pricing, resulting in increased global emissions. CBAM is designed to prevent this by equalising carbon costs. Official wording: Referenced in the recitals of Regulation (EU) 2023/956. Source: Regulation (EU) 2023/956 Recitals 2–5. |
| Carbon Price Paid (Country of Origin) | Any carbon cost already paid in the country where the goods were produced. | Technical definition: A carbon price paid in the country of origin includes explicit carbon costs such as carbon taxes, emissions trading payments, or other mandatory carbon pricing mechanisms. Importers may deduct this amount from the CBAM certificates owed, provided the carbon price is verified and meets the conditions in Article 9 of Regulation (EU) 2023/956. The deduction applies only to the portion of emissions for which a carbon price was actually paid. Source: Regulation (EU) 2023/956 Article 9. |
| CBAM (Carbon Border Adjustment Mechanism) | The EU system that puts a carbon cost on certain imported materials. | Technical definition: EU mechanism applying a carbon price to imports based on embedded emissions, mirroring EU ETS. Official wording: A mechanism for the adjustment of the carbon price at the border on imports of certain goods. Source: Regulation (EU) 2023/956 Article 1. |
| CBAM Authority | The national body in each EU country that oversees CBAM. | Technical definition: National competent authority administering CBAM, authorising declarants and enforcing compliance. Official wording: The competent authority designated by a Member State. Source: Regulation (EU) 2023/956 Article 3(15). |
| CBAM Certificate | The units an EU importer buys and surrenders to pay for CBAM emissions. | Technical definition: Electronic certificates corresponding to 1 tonne CO₂e of embedded emissions. Official wording: A certificate corresponding to one tonne of embedded emissions. Source: Regulation (EU) 2023/956 Article 3(16). |
| CBAM Certificate Price | The cost per CBAM certificate, linked to the EU carbon market price. | Technical definition: Price based on average closing prices of EU ETS allowances. Official wording: Calculated as the average of the closing prices of EU ETS allowances. Source: Regulation (EU) 2023/956 Article 21. |
| CBAM Declarant | The authorised importer that files CBAM reports and manages CBAM certificates. | Technical definition: Authorised person responsible for CBAM declarations and certificate surrender. Official wording: An authorised CBAM declarant as referred to in Article 5. Source: Regulation (EU) 2023/956 Article 3(13). |
| CBAM Good | A product listed in Annex I of the CBAM Regulation that is subject to CBAM rules. | Technical definition: A good whose CN code appears in Annex I of Regulation (EU) 2023/956, including iron and steel, aluminium, cement, fertilisers, electricity and hydrogen. Only these goods fall within the scope of CBAM reporting and certificate obligations. Emissions must be calculated according to Annex IV rules for each product category. Official wording: Goods listed in Annex I of Regulation (EU) 2023/956. Source: Regulation (EU) 2023/956 Annex I; Implementing Regulation (EU) 2025/2547. |
| CBAM Good (UK) | A product covered by the UK CBAM from 2027 based on UK-defined scope. | Technical definition: A good falling within the UK CBAM product scope, expected to include steel, aluminium, cement, ceramics, fertilisers and glass. The UK list differs from the EU CBAM Annex I list and will be finalised through UK legislation. Emissions reporting and levy obligations apply only to these goods. Official wording: Not yet legislated; described in UK Government CBAM policy statements. Source: UK Government CBAM Policy Statement (2023); UK Department for Energy Security & Net Zero. |
| CBAM Precursors | Intermediate products whose emissions must be included when calculating embedded emissions. | Technical definition: Goods listed in Annex II of Regulation (EU) 2023/956 that are used as inputs in the production of CBAM goods. Their embedded emissions must be included when calculating total emissions for complex goods. Examples include certain iron, steel and aluminium intermediates. Official wording: Precursors listed in Annex II of Regulation (EU) 2023/956. Source: Regulation (EU) 2023/956 Annex II; Implementing Regulation (EU) 2025/2547. |
| CBAM Registry | The EU’s online system that holds CBAM certificates and accounts. | Technical definition: Electronic database for CBAM accounts, certificates and transactions. Official wording: The electronic database for the recording of CBAM certificates. Source: Regulation (EU) 2023/956 Article 14. |
| CBAM Report (Quarterly) | The quarterly emissions report importers submit during the trial phase. | Technical definition: Report containing quantities, embedded emissions and carbon price paid, submitted during transitional period. Official wording: Quarterly CBAM reports during the transitional period. Source: Regulation (EU) 2023/956 Article 35. |
| CBAM Scope | The set of goods, emissions and obligations covered by CBAM rules. | Technical definition: The combination of goods listed in Annex I (CBAM goods), precursors listed in Annex II, embedded emissions defined in Annex IV, and the reporting and certificate obligations set out in Regulation (EU) 2023/956. Scope determines which imports require reporting, verification and certificate surrender. Official wording: Defined by Annexes I–IV of Regulation (EU) 2023/956. Source: Regulation (EU) 2023/956; Implementing Regulation (EU) 2025/2547. |
| CBAM Transitional Period | The trial phase where importers only report emissions and do not pay. | Technical definition: Period 1 Oct 2023 – 31 Dec 2025 requiring reporting but no certificate surrender. Official wording: From 1 October 2023 until 31 December 2025. Source: Regulation (EU) 2023/956 Article 32. |
| Casting (Steel/Aluminium) | Turning molten metal into solid shapes like slabs or billets. | Technical definition: Solidification of molten metal into slabs, blooms, billets or ingots. Included in CBAM embedded emissions. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Chamfering / Deburring | Smoothing or bevelling edges after cutting or machining. | Technical definition: Mechanical finishing operations excluded from CBAM system boundaries. Official wording: Finishing operations excluded. Source: Implementing Regulation (EU) 2025/2547 Annex II. |
| Chargeable CBAM Quantity (UK) | The amount of imported goods subject to the UK CBAM levy. | Technical definition: The mass or volume of a UK CBAM‑covered good that is liable for the border carbon levy, after accounting for exemptions, carbon price paid abroad, and any applicable adjustments. Official wording: Not yet legislated; referenced in UK CBAM design proposals. Source: UK Government CBAM Policy Statement (2023). |
| CIF (Cost, Insurance and Freight) | Seller pays shipping and insurance; buyer handles import and CBAM. | Technical definition: Seller pays freight and insurance to destination port; buyer is importer of record. Official wording: ICC definition. Source: Incoterms 2020. |
| CIP (Carriage and Insurance Paid To) | Seller pays transport and insurance; buyer handles import and CBAM. | Technical definition: Seller pays carriage and insurance to named place; buyer is importer of record. Official wording: ICC definition. Source: Incoterms 2020. |
| CFR (Cost and Freight) | Seller pays freight; buyer handles import and CBAM. | Technical definition: Seller pays transport to destination port; buyer assumes risk once loaded. Official wording: ICC definition. Source: Incoterms 2020. |
| CN Code | The 8‑digit EU customs code that decides if CBAM applies. | Technical definition: Combined Nomenclature code used for EU customs classification. CBAM scope defined by CN codes in Annex I. Official wording: CN established by Council Regulation 2658/87. Source: Regulation (EU) 2023/956 Annex I. |
| CO₂ (Carbon Dioxide) | The main greenhouse gas released when fuels are burned. | Technical definition: Primary greenhouse gas emitted by combustion and industrial processes. Official wording: Not defined in CBAM. Source: IPCC. |
| CO₂e (Carbon Dioxide Equivalent) | A way to express all greenhouse gases as if they were CO₂. | Technical definition: Metric expressing GHGs using global warming potentials relative to CO₂. Official wording: Not explicitly defined in CBAM. Source: IPCC; Implementing Regulation (EU) 2025/2547. |
| Cold Finishing | Mechanical finishing processes applied to steel bars after hot rolling. | Technical definition: Cold finishing includes drawing, peeling, grinding, polishing, and other mechanical finishing steps performed after hot rolling. These steps are included in CBAM when they form part of the production route of the imported good, regardless of whether they occur inside or outside the EU. If the imported bar is classified as cold‑finished (e.g., CN 7215, 7222, 7228), the emissions from cold finishing must be included. Source: CN Chapter 72; Implementing Regulation (EU) 2025/2547 Annex IV. |
| Cold‑Finished Bar (CN 7215 / 7222 / 7228) | Steel bars that have been further finished after hot rolling. | Technical definition: Bars and rods of non‑alloy, stainless or alloy steel that have been cold‑finished. CBAM‑covered. Official wording: Not defined in CBAM. Source: Regulation (EU) 2023/956 Annex I. |
| Commodity Code | The customs code used on paperwork that links directly to CBAM rules. | Technical definition: Full 10‑digit TARIC code used for EU import declarations. CBAM scope tied to declared CN/TARIC code. Official wording: Not defined in CBAM. Source: EU Customs Code. |
| Complex Goods | Goods produced using multiple precursors or production steps. | Technical definition: Goods whose production involves several inputs, precursors or processes, requiring allocation of emissions across multiple products. Official wording: Defined in Annex IV as goods produced using more than one precursor or process. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Continuous Casting | A process that turns molten steel into long semi‑finished shapes. | Technical definition: Solidification of molten steel into slabs, blooms or billets in a continuous strand. Included in CBAM embedded emissions. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Cradle‑to‑Gate | Measuring emissions from raw materials up to the point a product leaves the factory. | Technical definition: LCA boundary covering extraction to factory gate. CBAM is cradle‑to‑border. Official wording: Not defined in CBAM. Source: ISO 14040/44. |
| Cutting / Sawing | Cutting bar to length; not counted in CBAM emissions. | Technical definition: Mechanical operations such as sawing, cropping, shearing. Explicitly excluded from CBAM system boundaries. Official wording: Cutting excluded. Source: Implementing Regulation (EU) 2025/2547 Annex II. |
| DAP (Delivered At Place) | Seller delivers to your site; you handle import and CBAM. | Technical definition: Seller delivers goods ready for unloading; buyer handles import and CBAM. Official wording: ICC definition. Source: Incoterms 2020. |
| DDP (Delivered Duty Paid) | Seller handles everything including import and CBAM. | Technical definition: Seller becomes importer of record and CBAM declarant. Official wording: ICC definition. Source: Incoterms 2020. |
| DPU (Delivered at Place Unloaded) | Seller unloads at your site; you handle import and CBAM. | Technical definition: Seller delivers and unloads; buyer handles import and CBAM. Official wording: ICC definition. Source: Incoterms 2020. |
| Default Values (CBAM) | Standard emissions numbers you can use when real data is not available. | Technical definition: Commission‑determined average embedded emissions values. Official wording: Values determined by the Commission representing average embedded emissions. Source: Regulation (EU) 2023/956 Article 7(2). |
| Direct Emissions | Emissions that come directly from the factory’s own fuel use and processes. | Technical definition: Emissions from sources owned or controlled by the producer. Official wording: Greenhouse gas emissions from sources owned or controlled by the producer. Source: Regulation (EU) 2023/956 Article 3(23). |
| Downstream Processing | Steps done after the bar is made (like machining into nuts). | Technical definition: Processing after the CBAM good is produced in its imported form. Excluded from embedded emissions. Official wording: Embedded emissions cover production up to import. Source: Regulation (EU) 2023/956 Article 3(22). |
| DRI (Direct Reduced Iron) | An iron feedstock made without a blast furnace. | Technical definition: Iron produced by reducing ore in the solid state. Included in CBAM embedded emissions. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| EAF (Electric Arc Furnace) | A way of making steel by melting scrap with electricity. | Technical definition: Steelmaking process melting scrap/DRI using electric arcs. Included in CBAM embedded emissions. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Electricity Consumption (Machining Exclusion) | Electricity used for machining and other excluded downstream operations does not count toward embedded emissions for CBAM goods. | Technical definition: Under Implementing Regulation (EU) 2025/2547 Annex II, electricity consumption from excluded downstream processes — including machining, cutting, drilling, tapping, deburring, inspection, and packaging — must not be included in embedded emissions for iron and steel goods such as CN 7318 fasteners. Only electricity used in included metallurgical processes (e.g., melting, casting, rolling, heat treatment when metallurgical) is counted. Source: Implementing Regulation (EU) 2025/2547 Annex II. |
| Embedded Emissions | All the greenhouse gases emitted while making a product before it enters the EU. | Technical definition: Direct and indirect emissions released during the production of goods up to the time of import into the EU customs territory. Official wording: The direct and indirect emissions released during the production of goods up to the time of import. Source: Regulation (EU) 2023/956 Article 3(22). |
| Emission Factor | A value showing how much CO₂e is emitted per unit of activity. | Technical definition: A coefficient that quantifies emissions per unit of fuel, material or process activity. Used in calculation-based methods. Official wording: Defined in Annex IV as a representative value relating activity data to emissions. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| EU CBAM (European Union Carbon Border Adjustment Mechanism) | The EU system that applies a carbon cost to certain imported materials based on their embedded emissions. | Technical definition: A climate‑policy mechanism that requires importers of specific carbon‑intensive goods (including iron, steel, aluminium, cement, fertilisers, electricity and hydrogen) to report embedded emissions and, from 2026, purchase CBAM certificates reflecting the EU carbon price. It mirrors the EU Emissions Trading System (EU ETS) to prevent carbon leakage and ensure fair competition between EU and non‑EU producers. Official wording: “A mechanism for the adjustment of the carbon price at the border on imports of certain goods.” Source: Regulation (EU) 2023/956; Implementing Regulation (EU) 2025/2547. |
| EU ETS (EU Emissions Trading System) | The EU carbon market that sets the price used for CBAM certificates. | Technical definition: A cap‑and‑trade system where companies buy and surrender allowances for their emissions. CBAM certificate prices are based on the average EU ETS allowance price. Official wording: Established by Directive 2003/87/EC. Source: Regulation (EU) 2023/956 Article 21; Directive 2003/87/EC. |
| Fabricated Articles (CN 7326) | General steel fabrications that are outside CBAM scope. | Technical definition: Articles of iron or steel not specified elsewhere, classified under CN 7326. Not listed in Annex I and therefore not CBAM‑covered. Official wording: Not defined in CBAM. Source: CN Chapter 73; Regulation (EU) 2023/956 Annex I. |
| Fallback Values | Values used when actual emissions data is missing or incomplete. | Technical definition: Substitute values applied when primary data for actual emissions cannot be obtained, ensuring emissions can still be calculated. Distinct from default values. Official wording: Defined in Annex IV as values used when activity data or emission factors are unavailable. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Fasteners (CN 7318) | Finished nuts, bolts, screws and washers, which CBAM does not directly apply to. | Technical definition: Screws, bolts, nuts, coach screws, screw hooks, rivets, cotters, cotter pins, washers (including spring washers) and similar articles of iron or steel classified under CN 7318. Explicitly listed in Annex I of Regulation (EU) 2023/956 and therefore CBAM-covered from 1 October 2023. Financial obligations apply from 1 January 2026. CN 7318 is also listed in Annex II, meaning only direct embedded emissions are taken into account — indirect emissions from electricity are excluded. Source: Regulation (EU) 2023/956 Annex I and Annex II; CN Chapter 73. |
| FCA (Free Carrier) | The seller hands goods to your carrier; you handle shipping, import and CBAM. | Technical definition: Seller delivers goods, cleared for export, to a carrier nominated by the buyer. Buyer is importer of record and responsible for CBAM. Official wording: ICC definition. Source: Incoterms 2020. |
| FOB (Free On Board) | The seller loads goods onto your ship; you handle sea freight, import and CBAM. | Technical definition: Seller delivers goods on board the vessel nominated by the buyer. Buyer is importer of record and CBAM declarant. Official wording: ICC definition. Source: Incoterms 2020. |
| FCA vs FOB (Distinction) | FCA = handover to carrier; FOB = loading onto vessel. | Technical definition: FCA applies to any mode of transport; FOB applies only to sea freight. CBAM obligations unaffected — importer of record remains responsible. Official wording: ICC definitions. Source: Incoterms 2020. |
| Ferro‑alloys (General) | Alloying materials used in steelmaking; not CBAM goods themselves. | Technical definition: Iron‑based alloys (e.g., FeSi, FeMn, FeCr) used as inputs in steelmaking. Not listed in Annex I; emissions included only if part of precursor production. Official wording: Not defined in CBAM. Source: CN Chapter 72; Implementing Regulation (EU) 2025/2547 Annex IV. |
| Finished Goods (CBAM Context) | Products like nuts, bolts or assemblies that are not CBAM‑covered. | Technical definition: Whether a finished good is subject to CBAM depends entirely on whether its CN code appears in Annex I of Regulation (EU) 2023/956. CN 7318 fasteners (nuts, bolts, screws, washers) and CN 7616 aluminium fasteners are listed in Annex I and are CBAM goods. Other downstream finished articles such as machinery, vehicles or assemblies are not currently listed. Source: Regulation (EU) 2023/956 Annex I. |
| Forging (Steel/Aluminium) | Shaping metal using compressive force; counted only if part of precursor production. | Technical definition: Hot or cold deformation of metal using hammers or presses. Included in CBAM only if performed before the CBAM good reaches its imported form. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex II. |
| Fuel Emissions | Emissions released from burning fuels during production. | Technical definition: Direct emissions resulting from the combustion of fuels used in the production of CBAM goods or precursors. Official wording: Defined in Annex IV as emissions from fuel combustion. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Furnace (General) | Any industrial heating unit used in metal production. | Technical definition: Equipment used for melting, refining or heat‑treating metals (e.g., blast furnace, EAF, ladle furnace). Emissions included if part of system boundary. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| GHG (Greenhouse Gas) | Gases that cause climate change. | Technical definition: Gases that trap heat in the atmosphere, including CO₂, CH₄, N₂O, SF₆, HFCs and PFCs. Used in CBAM calculations as CO₂e. Official wording: Greenhouse gases listed in Annex I to Directive 2003/87/EC. Source: Regulation (EU) 2023/956 Article 3(1). |
| GHG Protocol | The main global rulebook for measuring emissions. | Technical definition: The globally used accounting framework for Scope 1, 2 and 3 emissions, used by suppliers to calculate product carbon footprints. Official wording: Not defined in CBAM. Source: GHG Protocol Corporate Standard. |
| Global Warming Potential (GWP) | A number showing how strong a greenhouse gas is compared to CO₂. | Technical definition: A factor used to convert greenhouse gases into CO₂e based on their warming impact over 100 years. Official wording: Not defined in CBAM. Source: IPCC AR6. |
| Goods Scope (UK CBAM) | The list of products covered by the UK CBAM from 2027. | Technical definition: The set of carbon‑intensive goods expected to be covered by UK CBAM, including steel, aluminium, cement, ceramics, fertilisers and glass. Final CN coverage is still under consultation. Official wording: Not yet legislated; described in UK Government policy statements. Source: UK Government CBAM Policy Statement (2023). |
| Hall-Héroult Process | The main industrial method for making aluminium metal. | Technical definition: Primary aluminium smelting process using electrolysis of alumina dissolved in molten cryolite. Major source of embedded emissions for CN 7604 aluminium bars. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex IV Aluminium. |
| Heat Number | A batch ID that tells you exactly which melt the metal came from. | Technical definition: Unique identifier assigned to a batch of steel or aluminium produced in a single melt or cast. Critical for traceability and linking emissions to material batches. Official wording: Not defined in CBAM. Source: EN 10204; industry practice. |
| Heat Treatment (Bars) | Heating metal to change its properties; counted in CBAM if done before import. | Technical definition: Metallurgical processes such as annealing, normalising, quenching and tempering, solution treatment and age hardening. Included in CBAM embedded emissions if performed outside the EU before import. Official wording: Production processes include heat treatment. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Heat Treatment (Fasteners) | Heating finished nuts or bolts; not counted in CBAM. | Technical definition: Heat treatment applied to finished CN 7318 nuts or bolts forms part of the production process for those CBAM goods. The direct fuel combustion emissions from the heat treatment process must be included in the embedded emissions data provided to EU importers. Electricity consumed during heat treatment is excluded under Annex II. Source: Regulation (EU) 2023/956; Implementing Regulation (EU) 2025/2547. |
| Hot Rolling | Rolling metal while hot to make bars or rods. | Technical definition: Rolling metal at high temperature to produce bars, rods, wire rod or profiles. Included in CBAM system boundaries for iron, steel and aluminium. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex II. |
| Hot-Rolled Bar (CN 7214 / CN 7228) | Steel bars made by hot rolling; covered by CBAM. | Technical definition: Bars and rods of non-alloy or alloy steel produced by hot rolling. CBAM-covered goods. Official wording: Not defined in CBAM. Source: Regulation (EU) 2023/956 Annex I; CN Chapter 72. |
| HS Code | The international product code used for customs. | Technical definition: Harmonised System code used globally for customs classification. Basis for CN and TARIC codes. Official wording: Not defined in CBAM. Source: WCO Harmonised System. |
| Indirect Emissions | Emissions from electricity use. | Technical definition: Emissions from electricity consumed during production. Excluded for iron, steel and aluminium under Article 7(1). Official wording: Emissions from the generation of electricity consumed during production. Source: Regulation (EU) 2023/956 Article 3(24). |
| Ingot | A big block of metal cast before rolling. | Technical definition: Large cast block of metal used as feedstock for rolling or forging. Emissions included in CBAM if produced outside the EU. Official wording: Not defined in CBAM. Source: Metallurgical practice. |
| Importer of Record | The company legally responsible for importing goods. | Technical definition: The entity legally responsible for customs declarations and CBAM reporting when importing goods into the EU. Official wording: Not defined in CBAM. Source: EU Customs Code. |
| Incoterms | Standard trade terms that define who pays for what in shipping. | Technical definition: International commercial terms defining responsibilities for transport, insurance, risk and customs. CBAM obligations always fall on the importer of record regardless of Incoterm. Official wording: Not defined in CBAM. Source: ICC Incoterms 2020. |
| Incoterm: CFR | Seller pays freight; buyer handles import and CBAM. | Technical definition: Seller pays for transport to destination port; buyer assumes risk once goods are loaded. Buyer is importer of record and CBAM declarant. Official wording: ICC definition. Source: Incoterms 2020. |
| Incoterm: CIF | Seller pays shipping and insurance; buyer handles import and CBAM. | Technical definition: Seller pays freight and insurance to destination port; buyer is importer of record and CBAM declarant. Official wording: ICC definition. Source: Incoterms 2020. |
| Incoterm: CIP | Seller pays transport and insurance; buyer handles import and CBAM. | Technical definition: Seller pays carriage and insurance to named place; buyer is importer of record. Official wording: ICC definition. Source: Incoterms 2020. |
| Incoterm: CPT | Seller pays transport; buyer handles import and CBAM. | Technical definition: Seller pays carriage to named destination; buyer assumes risk at first carrier. Buyer is importer of record. Official wording: ICC definition. Source: Incoterms 2020. |
| Incoterm: DAP | Seller delivers to your site; you handle import and CBAM. | Technical definition: Seller delivers goods ready for unloading; buyer handles import and CBAM. Official wording: ICC definition. Source: Incoterms 2020. |
| Incoterm: DDP | Seller handles everything including import and CBAM. | Technical definition: Seller handles all import duties and becomes importer of record; seller becomes CBAM declarant if importing into EU. Official wording: ICC definition. Source: Incoterms 2020. |
| Incoterm: DPU | Seller unloads at your site; you handle import and CBAM. | Technical definition: Seller delivers and unloads; buyer handles import and CBAM.Official wording: ICC definition. Source: Incoterms 2020. |
| Incoterm: EXW | Buyer handles everything including import and CBAM. | Technical definition: Buyer collects goods at seller’s premises and handles all export, transport and import steps including CBAM. Official wording: ICC definition. Source: Incoterms 2020. |
| Incoterm: FCA | Seller hands goods to your carrier; you handle import and CBAM. | Technical definition: Seller delivers goods to buyer’s carrier; buyer handles import and CBAM. Official wording: ICC definition. Source: Incoterms 2020. |
| Incoterm: FOB | Seller loads goods; buyer handles shipping and CBAM. | Technical definition: Seller loads goods on vessel; buyer handles freight, import and CBAM. Official wording: ICC definition. Source: Incoterms 2020. |
| Installation (CBAM) | The facility where the CBAM good or precursor is produced. | Technical definition: A stationary technical unit where production processes occur, including all directly associated activities. Emissions must be calculated at installation level. Official wording: Mirrors the definition in Directive 2003/87/EC. Source: Implementing Regulation (EU) 2025/2547 Article 2. |
| Material Input Emissions | Emissions from materials used in production. | Technical definition: Emissions associated with the use of materials that release CO₂e during processing, such as reducing agents or carbonates. Official wording: Defined in Annex IV as emissions from material inputs. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Material Misstatement | An error in emissions data large enough to affect CBAM reporting. | Technical definition: An inaccuracy, omission or incorrect value in emissions data that could influence the CBAM declaration. Official wording: Defined in the verification section as an error that could affect reported emissions. Source: Implementing Regulation (EU) 2025/2547 Articles 18–21. |
| Measurement-Based Method | A method that calculates emissions using direct measurement. | Technical definition: Method where emissions are determined using continuous or periodic measurement of gas flows and concentrations. Used when monitoring equipment is available. Official wording: Defined in Annex IV as a method based on direct measurement. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Monitoring Methodology | The rules and methods used to calculate emissions. | Technical definition: The structured approach an installation uses to collect data, calculate emissions and ensure accuracy, including choice of calculation or measurement method. Official wording: Defined in Annex IV as the methodology for determining embedded emissions. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Non-Conformity | A failure to follow CBAM rules or monitoring requirements. | Technical definition: A deviation from CBAM monitoring, reporting or verification requirements identified during verification. Official wording: Defined in the verification section as a failure to comply with CBAM rules. Source: Implementing Regulation (EU) 2025/2547 Articles 18–21. |
| Pelletising (Iron Ore) | Turning iron ore powder into pellets for steelmaking. | Technical definition: Process of agglomerating fine iron ore into pellets suitable for blast furnace or DRI processes. Included in CBAM embedded emissions for iron and steel goods. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex IV Iron and Steel. |
| Pig Iron | The raw iron made in a blast furnace before it becomes steel. | Technical definition: High‑carbon iron produced in a blast furnace, used as feedstock for BOF steelmaking. Emissions from pig iron production are included in CBAM embedded emissions. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Plating / Coating | Adding a protective coating to metal; not counted in CBAM. | Technical definition: Surface treatments such as zinc plating, galvanising, phosphate coating or painting. Explicitly excluded from CBAM system boundaries because they occur after the CBAM good is produced. Official wording: Plating is excluded from the system boundary. Source: Implementing Regulation (EU) 2025/2547 Annex II. |
| Post‑Import Processes | Work done after the material enters the EU; not counted in CBAM. | Technical definition: Any processing performed after the CBAM good has entered the EU, including machining, coating, assembly or heat treatment. These processes are excluded from embedded emissions. Official wording: Embedded emissions cover production up to the time of import. Source: Regulation (EU) 2023/956 Article 3(22). |
| Precursors (CBAM) | Materials used to make the final product that already contain emissions. | Technical definition: Intermediate materials such as pig iron, DRI, slabs, billets, blooms, alumina or primary aluminium that carry embedded emissions into the final CBAM good. Official wording: Not explicitly defined but referenced in Annex IV. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Primary Aluminium | Aluminium made from ore, not recycled. | Technical definition: Aluminium produced from alumina via the Hall‑Héroult electrolytic process. High embedded emissions due to electricity intensity. Included in CBAM system boundaries. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex IV Aluminium. |
| Process Emissions | Emissions created by chemical reactions in manufacturing. | Technical definition: Emissions from chemical reactions during production, such as CO₂ released during iron ore reduction or anode consumption in aluminium smelting. Included in CBAM embedded emissions. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Product Carbon Footprint (PCF) | The total carbon emissions of a product. | Technical definition: Total cradle‑to‑gate or cradle‑to‑grave emissions per unit of product, calculated using LCA methodology. Not required by CBAM but often requested by customers. Official wording: Not defined in CBAM.Source: ISO 14067. |
| Production of Goods (CBAM) | All steps involved in making a CBAM‑covered material. | Technical definition: All processes resulting in the production of CBAM goods, including production of precursors and intermediate products. Official wording: All processes resulting in the production of goods, including the production of precursors and intermediate products used in the production of those goods. Source: Implementing Regulation (EU) 2025/2547 Annex II. |
| Production Routes | Different industrial pathways used to make a CBAM good. | Technical definition: Distinct technological processes used to produce a CBAM good, such as BF‑BOF or EAF for steel, or primary vs secondary aluminium. Emissions vary significantly by route. Official wording: Defined in Annex IV for product-specific rules. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Profile (Aluminium, CN 7604) | Aluminium shapes made by extrusion that are covered by CBAM. | Technical definition: Aluminium extruded shapes classified under CN 7604. Included in CBAM scope. Emissions include alumina refining, smelting, casting and extrusion. Official wording: Not defined in CBAM. Source: Regulation (EU) 2023/956 Annex I. |
| Quenching and Tempering | Heating and cooling steel to make it stronger. | Technical definition: Heat treatment involving rapid cooling followed by reheating to achieve desired mechanical properties. Included in CBAM if performed outside the EU before import. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Raw Material Extraction | Getting metal ores out of the ground. | Technical definition: Mining and extraction of ores such as bauxite or iron ore. Emissions included in CBAM embedded emissions for aluminium and steel. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Reasonable Assurance | The confidence level required for verifying emissions data. | Technical definition: A high but not absolute level of confidence that emissions data is free from material misstatement. Required for verification of actual emissions. Official wording: Defined in the verification section as the level of assurance required. Source: Implementing Regulation (EU) 2025/2547 Articles 18–21. |
| Rebar (Reinforcing Bar) | Steel bars used in concrete reinforcement. | Technical definition: Steel reinforcing bar used in construction, typically classified under CN 7214 or 7215 depending on finishing. CBAM‑covered if CN code appears in Annex I. Official wording: Not defined in CBAM. Source: Regulation (EU) 2023/956 Annex I. |
| Recycling (Secondary Aluminium) | Making aluminium from scrap instead of ore. | Technical definition: Melting and refining aluminium scrap to produce secondary aluminium. Lower embedded emissions than primary aluminium. Included in CBAM system boundaries. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex IV Aluminium. |
| Reporting Declarant | The importer responsible for CBAM reports during the transitional period. | Technical definition: A person submitting quarterly CBAM reports between 2023 and 2025, before authorisation becomes mandatory. Official wording: Defined in Article 3 as the person submitting CBAM reports during the transitional period. Source: Regulation (EU) 2023/956 Article 3. |
| Rolling (Hot or Cold) | Flattening or shaping metal using rollers. | Technical definition: Mechanical deformation process used to reduce thickness or change shape of metal. Hot rolling and cold finishing are included in CBAM system boundaries. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex II. |
| Round Bar (Steel or Aluminium) | A round metal bar used for machining. | Technical definition: Solid cylindrical bar stock classified under CN 7214, 7215, 7222, 7228 or 7604 depending on material and finishing. CBAM‑covered if CN code appears in Annex I. Official wording: Not defined in CBAM. Source: CN Chapter 72 and 76. |
| Sampling Plan | A plan describing how data samples are selected for verification. | Technical definition: A structured approach used by verifiers to select data samples for testing accuracy and completeness of emissions data. Official wording: Defined in the verification section. Source: Implementing Regulation (EU) 2025/2547 Articles 18–21. |
| Scope 1 Emissions | Emissions from fuel burned on‑site. | Technical definition: Direct emissions from owned or controlled sources such as combustion and process emissions. Used in PCF calculations but not explicitly required by CBAM. Official wording: Not defined in CBAM.Source: GHG Protocol. |
| Scope 2 Emissions | Emissions from electricity use. | Technical definition: Indirect emissions from purchased electricity, steam, heating or cooling. Excluded from CBAM for iron, steel and aluminium. Official wording: Not defined in CBAM.Source: GHG Protocol. |
| Scope 3 Emissions | Emissions from suppliers and customers. | Technical definition: All other indirect emissions in the value chain, including upstream and downstream activities. Not required for CBAM but often requested by customers. Official wording: Not defined in CBAM. Source: GHG Protocol. |
| Scrap Ratio (Steel or Aluminium) | How much recycled material is used. | Technical definition: Percentage of recycled scrap used in production. Affects embedded emissions significantly. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Semi‑Finished Products (Steel) | Metal shapes made before final rolling. | Technical definition: Slabs, blooms and billets produced by casting or rolling. Emissions included in CBAM embedded emissions. Official wording: Not defined in CBAM.Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Simple Goods (CBAM) | Products made in one factory with simple production steps. | Technical definition: Goods produced in a single installation without complex precursor chains. Emissions can be directly allocated. Official wording: Defined in Annex IV. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Slab (Steel) | A large flat block of steel before rolling. | Technical definition: Semi‑finished steel product with rectangular cross‑section used for rolling into plate or strip. Emissions included in CBAM. Official wording: Not defined in CBAM.Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Spheroidising | Heat treatment to make steel easier to machine. | Technical definition: Heat treatment that transforms cementite into spheroidal form to improve machinability. Included in CBAM if performed outside the EU. Official wording: Not defined in CBAM. Source: Metallurgical practice. |
| Square Bar (Steel or Aluminium) | A square metal bar used for machining. | Technical definition: Solid square‑section bar stock classified under CN 7214, 7215, 7222, 7228 or 7604 depending on material and finishing. CBAM‑covered if CN code appears in Annex I. Official wording: Not defined in CBAM. Source: CN Chapter 72 and 76. |
| Stainless Steel Bar (CN 7222) | Stainless steel bars covered by CBAM. | Technical definition: Bars and rods of stainless steel classified under CN 7222. CBAM‑covered goods. Emissions include steelmaking, casting, rolling and cold finishing. Official wording: Not defined in CBAM. Source: Regulation (EU) 2023/956 Annex I. |
| Steelmaking (General) | The steps used to turn iron into steel. | Technical definition: Processes including blast furnace ironmaking, BOF steelmaking, EAF steelmaking, ladle refining and continuous casting. All included in CBAM embedded emissions. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Supplier Declaration (Emissions) | Emissions information provided by your material supplier. | Technical definition: Emissions data provided by the producer of the CBAM good or precursor, used by EU importers to calculate embedded emissions. Official wording: Not defined in CBAM but required for actual emissions reporting. Source: Implementing Regulation (EU) 2025/2547 Articles 3–7. |
| System Boundary (CBAM) | The list of steps that count when calculating CBAM emissions. | Technical definition: The set of production processes and emission sources included in embedded emissions calculations for each CBAM product category. Official wording: The production processes and emissions sources to be taken into account for determining embedded emissions. Source: Implementing Regulation (EU) 2025/2547 Annex II. |
| TARIC Code | The full 10‑digit customs code used when importing into the EU. | Technical definition: The 10‑digit EU customs code used for import declarations, built on the 8‑digit CN code plus 2 additional digits. CBAM scope and reporting are tied directly to the TARIC/CN code declared at import. Official wording: Not defined in CBAM. Source: EU TARIC; Regulation (EU) 2023/956 Annex I. |
| Third Country | Any non‑EU country (including the UK for CBAM purposes). | Technical definition: Any country that is not a member of the European Union. For CBAM, goods from third countries are subject to CBAM if their CN code is listed in Annex I. Official wording: Not explicitly defined in CBAM. Source: Regulation (EU) 2023/956. |
| Third‑Country Operator | A non‑EU manufacturer that makes CBAM‑covered materials. | Technical definition: The operator of an installation located in a third country that produces CBAM goods or precursors. May provide emissions data to EU importers. Official wording: Not explicitly defined in CBAM. Source: Implementing Regulation (EU) 2025/2547. |
| Transitional Period (CBAM) | The trial phase where importers only report emissions and do not pay. | Technical definition: The period from 1 October 2023 to 31 December 2025 during which importers of CBAM goods must submit quarterly CBAM reports but are not yet required to purchase or surrender CBAM certificates. Official wording: From 1 October 2023 until 31 December 2025. Source: Regulation (EU) 2023/956 Article 32. |
| Transitional Reporting (CBAM) | Quarterly emissions reporting required during the CBAM trial phase. | Technical definition: The obligation for EU importers to submit quarterly CBAM reports containing quantities, embedded emissions, and carbon price paid for all CBAM goods imported between 1 October 2023 and 31 December 2025. No certificates are purchased during this period. Official wording: “Quarterly CBAM reports during the transitional period.” Source: Regulation (EU) 2023/956 Article 35. |
| Upstream Emissions | Emissions created before the bar or material reaches its final form. | Technical definition: Emissions from all processes that occur before the final CBAM good is produced, including raw material extraction, precursors, ironmaking, steelmaking, alumina refining, aluminium smelting, casting and rolling. Official wording: Not defined in CBAM. Source: Regulation (EU) 2023/956 Article 3(22); Implementing Regulation (EU) 2025/2547 Annex IV. |
| UK CBAM (United Kingdom Carbon Border Adjustment Mechanism) | The UK’s planned system to apply a carbon cost to imported carbon‑intensive goods from 2027. | Technical definition: A forthcoming UK border carbon pricing mechanism, expected to begin in 2027, applying to imports of carbon‑intensive goods such as steel, aluminium, cement, ceramics, fertilisers and glass. It will require importers to pay a levy based on the difference between the UK carbon price and any carbon price already paid in the country of origin. Detailed methodology, reporting rules and product coverage are still under development. Official wording: Not yet legislated; described in UK Government policy statements (December 2023 and March 2024). Source: UK Government CBAM Policy Statement (2023); UK Department for Energy Security & Net Zero. |
| Default Values (UK CBAM) | Standard emissions values used when actual data is unavailable. | Technical definition: UK Government‑determined emissions factors representing typical carbon intensity for each covered good. Expected to be used widely in early years of UK CBAM until actual emissions reporting becomes mandatory. Official wording: Not yet legislated; referenced in UK CBAM policy statements. Source: UK Government CBAM Policy Statement (2023). |
| UK CBAM | The UK’s future version of CBAM, starting in 2027. | Technical definition: The planned UK Carbon Border Adjustment Mechanism, expected to start in 2027 and apply to imports of carbon‑intensive goods such as steel and aluminium. Detailed CN coverage and methodology are still under development. Official wording: Not yet legislated; described in UK Government policy statements. Source: UK Government CBAM announcement December 2023. |
| UK ETS (UK Emissions Trading Scheme) | The UK carbon market that will influence UK CBAM pricing. | Technical definition: The UK’s cap‑and‑trade system for carbon pricing, jointly operated by the UK, Scottish and Welsh Governments. UK CBAM levies will be linked to the UK ETS carbon price. Official wording: Established by The Greenhouse Gas Emissions Trading Scheme Order 2020. Source: UK ETS Authority; UK CBAM Policy Statement (2023). |
| Verification (CBAM) | Independent checking of emissions data. | Technical definition: Independent assessment by an accredited verifier to confirm that embedded emissions have been calculated in accordance with CBAM rules and are free from material misstatements. Official wording: Defined in Implementing Regulation (EU) 2025/2547 Chapter IV. Source: Implementing Regulation (EU) 2025/2547 Articles 18–21. |
| Verification Report (CBAM) | The document confirming that emissions data is correct and compliant. | Technical definition: A report issued by an accredited verifier confirming that embedded emissions have been calculated according to CBAM rules and are free from material misstatements. Official wording: Defined in Implementing Regulation (EU) 2025/2547 Chapter IV. Source: Implementing Regulation (EU) 2025/2547 Articles 18–21. |
| Verifier (CBAM) | An independent organisation that checks whether emissions data is correct. | Technical definition: An accredited, independent and impartial body that performs verification of CBAM emissions data and issues a verification report. Official wording: Defined in Implementing Regulation (EU) 2025/2547. Source: Implementing Regulation (EU) 2025/2547 Articles 18–21. |
| Vacuum Degassing (Steel) | A refining step to remove gases from molten steel. | Technical definition: Secondary steelmaking process where molten steel is exposed to vacuum to remove dissolved gases such as hydrogen and nitrogen. Emissions from this process are included in CBAM embedded emissions. Official wording: Not defined in CBAM. Source: Steelmaking practice; Implementing Regulation (EU) 2025/2547 Annex IV. |
| Waste Gas | Gas released during production that may be reused or flared. | Technical definition: Gas generated during metallurgical or chemical processes that may be combusted, reused or released. Relevant for calculating net emissions. Official wording: Defined in Annex IV for steel and other sectors. Source: Implementing Regulation (EU) 2025/2547 Annex IV. |
| Wire Rod (CN 7213) | Coiled steel rod used as feedstock, covered by CBAM. | Technical definition: Wire rod of iron or non‑alloy steel classified under CN 7213, typically hot‑rolled and coiled. Listed as a CBAM good; emissions include ironmaking, steelmaking, casting and rolling. Official wording: Not defined in CBAM beyond Annex I listing. Source: Regulation (EU) 2023/956 Annex I; CN Chapter 72. |
| Wire Drawing (Steel/Aluminium) | Pulling metal through dies to make thinner wire. | Technical definition: Cold working process where wire rod or bar is pulled through dies to reduce diameter. If performed outside the EU on CBAM goods, emissions are included; if performed after import, excluded. Official wording: Not defined in CBAM. Source: Implementing Regulation (EU) 2025/2547 Annex II and IV. |
| Yield (Production Yield) | How much finished product you get from the starting material. | Technical definition: Ratio of finished product mass to input material mass, used in emissions allocation and mass balance. Lower yields increase emissions per tonne of finished product. Official wording: Not defined in CBAM. Source: LCA and CBAM calculation practice. |
| Zinc Plating | A protective zinc coating on steel parts, not counted in CBAM. | Technical definition: Electroplated zinc coating applied to steel fasteners for corrosion protection. Classified as a finishing operation and excluded from CBAM system boundaries. Official wording: Plating is excluded from the system boundary. Source: Implementing Regulation (EU) 2025/2547 Annex II. |
FAQ – CN Codes for CBAM‑Covered Aluminium, Stainless Steel & Steel Bars
1. What is the purpose of this CN code table?
It helps us classify imported steel, stainless steel and aluminium bars correctly for CBAM reporting.
We have published this CN code table to help us – and our EU customers – correctly identify the 10-digit EU TARIC code for each imported steel, stainless steel or aluminium bar we supply. CBAM obligations apply strictly based on the CN code declared at import. If the CN code is wrong, the CBAM report will also be wrong, because the CBAM system links emissions reporting directly to the customs declaration.
As a manufacturer of nuts and precision-machined fasteners, this is particularly important for us because:
- We import bars, not finished fasteners
- Those bars are CBAM-covered goods under CN headings such as 7214, 7215, 7222, 7228 and 7604
- The finished nuts we produce are themselves CBAM-covered goods under CN 7318, which is explicitly listed in Annex I of Regulation (EU) 2023/956
This means that when our EU customers import our finished fasteners, those imports trigger CBAM obligations. Our EU customers will require CBAM-compliant emissions data from us. The CN code table maps grades such as 230M07, 11SMnPb30, 817M40T, 303, 316, 6082, 2011 and 6026 to the correct CN code based on alloy content, stainless classification, aluminium series and finishing condition.
Source: Implementing Regulation (EU) 2025/2547 and Annex I — Regulation (EU) 2023/956 (consolidated)
2. Why is this table important for CBAM compliance?
Because CBAM applies only to specific CN codes – if the CN code is wrong, our CBAM reporting is wrong.
CBAM is a CN code-driven mechanism. Annex I of Regulation (EU) 2023/956 lists the exact CN codes that fall within the CBAM scope. For Trojan Special Fasteners Limited, the key codes include:
- 7213 – wire rod of iron or non-alloy steel
- 7214 – non-alloy steel bars and rods, hot-rolled
- 7215 – non-alloy steel bars and rods, cold-finished
- 7222 – stainless steel bars and rods
- 7228 – other alloy steel bars and rods
- 7318 – screws, bolts, nuts, washers and similar articles of iron or steel (the CN code covering our finished products)
- 7604 – aluminium bars, rods and profiles
If the bar we import falls under one of the bar CN codes (7213 to 7228 or 7604), it is CBAM-covered as a primary or semi-finished material. Our finished nuts under CN 7318 are also CBAM-covered as downstream iron and steel goods, explicitly listed in Annex I. This means our EU customers must declare the embedded emissions of those nuts when importing them into the EU.
The CN code therefore determines:
- Whether emissions must be reported
- Which CBAM calculation rules and methodology apply
- Which template must be used
- Whether official default values are available and which values apply
Source: Annex I — Regulation (EU) 2023/956 (consolidated)
3. How are steel and aluminium material grades mapped to CN codes?
We map them by composition, product form, alloy series and finishing condition, not by commercial grade name.
The CN system does not recognise commercial grade names such as 230M07, 817M40T, 303, 316, 6082 or 2011. Instead, it classifies products based on:
- Whether the steel is non-alloy, alloy or stainless
- Whether the aluminium is pure or alloyed, and which series it belongs to
- The product form (bar, rod, profile, wire rod or semi-finished)
- The finishing condition (hot-rolled, cold-finished, drawn, peeled or ground)
- The cross-section shape (round, square, hexagon or other)
Our grade-to-code mappings are as follows:
- 230M07, 11SMnPb30, C45 hot-rolled → non-alloy steel bar → 7214
- 230M07, 11SMnPb30, C45 cold-finished → non-alloy steel bar → 7215
- 817M40T, L7/B7 → alloy steel bar → 7228
- 303, 316 → stainless steel bar → 7222
- 6082, 2011, 6026 → aluminium alloy bar → 7604
This mapping is essential for CBAM because the CN code determines whether the bar is in scope, which emissions methodology applies and which default emissions values are used when actual data is unavailable.
Source: EU Combined Nomenclature
4. Are all CN codes in this table officially CBAM‑covered?
Yes — every CN code in this table is within the official CBAM product scope under Annex I of Regulation (EU) 2023/956.
The bar codes covered by our table include:
- 7213, 7214, 7215 – non-alloy steel wire rod and bars
- 7222 – stainless steel bars
- 7228 – other alloy steel bars
- 7604 – aluminium bars, rods and profiles
An important clarification on CN 7318: CN 7318 (screws, bolts, nuts, washers and similar articles of iron or steel) is explicitly listed in Annex I of Regulation (EU) 2023/956 and has been within the formal CBAM scope since 1 October 2023. Financial obligations apply from 1 January 2026. CN 7318 fasteners must not be confused with general fabricated articles under CN 7326, which are also listed in Annex I but cover a different range of iron and steel articles.
A note on indirect emissions for CN 7318: Iron and steel goods — including CN 7318 — are listed in Annex II of Regulation (EU) 2023/956. This means that for CN 7318 nuts, only direct embedded emissions are taken into account. Indirect emissions arising from electricity consumed during production are excluded from the CBAM embedded emissions calculation for these goods.
Source: Annex I — Regulation (EU) 2023/956 (consolidated)
5. How do I know whether a steel grade is alloy, non‑alloy or stainless?
We check whether the chemical composition exceeds the alloy steel thresholds defined in the CN rules.
The CN Explanatory Notes define exactly when a steel is treated as non-alloy, alloy or stainless. In practical terms:
- Non-alloy steel does not exceed the CN-specified limits for elements such as chromium, nickel, molybdenum, vanadium, tungsten and boron
- Alloy steel exceeds one or more of those compositional limits
- Stainless steel contains 10.5% chromium or more and 1.2% carbon or less, typically also containing nickel and other alloying elements
The grades we commonly process classify as follows:
- 230M07, 11SMnPb30, C45 → non-alloy steel → CN 7214 or 7215
- 817M40T, EN24T, L7/B7 → alloy steel → CN 7228
- 303, 304, 316 → stainless steel → CN 7222
This classification matters for CBAM because each category carries different embedded emissions reporting obligations and different published default values. Where a grade sits close to a compositional boundary, we recommend seeking formal classification advice before completing a CBAM report.
Source: CN Explanatory Notes Chapter 72
6. How are aluminium grades classified for CN and CBAM purposes?
We classify them by whether they are pure or alloyed, by their alloy series and by their product form.
Aluminium bars and rods fall under CN heading 7604. Within that heading the CN distinguishes between:
- Non-alloy aluminium (typically 1xxx series)
- Aluminium alloys (2xxx, 5xxx, 6xxx, 7xxx series and others)
- Bars and rods versus profiles
- Cross-section type (solid versus hollow, uniform versus non-uniform)
The aluminium alloys we use for machining – including 6082, 2011, 6026 and 7075 – are all classified as alloy aluminium bars under CN 7604. These are explicitly within the CBAM scope, so any aluminium bar stock we import and use to make nuts or machined parts is a CBAM-covered import.
Aluminium fasteners and machined articles such as aluminium nuts are classified under CN 7616 10 00 rather than CN 7318, which covers iron and steel fasteners only. CN 7616 is listed in Annex I of Regulation (EU) 2023/956 and is therefore also a CBAM-covered good. EU customers importing aluminium fasteners from us will therefore have CBAM obligations to consider. We confirm the precise CN code for each finished product separately on request. For actual embedded emissions values for aluminium goods, customers should refer to the country-specific default values published in Annex I of Implementing Regulation (EU) 2025/2621.
Source: EU TARIC Consultation and Annex I — Regulation (EU) 2023/956 (consolidated)
7. Why does the finishing condition (hot‑rolled vs cold‑finished) affect the CN code?
Because the CN system treats hot-rolled and cold-finished bars as distinct products with different codes and different embedded emissions profiles.
For steel, the CN distinguishes between:
- Hot-rolled bars, produced directly from the rolling mill with a mill-scale finish
- Cold-finished bars, which have been drawn, peeled, ground or otherwise further processed to tighter tolerances and better surface quality
This leads to different CN headings for our main bar grades:
- Hot-rolled non-alloy steel bars (230M07, 11SMnPb30, C45 as-rolled) → 7214
- Cold-finished non-alloy steel bars (230M07, 11SMnPb30, C45 cold-drawn or peeled) → 7215
- Hot-rolled alloy steel bars (817M40T as-rolled) → 7228 10, 7228 20 or 7228 30
- Cold-finished alloy steel bars (817M40T cold-drawn or peeled) → 7228 50 or 7228 60
Cold finishing typically adds embedded emissions because it involves additional processing steps beyond hot rolling. Under CBAM, those additional emissions must be included if the cold finishing takes place outside the EU. Reporting the wrong finishing condition means declaring against the wrong CN code, which will result in the wrong default value being applied and a non-compliant CBAM declaration.
Source: EU Combined Nomenclature and Implementing Regulation (EU) 2025/2547
8. Why are multiple material grades grouped under one CN code?
Because CN codes classify by composition and form, not by commercial grade names.
The CN system exists for customs and tariff purposes, not for engineering specification. It groups products that share the same:
- Basic chemical category (non-alloy, alloy, stainless or aluminium alloy)
- Product form (bar, rod, wire rod or profile)
- Finishing condition (hot-rolled or cold-finished)
- Cross-section type (round, square, hexagon or other)
This means many different commercial grades share the same CN code. For example:
- 230M07, 11SMnPb30 and C45 hot-rolled round bars all map to 7214
- 817M40T and EN24T cold-finished hexagon bars both map to 7228 50
- 303, 304 and 316 stainless bars all map to 7222
- 6082, 2011 and 6026 aluminium bars all map to 7604
Grouping them under one CN code is correct for customs and CBAM purposes. It also means that for CBAM reporting, embedded emissions are determined per aggregated goods category rather than per individual commercial grade, which reduces the reporting burden. Within the same CN code, alloying element content and scrap ratios may vary between grades, but embedded emissions are reported at the aggregated goods category level.
Source: EU Combined Nomenclature
9. Can this CN code table be used for supplier declarations and CBAM reporting?
Yes – we have designed it to help our suppliers and EU customers align grade names, CN codes and CBAM reporting.
Our bar suppliers outside the EU often do not work with EU CN codes. They know:
- The grade name (for example 230M07, 817M40T, 303, 6082)
- The product form (bar, rod or profile)
- The finishing condition (hot-rolled, cold-drawn, peeled or ground)
- The cross-section shape and size (round, hexagon or square)
Our CN code table translates this information into the correct 10-digit CN/TARIC code, enabling:
- Our suppliers to provide emissions data against the correct CBAM product category
- Consistency between our purchase orders, mill certificates, customs entries and CBAM reports
- Our EU customers to match the emissions data we provide against the correct CN code in their CBAM declarations
This directly supports the obligations our EU customers have as importers of our finished fasteners under CN 7318, as well as any obligations arising from the import of bar stock itself.
Source: Annex I — Regulation (EU) 2023/956 (consolidated) and Implementing Regulation (EU) 2025/2547
10. Does the CN code affect how embedded emissions are calculated under CBAM?
Yes — the CN code determines which CBAM product rules and calculation methods apply, as well as which official default values are used if actual data is unavailable.
CBAM Annex IV and the implementing regulations set out different calculation rules for different product categories. For the CN codes relevant to us:
- Iron and steel bars (7213, 7214, 7215, 7222, 7228) – calculation rules require inclusion of ironmaking, steelmaking, casting, rolling and cold finishing, plus the use of scrap, pig iron, DRI and ferro-alloys as applicable. Only direct emissions are taken into account (Annex II goods).
- Aluminium bars (7604) – calculation rules require inclusion of alumina production, primary aluminium smelting or secondary recycling, and casting and rolling or extrusion into bars. Only direct emissions are taken into account (Annex II goods).
- Finished iron and steel fasteners (CN 7318) – only direct embedded emissions are taken into account, as CN 7318 is an Annex II good. Indirect emissions from electricity consumed in machining are excluded from the embedded emissions calculation. Country-specific default values for direct emissions are published in Annex I of Implementing Regulation (EU) 2025/2621.
- Aluminium fasteners (CN 7616) – also an Annex II good; only direct emissions apply. Country-specific default values are published in Annex I of Implementing Regulation (EU) 2025/2621.
For authoritative country-specific default values applicable to your specific import, always consult Annex I of Implementing Regulation (EU) 2025/2621 directly, as values vary by country of origin and production route. An Excel version is available on the European Commission CBAM homepage for reference purposes, though the legally binding values are those set out in the Regulation itself.
Because the CN code determines the product category, it also determines which rules and defaults apply. An incorrect CN code will lead to the wrong calculation methodology being used and potentially a significant misstatement of embedded emissions in the CBAM declaration.
Source: Implementing Regulation (EU) 2025/2547 and Implementing Regulation (EU) 2025/2621
11. What is CBAM and why does it matter to us at Trojan Special Fasteners Limited?
CBAM requires EU importers to report the embedded emissions of steel and aluminium bars, and also of finished fasteners, entering the EU.
CBAM is the EU's Carbon Border Adjustment Mechanism, established under Regulation (EU) 2023/956. It applies to specific carbon-intensive goods imported into the EU, including steel bars (CN 7213, 7214, 7215, 7222, 7228), aluminium bars and profiles (CN 7604), and finished iron and steel fasteners including nuts, bolts and screws under CN 7318. The CN code table on this website helps ensure that the correct CN code is used so that CBAM reporting is accurate and compliant.
Although we do not import goods into the EU and are therefore not ourselves CBAM declarants, our EU customers who import our finished nuts and fasteners are CBAM declarants and have reporting and certificate obligations under the definitive phase of CBAM, which began on 1 January 2026. Those customers will ask us for CBAM-compliant emissions data for the goods we supply to them.
Key points:
- CBAM applies only to imports into the EU
- Steel and aluminium bars are CBAM-covered as primary and semi-finished goods
- Finished iron and steel nuts and fasteners under CN 7318 are also CBAM-covered, explicitly listed in Annex I of Regulation (EU) 2023/956
- Aluminium fasteners and machined articles under CN 7616 are also CBAM-covered, listed in Annex I
- For both CN 7318 and CN 7616 goods, only direct embedded emissions are taken into account — indirect emissions from electricity are excluded under Annex II of Regulation (EU) 2023/956
- EU importers must report embedded emissions and, from 1 January 2026, surrender CBAM certificates
- We are not CBAM declarants, but our EU customers are, and they require emissions data from us
Source: Annex I — Regulation (EU) 2023/956 (consolidated)
12. Does CBAM apply to the finished nuts, bolts and machined parts we produce?
Yes, finished iron and steel fasteners including nuts are CBAM-covered downstream goods under CN 7318, explicitly listed in Annex I of Regulation (EU) 2023/956.
This is one of the most important points to understand about our position as a manufacturer supplying EU customers. CN 7318 has been within the formal CBAM scope since the transitional phase commenced on 1 October 2023. Financial obligations on imports of CN 7318 goods apply from 1 January 2026.
This means:
- Finished iron and steel nuts under CN 7318 16 are CBAM-covered
- Finished stainless steel fasteners under CN 7318 12 10 and CN 7318 14 10 are CBAM-covered
- Aluminium nuts and fasteners under CN 7616 10 00 are also CBAM-covered
- When our EU customers import our finished fasteners, those imports trigger CBAM obligations
- Our EU customers will require CBAM-compliant embedded emissions data from us
An important point on indirect emissions: CN 7318 iron and steel fasteners and CN 7616 aluminium articles are both listed in Annex II of Regulation (EU) 2023/956. This means that for these goods, only direct embedded emissions are taken into account in the CBAM calculation. Indirect emissions from electricity consumed during production are excluded. For authoritative country-specific default values, consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
The bar stock we use to make those fasteners is also CBAM-covered in its own right when it is imported, under the bar CN codes listed in question 11. Both the bar and the finished fastener can therefore independently trigger CBAM obligations at different points in the supply chain.
What is not included in CBAM is the mechanical machining we perform in the UK. Our CNC turning, bar turning, drilling and tapping operations are downstream processes that do not add metallurgical process emissions. The direct emissions from our UK machining stage are negligible and relate only to any on-site fossil fuel use such as space heating — our machining equipment is electrically driven and, as noted above, electricity-related indirect emissions are excluded for CN 7318 goods. What is included in the embedded emissions figure is the embedded carbon of the bar itself, from upstream steel or aluminium production.
Source: Annex I — Regulation (EU) 2023/956 (consolidated)
13. Does CBAM create obligations for us as a UK manufacturer exporting nuts or machined parts to the EU?
We are not CBAM declarants, but we have obligations to provide emissions data to our EU customers who are.
CBAM applies only to imports into the EU. We do not import goods into the EU and we are therefore not the CBAM declarant. The CBAM declarant is always the EU importer, or their indirect customs representative. Our EU customers who import our finished nuts and fasteners are the CBAM declarants and it is they who must report embedded emissions and purchase CBAM certificates.
However, this does not mean CBAM is irrelevant to us. Our EU customers cannot fulfil their CBAM reporting obligations without emissions data from us. If we do not provide that data, our customers may be subject to penalties and may ultimately be unable to import our goods into the EU. Providing accurate and timely CBAM-compliant emissions data to our EU customers is therefore a commercial and regulatory necessity for maintaining our market access.
Key points:
- We are not CBAM declarants
- CBAM reporting obligations rest with our EU customers as the importers
- Our EU customers require CBAM-compliant emissions data from us for the finished fasteners they import
- Failure to provide that data could result in our customers facing penalties and being unable to import our goods
- We use our in-house CBAM reporting template for our customers that require emissions data
- Our UK machining operations are not themselves included in the CBAM embedded emissions calculation
Source: Regulation (EU) 2023/956 Article 2
14. Does the UK have its own CBAM?
Yes, the UK will introduce its own CBAM on 1 January 2027.
The UK Government has confirmed that a UK CBAM will begin on 1 January 2027. It is expected to cover steel and aluminium, among other sectors. The UK CBAM has some important differences from the EU version.
What we currently know:
- There is no UK CBAM in force as of 2026
- The UK CBAM starts on 1 January 2027
- It will cover steel, aluminium, ceramics, cement, fertilisers, glass and hydrogen
- A minimum registration threshold of £50,000 in CBAM goods over a rolling 12-month period applies
- Indirect emissions from electricity will initially be excluded from the UK CBAM scope
- UK importers will have reporting and payment obligations once it comes into force
- We currently have no CBAM obligations in the UK because we do not import CBAM goods into the UK on a relevant scale
We are monitoring the UK CBAM legislation and will update our position as further details are confirmed by secondary legislation and HMRC guidance.
Source: UK Government CBAM factsheet
15. Do we need to report emissions for machining, thread-rolling or nut-forming carried out in the UK?
No. The CBAM embedded emissions boundary ends at the point of import into the EU. All processing we carry out in the UK falls outside that boundary.
CBAM defines embedded emissions in Article 3(22) of Regulation (EU) 2023/956 as the direct and indirect emissions released during the production of goods up to the time of import into the customs territory of the Union. This definition is the legal basis for excluding all UK-based processing from the CBAM embedded emissions calculation.
The following UK operations are therefore not included in CBAM embedded emissions, regardless of how energy-intensive they are:
- CNC turning and bar turning
- Automatic lathe operations
- Drilling and tapping
- Thread-rolling
- Nut-forming and cold heading
- Milling, countersinking and chamfering
- Deburring and end-facing
- UK-based heat treatment (performed after the bar has entered the UK)
- UK-based coating and plating
- UK-based cutting and cropping
Why our UK electricity use is not included in CBAM
Although our CNC machines and lathes consume electricity, those indirect emissions do not form part of the CBAM embedded emissions declared by our EU customers. This is because:
- CN 7318 iron and steel fasteners are listed in Annex II of Regulation (EU) 2023/956, which means only direct emissions are taken into account — indirect emissions from electricity are excluded for these goods regardless of where production takes place
- The CBAM system boundary for iron and steel goods focuses on upstream production processes: ironmaking, steelmaking, casting and rolling
- Downstream mechanical machining in a third country (the UK) is not a defined production process within the system boundary for iron and steel goods under Implementing Regulation (EU) 2025/2547
What is included in CBAM for our products
The embedded emissions that our EU customers must report for our nuts consist of:
- The direct embedded emissions of the steel or aluminium bar we used to make the nuts, as calculated by our bar supplier or using official default values
- Any direct process emissions from bar production performed outside the UK before we received the bar (for example steelmaking, rolling or cold finishing)
Scenario A: Bar produced outside the UK, processed by us in the UK, sold to EU customer
If bar was produced in, for example, Italy or Sweden and delivered to us in the UK, and we machine it into nuts and sell those nuts to an EU customer:
- The embedded emissions of the bar are those from the Italian or Swedish steel production
- Our UK machining is excluded from CBAM
- We provide emissions data for the bar's production to our EU customer
- Our EU customer declares those embedded emissions when importing our nuts
Scenario B: Bar produced in the UK, machined by us, sold to EU customer
If we use UK-produced bar:
- The bar is a product of a third country (the UK) from the EU's perspective
- The embedded emissions of that bar are determined by the UK steel production route
- Our machining is excluded
- We provide the bar's embedded emissions data to our EU customer
Scenario C: Bar sourced from within the EU (for example Italy), processed in the UK, returned to the EU
Even where the bar originated in the EU, once it has been exported to the UK and then reimported into the EU as finished nuts:
- The nuts are a product of the UK (a third country) at the point of import
- CBAM applies to the embedded emissions of the imported nuts as a CN 7318 CBAM good
- The relevant embedded emissions are those from the original bar production, not from our UK machining
- Our EU customer declares the embedded emissions of the nuts using our bar supplier's data or official default values
Source: Regulation (EU) 2023/956 Article 3(22) and Implementing Regulation (EU) 2025/2547
16. Do emissions from heat treatment need to be included in our CBAM reporting, and does it matter that we sub-contract it?
Yes, heat treatment emissions must be included in the embedded emissions data we provide to our EU customers, and the fact that we sub-contract heat treatment to a third party does not remove that obligation. It means we must obtain the relevant emissions data from our heat treatment sub-contractor and incorporate it into our own CBAM reporting.
Why heat treatment emissions are included even though we sub-contract them
Our finished nuts under CN 7318 are CBAM goods and we are the operator responsible for reporting their embedded emissions. Under the CBAM methodology, embedded emissions cover all direct emissions released during the production of the goods, which means every process step involved in producing the nuts in their final condition as supplied to our customers. Heat treatment is part of the production of our nuts. The fact that it takes place at a different physical location, operated by a third party under our instruction, does not remove it from the scope of our production process for CBAM purposes.
The CBAM Regulation defines an operator as any person who operates or controls an installation in a third country. We control the production of our nuts end to end, including the specification, scheduling and receipt of heat treatment from our sub-contractor. We are therefore responsible for ensuring the heat treatment emissions are captured in the embedded emissions data we report.
This is directly analogous to the precursor material principle in CBAM, where a manufacturer must obtain emissions data from their material suppliers and include it in their own report. In our case, the heat treatment sub-contractor is providing a processing service rather than a material, but the principle is the same: we must obtain their emissions data and include it in our figures.
What data we need to obtain from our heat treatment sub-contractor
To include heat treatment emissions in our CBAM reporting, we need our sub-contractor to provide us with the following information, expressed per tonne of nuts processed:
- The type and quantity of fuel consumed in their furnaces per tonne of nuts treated (for example cubic metres of natural gas per tonne, or litres of oil per tonne), which gives us their direct emissions contribution
- The quantity of electricity consumed per tonne of nuts treated (MWh per tonne) — note that for CN 7318 goods, indirect emissions from electricity are excluded under Annex II of Regulation (EU) 2023/956, so electricity data is required for completeness but does not form part of the CBAM declaration for our nuts
If our sub-contractor is unable or unwilling to provide actual data, we should note that the CBAM guidance permits the use of estimated values for minor contributions to total embedded emissions. However, given that heat treatment of fasteners, particularly hardening and tempering of carbon steel or stainless grades, can be a significant energy input, we should make every reasonable effort to obtain actual data from our sub-contractor.
How this data is incorporated into our in-house template reporting
When we complete our own in-house CBAM reporting template for our EU customers, the heat treatment emissions are incorporated as follows:
- The direct emissions from our sub-contractor's furnace fuel consumption are added to our own direct emissions figure
- Our own machining facility direct emissions will be zero or very low as we have no combustion processes on site
- The combined total of direct emissions represents the embedded direct emissions of our nuts as finished and heat treated goods
- Electricity consumption from heat treatment is recorded for internal purposes but is excluded from the CBAM declaration for CN 7318 goods
Three scenarios for heat treatment in our supply chain
Scenario A: We sub-contract heat treatment of finished or part-formed nuts to a UK third party
This is our standard position. The UK sub-contractor heat treats the nuts and returns them to us for final inspection and despatch. We must:
- Request fuel consumption data per tonne of nuts from our sub-contractor
- Add their direct emissions (from furnace fuel) to our own direct emissions total
- Report the combined figure in our in-house CBAM Reporting Template
Scenario B: Our bar supplier heat treats the bar before delivery to us
If the bar arrives already heat treated (for example quenched and tempered alloy bar), those heat treatment emissions are embedded in the bar as a precursor material. We capture them via the bar's embedded emissions data, which we obtain from our bar supplier and enter in the precursor section of our in-house template. We do not double-count them in our own direct emissions.
Scenario C: We sub-contract heat treatment to a non-UK third party
If heat treatment were sub-contracted to a facility outside the UK, the same principle applies. We remain the operator responsible for the embedded emissions of our nuts, and we must obtain and include the heat treatment emissions data from that facility. The geographical location of the sub-contractor does not change our reporting obligation.
Using default values
If we elect to use the official CN 7318 default values rather than providing actual data, those defaults implicitly represent a typical production route for carbon steel nuts including heat treatment. In that case we do not need to separately account for our sub-contractor's emissions, as the default already covers the full production process. However, if our actual direct emissions including heat treatment are materially lower than the default, we would benefit commercially from providing actual data, as our EU customers' CBAM certificate costs would be lower. For current default values, consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
Our obligation to engage with our heat treatment sub-contractor
In practical terms, we need to establish a data-sharing arrangement with our heat treatment sub-contractor so that we can fulfil our CBAM reporting obligations reliably. This means:
- Informing our sub-contractor of the requirement and what data we need from them
- Agreeing how that data will be recorded and shared, ideally on a per-batch or annual average basis
- Retaining records for at least four years in accordance with CBAM record-keeping requirements
- Reviewing the data annually as part of our CBAM reporting cycle
Summary
- Heat treatment is part of the production process for our CN 7318 nuts and its direct fuel-combustion emissions must be included in our CBAM reporting regardless of where it takes place or who performs it
- Sub-contracting heat treatment does not remove the obligation; it transfers the data-gathering task to us as the responsible operator
- We must obtain fuel consumption data from our heat treatment sub-contractor and incorporate the resulting direct emissions into our in-house reporting template figures
- Electricity consumed during heat treatment does not form part of the CBAM declaration for CN 7318 goods, as indirect emissions are excluded under Annex II of Regulation (EU) 2023/956
- If we use CN 7318 default values, the defaults implicitly cover heat treatment and no separate accounting is required, but actual data may be more commercially favourable if our direct emissions are below the default
Source: Annex I — Regulation (EU) 2023/956 (consolidated) and Implementing Regulation (EU) 2025/2547
17. Do emissions from cutting or sawing performed outside the EU need to be included in CBAM?
No. Cutting and sawing are minor mechanical preparation operations that do not change the metallurgical condition or CN classification of the bar, and the associated emissions are not separately reportable under CBAM.
CBAM covers emissions from production processes as defined in Annex I of Implementing Regulation (EU) 2025/2547. These are the processes that determine the embedded carbon of the bar as it arrives at the point of import, principally ironmaking, steelmaking, casting, rolling, heat treatment and cold finishing. Simple cutting and sawing operations do not fall within the defined production processes for CBAM purposes. They do not alter the alloy composition, the metallurgical condition, the CN code classification or the embedded emissions profile of the bar in any material way.
Operations that are not separately reportable under CBAM:
- Sawing to length
- Cropping
- Shearing
- Guillotining
- Cutting to length
- Chamfering
- End-facing
- Deburring
It is important to note that this applies to cutting and sawing as standalone operations. If cutting forms part of a broader cold finishing process (for example in a combined draw-and-cut production line), then the cold finishing emissions must be included, but the cutting itself is still not the reportable element. It is the drawing, peeling or grinding that generates the reportable embedded emissions in those cases.
Source: EU Combined Nomenclature and Implementing Regulation (EU) 2025/2547
18. Do emissions from peeling, grinding or polishing performed outside the EU need to be included in CBAM?
Yes, when these processes form part of cold finishing of bars performed outside the EU before import into the EU, they must be included in the bar's embedded emissions.
Cold finishing is a defined production process under the CBAM methodology. It changes both the CN classification of the bar (moving it from CN 7214 to CN 7215 for non-alloy steel, or from CN 7228 10/20/30 to CN 7228 50/60 for alloy steel) and its embedded emissions profile. The Combined Nomenclature specifically defines cold-finished bars as those subjected to cold drawing, peeling, grinding or similar operations, and these processes add energy and therefore emissions beyond those of the hot-rolled bar.
Cold-finishing operations on bars performed outside the EU that must be included in the bar's embedded emissions:
- Peeling
- Centreless grinding
- Cold drawing
- Bright drawing
- Precision grinding
- Turning or skimming as a surface finishing operation
- Polishing where it involves material removal and changes the surface condition of the bar
The key test is whether the operation changes the CN code of the bar from a hot-rolled classification to a cold-finished classification. If it does, the emissions from that process must be included.
Cold finishing operations performed inside the UK or EU after import are not included. If our bar suppliers perform cold finishing outside the EU as part of delivering bar to us in the UK, those cold finishing emissions should be reflected in the emissions data our bar suppliers provide. If they cannot provide actual data, the correct default value is that for the cold-finished CN code (for example CN 7215 rather than CN 7214 for non-alloy bar).
Source: EU Combined Nomenclature and Implementing Regulation (EU) 2025/2547
19. Do emissions from straightening performed outside the EU need to be included in CBAM?
No, straightening alone does not add reportable embedded emissions and does not change the CN classification of the bar, so it is not separately included in CBAM.
Straightening is a minor mechanical operation. It corrects dimensional deviation in the bar but does not alter its metallurgical condition, its alloy composition or its CN code. It is not listed as a distinct production process in the CBAM methodology.
Typical straightening operations that are not separately reportable:
- Roller straightening
- Press straightening
- Tension straightening
- Rotary straightening
Straightening becomes relevant for CBAM only in the context of a wider cold-finishing sequence. For example, if a bar producer performs a combined sequence of cold drawing followed by straightening, the reportable emissions arise from the cold drawing, not from the straightening itself. The straightening in that scenario is an ancillary step within the cold-finishing process.
It is therefore important for us when requesting data from our bar suppliers to understand whether straightening is being carried out as a standalone operation or as part of a broader cold-finishing process. If the bar is delivered to us cold-drawn and straightened, the cold-drawing emissions must be included. The straightening itself does not add a separate emissions figure.
Source: EU Combined Nomenclature and Implementing Regulation (EU) 2025/2547
20. Do emissions from pickling or descaling performed outside the EU need to be included in CBAM?
No. Pickling and descaling are surface-cleaning operations. They do not change the metallurgical condition or CN classification of the bar, and they are not listed as production processes in the CBAM methodology.
These processes remove scale, oxide layers or surface contamination from the bar but do not alter its composition, mechanical properties or embedded carbon. They are preparatory operations that may accompany cold finishing or heat treatment but do not in themselves add to the embedded emissions of the bar for CBAM reporting purposes.
Surface-cleaning operations that are not separately reportable under CBAM:
- Acid pickling
- Alkaline descaling
- Electrolytic cleaning
- Shot blasting
- Sand blasting
- Scale removal by mechanical means
- Surface preparation prior to coating or drawing
As with straightening, the relevant question is whether pickling or descaling is occurring as a standalone operation or as part of a wider cold-finishing or heat-treatment sequence. If it is part of a cold-finishing process (for example, hot-rolled bar is pickled and then cold-drawn), the reportable embedded emissions arise from the cold drawing, not from the pickling. The pickling is an ancillary step within that process.
If our bar suppliers carry out pickling as part of a cold-finishing or heat-treatment process, that full process should be reflected in the embedded emissions data they provide to us. If only standalone pickling or descaling is carried out, no additional emissions figure is required for that operation.
21. Do we need separate emission factors for each bar diameter or shape?
No. CBAM requires emissions per product category as defined by CN code and production route, not per diameter, cross-section or length.
CBAM reporting is based on the embedded emissions per tonne of the imported product. The product is defined by its CN code and production route, not by its physical dimensions or cross-section shape. This means that for a given CN code and production route, one embedded emissions figure applies to all sizes and shapes within that category.
This has the following practical implications for us:
- Different diameters of the same grade and condition use the same embedded emissions figure (for example, 20 mm, 30 mm and 50 mm diameter 230M07 cold-finished bar all fall under CN 7215 with the same default value per tonne)
- Different cross-section shapes of the same grade and condition use the same embedded emissions figure if the CN code is unchanged (for example round and hexagon 316 stainless bar both fall under CN 7222)
- Different lengths do not affect the embedded emissions figure
- Only a change in CN code or production route requires a different embedded emissions figure
For current country-specific default values applicable to each CN code, consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
Where different diameters or shapes are produced via genuinely different production routes (for example some sizes hot-rolled and others cold-finished), they would attract different CN codes and therefore different embedded emissions figures, but this is a consequence of the production route difference, not the dimension difference itself.
Source: Implementing Regulation (EU) 2025/2547
22. Do upstream raw material emissions need to be included in CBAM reporting?
Yes. Upstream precursor emissions form part of the embedded emissions of the imported bar and must be included in full.
CBAM defines embedded emissions as including the direct emissions released during the production of goods, which explicitly covers the production of precursor materials used as inputs. This means that for bar stock, the embedded emissions figure must cover the full upstream chain from raw material through to the bar in the condition in which it is imported.
For steel bars, upstream emissions that must be included are those arising from:
- Ironmaking, including blast furnace pig iron production or direct reduced iron production
- Scrap preparation and use where electric arc furnace routes are used
- Steelmaking, including basic oxygen furnace or electric arc furnace operations
- Casting into blooms, billets or slabs
- Rolling into bar form
- Cold finishing where applicable (drawing, peeling, grinding)
- Ferro-alloy production for alloying additions such as manganese, chromium, nickel, molybdenum and vanadium
For stainless steel bars specifically, the upstream chain also includes the significant embedded emissions from:
- Primary nickel production
- Primary chromium and ferrochromium production
- Molybdenum production where applicable
This is why stainless steel bars carry substantially higher default embedded emissions values than carbon or alloy steel bars. For iron, steel and aluminium goods — including all bar CN codes — only direct emissions are taken into account under Annex II of Regulation (EU) 2023/956; indirect emissions from electricity are excluded.
For aluminium bars, the upstream chain includes:
- Bauxite mining and alumina refining
- Primary aluminium smelting, which is extremely electricity-intensive
- Secondary aluminium production where recycled scrap is used
- Casting and extrusion or rolling into bar and profile form
- Alloying additions such as magnesium, silicon, copper and zinc
Note that although primary aluminium smelting is highly electricity-intensive, aluminium is an Annex II good and only direct emissions are taken into account in the CBAM calculation. The indirect electricity emissions from smelting are excluded.
In practice, for our CBAM reporting we capture all upstream emissions through the embedded emissions data provided by our bar suppliers, or through official default values where actual data is not available. For current country-specific default values, consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
Source: Implementing Regulation (EU) 2025/2547
23. Are stainless steel bars we use to make nuts CBAM-covered?
Yes. Stainless steel bars under CN 7222 are CBAM-covered, and our finished stainless steel nuts under CN 7318 are also CBAM-covered, explicitly listed in Annex I of Regulation (EU) 2023/956.
Both the bar we use as input material and the finished nuts we produce are within the CBAM scope, at different points in the supply chain. Understanding this dual coverage is important for how we respond to data requests from our EU customers.
The bar: CN 7222
Stainless steel bars fall under CN 7222 and are listed in Annex I of Regulation (EU) 2023/956. They are CBAM-covered whenever they are imported into the EU. The bar grades we typically use include:
- 303 — free-machining austenitic stainless steel
- 304 — standard austenitic stainless steel
- 316 — molybdenum-bearing austenitic stainless steel
- 431 — martensitic/ferritic stainless steel
- 17-4PH — precipitation hardening stainless steel
All of these fall under CN 7222 when in bar form. CN 7222 is an iron and steel good and is listed in Annex II of Regulation (EU) 2023/956, meaning only direct emissions are taken into account — indirect emissions from electricity are excluded. For current country-specific default values for CN 7222, consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
The finished nut: CN 7318
Our finished stainless steel nuts fall under CN 7318 12 10 or CN 7318 14 10. CN 7318 is also an Annex II good and only direct emissions are taken into account. For current country-specific default values for stainless steel fasteners, consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
Our role and obligations
We are not CBAM declarants. The reporting obligation rests with our EU customers as the importers of our finished nuts. However, we have a practical obligation to provide them with CBAM-compliant emissions data. Specifically:
- We provide embedded direct emissions data for our finished stainless steel nuts via our own in-house emissions data template
- The data we provide covers the embedded direct emissions of the stainless steel bar we used as precursor material, plus any direct process emissions from our own production (negligible for a machining-only operation with no combustion processes)
- We obtain bar-level embedded emissions data from our bar suppliers, or use the CN 7222 default values where actual data is not available
- We can confirm bar grade, supplier, country of origin and production route to support our EU customers' declarations
Source: Annex I — Regulation (EU) 2023/956 (consolidated)
24. Are alloy steel bars we use to manufacture nuts CBAM-covered?
Yes. Alloy steel bars under CN 7228 are CBAM-covered, and our finished alloy steel nuts under CN 7318 are also CBAM-covered, explicitly listed in Annex I of Regulation (EU) 2023/956.
The bar: CN 7228
Alloy steel bars fall under CN 7228 and are listed in Annex I of the CBAM Regulation. Typical alloy steel grades we use include:
- 817M40 and EN24 (nickel-chromium-molybdenum steel)
- 708M40 and EN19 (chromium-molybdenum steel)
- 605M36T and EN16T (manganese-molybdenum steel)
- L7 and B7 (chromium-molybdenum alloy stud bolt grades)
- 4140 and 4340
CN 7228 is listed in Annex II of Regulation (EU) 2023/956, meaning only direct emissions are taken into account — indirect emissions from electricity are excluded. For current country-specific default values for CN 7228 sub-headings by production route, consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
The finished nut: CN 7318
Our finished alloy steel nuts fall under CN 7318 16 (Nuts). CN 7318 is also an Annex II good and only direct emissions are taken into account. For current country-specific default values, consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
Our role and obligations
We are not CBAM declarants. Our EU customers who import our finished nuts are the CBAM declarants. We provide them with CBAM-compliant emissions data via our in-house template. That data covers:
- The embedded direct emissions of the alloy steel bar we used as precursor material, obtained from our bar suppliers or via CN 7228 default values
- Any direct process emissions from our own production (negligible for a machining-only operation)
- Documentation on bar grade, supplier, country of origin and production route
Source: Annex I — Regulation (EU) 2023/956 (consolidated)
25. Are non-alloy steel bars we use to manufacture nuts CBAM-covered?
Yes. Non-alloy steel bars under CN 7214 and CN 7215 are CBAM-covered, and our finished non-alloy steel nuts under CN 7318 are also CBAM-covered, explicitly listed in Annex I of Regulation (EU) 2023/956.
The bar: CN 7214 and CN 7215
Non-alloy steel bars fall under CN 7214 (hot-rolled) or CN 7215 (cold-finished) and are listed in Annex I of the CBAM Regulation. Typical non-alloy grades we use include:
- 230M07 / 230M07Pb — the standard free-machining steel grade used for the majority of our automatic lathe work
- 11SMnPb30 — leaded free-machining steel
- C45 — medium carbon steel for higher strength applications
CN 7214 and CN 7215 are listed in Annex II of Regulation (EU) 2023/956, meaning only direct emissions are taken into account — indirect emissions from electricity are excluded. For current country-specific default values, consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
The finished nut: CN 7318
Our finished non-alloy steel nuts fall under CN 7318 16 (Nuts). CN 7318 is also an Annex II good and only direct emissions are taken into account. For current country-specific default values, consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
Our role and obligations
We are not CBAM declarants. Our EU customers who import our finished nuts are the CBAM declarants. We provide them with CBAM-compliant emissions data via our in-house template, covering the embedded direct emissions of the bar precursor material and any direct process emissions from our own production.
Source: Annex I — Regulation (EU) 2023/956 (consolidated)
26. Are semi-finished steel products such as billets relevant to us as a nut manufacturer?
Only indirectly. Billets under CN 7207 are CBAM-covered when imported into the EU, but we do not purchase or handle billets. We purchase finished bar, and any billet-level emissions are already embedded within the bar's embedded emissions figure.
Semi-finished steel products covered by CBAM include:
- Billets (CN 7207)
- Blooms
- Slabs
These fall under CN 7207, which is listed in Annex I of the CBAM Regulation. They are CBAM-covered when imported into the EU by steel processors or rolling mills.
The relevance to us is indirect and arises in two ways:
- Where our bar supplier rolls bar from imported billets outside the EU, the embedded emissions of those billets form part of the bar's upstream emissions chain and must be captured in the bar's embedded emissions figure. Our bar supplier is responsible for including them when they provide us with actual emissions data.
- Where official default values are used for the bar CN code, those defaults implicitly include the upstream billet or slab emissions, so no separate accounting is required on our part.
We do not purchase billets, we do not handle billets, and we do not need to report at billet level. Our reporting is always at the level of the bar we actually purchase and the finished nut we produce.
Source: Annex I — Regulation (EU) 2023/956 (consolidated)
27. Are aluminium bars we use to manufacture nuts or components CBAM-covered?
Yes. Aluminium bars under CN 7604 are CBAM-covered, and our finished aluminium nuts and machined components are also CBAM-covered under CN 7616 10 00.
The bar: CN 7604
Aluminium alloy bars fall under CN 7604 and are listed in Annex I of the CBAM Regulation. Common aluminium grades we use include:
- 6082 — the most widely used structural aluminium alloy for machining applications
- 2011 — free-machining aluminium alloy with high copper content
- 6026 — free-machining aluminium alloy with improved machinability
- 7075 — high-strength zinc-bearing aluminium alloy
CN 7604 is listed in Annex II of Regulation (EU) 2023/956, meaning only direct emissions are taken into account — indirect emissions from electricity are excluded. Although primary aluminium smelting is highly electricity-intensive, those indirect emissions do not form part of the CBAM calculation for aluminium goods. For current country-specific default values for CN 7604, consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
The finished component: CN 7616 10 00
Our finished aluminium nuts, bolts and similar fasteners fall under CN 7616 10 00, not CN 7318, which covers iron and steel fasteners only. CN 7616 is listed in Annex I of Regulation (EU) 2023/956 and is also an Annex II good, meaning only direct emissions are taken into account. For current country-specific default values for CN 7616, consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
Our role and obligations
We are not CBAM declarants. Our EU customers who import our finished aluminium nuts are the CBAM declarants. We provide them with CBAM-compliant emissions data via our in-house template, covering:
- The embedded direct emissions of the aluminium bar precursor, obtained from our bar suppliers or via CN 7604 default values
- Any direct process emissions from our own production (negligible for a machining-only operation)
- Documentation on alloy grade, supplier, country of origin and production route
Source: Annex I — Regulation (EU) 2023/956 (consolidated)
28. Does cutting bar stock before nut production affect CBAM classification or what we report?
No. Cutting bars to length does not change the CN code, the CBAM scope, or the embedded emissions figure for the bar.
Cutting is a minor mechanical preparation operation. The CN Explanatory Notes confirm that cutting to length does not affect the classification of bars and rods. The cut bar remains classified under the same CN code as the full-length bar and carries the same embedded emissions per tonne.
Operations that do not change the bar's CN code or embedded emissions figure:
- Sawing to length
- Cropping
- Guillotining
- Cutting to length by any method
- Chamfering ends
- End-facing
This applies whether we cut the bar ourselves at our facility or whether we receive bar already cut to length by our supplier or a stockholder. In either case:
- The CN code of the bar material is unchanged
- The embedded emissions per tonne are unchanged
- We continue to report at bar-material level using the CN code appropriate to the grade and condition of the bar
It is important to note that cutting is distinct from cold finishing. If a supplier cuts bar that has been cold-drawn or peeled, the cold-finishing has already changed the CN code and added to the embedded emissions before the cutting took place. The cutting itself adds nothing further to the emissions or classification.
Source: EU Combined Nomenclature
29. Does heat treatment of bars or nuts change the CN code or what we report?
No. Heat treatment does not change the CN code of bars or nuts. However, heat treatment performed on bar stock outside the EU as part of the bar's production process must be included in the bar's embedded emissions, and heat treatment of finished nuts that we sub-contract must be included in the embedded emissions of our finished nuts.
Why heat treatment does not change the CN code
CN classification of steel bars is based on chemical composition, product form and finishing condition (hot-rolled versus cold-finished). Heat treatment changes the mechanical properties and metallurgical condition of the steel but does not alter its chemical composition or its form. A 316 stainless bar that has been solution-annealed is still classified under CN 7222 in the same sub-heading as one that has not. A 230M07 bar that has been bright-annealed is still classified under CN 7215 if it was cold-finished before annealing.
Heat treatment of bars by our bar supplier outside the UK
If our bar arrives in a heat treated condition (for example, quenched and tempered alloy bar, or solution-annealed stainless bar), the heat treatment was part of the bar's production process outside the UK. Those heat treatment direct emissions are embedded in the bar and must be included in the bar's embedded emissions figure, which our bar supplier should provide. If we use default values for the bar CN code, the default implicitly covers the standard production route including typical heat treatment.
Heat treatment of our finished nuts sub-contracted by us in the UK
We sub-contract heat treatment of finished or part-formed nuts to a third party heat treatment facility in the UK. As explained in question 16, this does not remove the heat treatment emissions from our CBAM reporting obligation. The heat treatment is part of the production process for our CN 7318 or CN 7616 nuts, and the direct emissions from our sub-contractor's furnace fuel consumption must be included in the embedded emissions data we provide to our EU customers. Note that electricity consumed during heat treatment does not form part of the CBAM declaration for CN 7318 or CN 7616 goods, as indirect emissions are excluded under Annex II of Regulation (EU) 2023/956.
Summary
- Heat treatment never changes the CN code of bars or nuts
- Heat treatment direct emissions from our bar supplier outside the UK are bar precursor emissions, captured in the bar's embedded emissions data
- Direct fuel-combustion emissions from heat treatment of our finished nuts performed by our UK sub-contractor must be included in our in-house template reporting
- Heat treatment electricity is excluded from the CBAM declaration for CN 7318 and CN 7616 goods under Annex II
- Heat treatment performed inside the EU after import by our customer is outside the CBAM scope
Source: EU Combined Nomenclature and Annex I — Regulation (EU) 2023/956 (consolidated)
30. Does cold drawing of bars we use to manufacture nuts change what we report?
Yes. Cold drawing and other cold-finishing operations change the CN code of the bar and may increase its embedded direct emissions figure. We must ensure we are using the correct CN code and corresponding embedded emissions data for any cold-finished bar we purchase.
How cold finishing changes the CN code
For non-alloy steel bars:
- Hot-rolled bars are classified under CN 7214
- Cold-finished bars (cold-drawn, peeled, ground or bright-drawn) are classified under CN 7215
For alloy steel bars:
- Hot-rolled alloy bars fall under CN 7228 10, 7228 20 or 7228 30
- Cold-finished alloy bars fall under CN 7228 50 or 7228 60
For stainless steel bars:
- Hot-rolled stainless bars fall under CN 7222 11 or 7222 19
- Cold-finished stainless bars fall under CN 7222 20
How cold finishing affects embedded emissions
Cold finishing adds processing steps beyond hot rolling, which may increase the direct embedded emissions of the bar. Where actual supplier data is available, cold-finished bar will typically show higher actual embedded direct emissions than hot-rolled bar of the same grade, because the cold-finishing energy and process inputs are explicitly captured. For official country-specific default values by CN code and production route, consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
All bar CN codes — whether hot-rolled or cold-finished, carbon steel, alloy steel, stainless steel or aluminium — are Annex II goods under Regulation (EU) 2023/956. Only direct emissions are taken into account in every case.
Our practical position
We do not cold-draw or cold-finish bars ourselves. We purchase bars that are already classified as either hot-rolled or cold-finished by our suppliers. Our responsibility is to:
- Identify correctly whether the bar we purchase is hot-rolled or cold-finished
- Use the correct CN code for that condition
- Apply the correct embedded direct emissions figure (actual data from supplier or the default for the appropriate CN code) in our in-house template reporting
Reporting a bar as hot-rolled when it is in fact cold-finished would result in the wrong CN code being used and potentially an understated embedded emissions figure in our CBAM data, which could expose our EU customers to compliance risk.
Source: EU Combined Nomenclature and Implementing Regulation (EU) 2025/2547
31. If our distributors export our nuts to the EU, do we become responsible for CBAM reporting?
No. We do not become CBAM declarants even if our distributors export our nuts to the EU.
CBAM obligations apply only to:
- EU importers
- Indirect customs representatives acting on behalf of EU importers
We are:
- A UK manufacturer
- Not exporting directly to the EU
- Not importing from the EU
- Not the importer of record for any CBAM-covered goods entering the EU
Our nuts fall under CN 7318, which is listed in Annex I of Regulation (EU) 2023/956 and is a CBAM-covered good. When our distributors export our nuts to the EU, those imports trigger CBAM obligations for the EU importer — not for us. Our role is to support that importer by providing CBAM-compliant emissions data.
Therefore:
- We do not submit CBAM declarations
- We do not purchase CBAM certificates
- We do not calculate CBAM liabilities
However, we can and do support distributors by providing:
- Bar-level embedded direct emissions data
- Bar grade and CN code
- Supplier name and country of origin where known
- Production route information (e.g. EAF/BOF, hot-rolled/cold-finished)
- Confirmation that CN 7318 nuts are CBAM-covered and that only direct embedded emissions apply under Annex II of Regulation (EU) 2023/956
Summary:
- We never become CBAM declarants. If distributors export our nuts to the EU, we provide bar-level direct emissions data to support the EU importer's CBAM reporting obligations.
Source: Annex I — Regulation (EU) 2023/956 (consolidated)
32. What information can we provide to distributors who export our nuts to the EU?
We can provide all CBAM-appropriate information relating to the raw materials used to manufacture our nuts and the production processes we apply.
We can supply:
- Bar grade (e.g. 230M07, 316, EN24, 6082)
- Correct CN code for the bar (using the CN code table on this website)
- Supplier name and country of origin where known
- Production route information (e.g. EAF/BOF, hot-rolled/cold-finished)
- Embedded direct emissions per tonne of bar
- Confirmation that nuts (CN 7318) are CBAM-covered and that only direct embedded emissions apply under Annex II of Regulation (EU) 2023/956
- Confirmation of any direct process emissions from our own facility (negligible for a machining-only operation with no combustion processes on site)
We also monitor electricity use for nut manufacturing. Note that indirect emissions from electricity are excluded for CN 7318 iron and steel goods under Annex II of Regulation (EU) 2023/956, so electricity data does not form part of the CBAM declaration for our nuts. We retain it for internal purposes and for transparency with customers.
What we cannot provide:
- We cannot submit CBAM declarations
- We cannot calculate CBAM certificate obligations
- We cannot provide emissions for processes outside our control (e.g. distributor transport)
Summary:
- We provide detailed bar-level direct emissions data and can confirm our own process emissions position. We do not submit CBAM declarations.
33. If the EU expands CBAM to include additional finished goods, are we prepared?
Yes. CN 7318 nuts are already within CBAM scope and have been since 1 October 2023. We are already set up to support EU customer CBAM reporting obligations.
For the existing CN 7318 scope, we already have:
- Embedded direct emissions data at bar level from our suppliers or via official default values
- Process-level understanding of nut production
- Traceability of raw materials to finished batches
- Confirmation that only direct emissions apply for CN 7318 goods under Annex II
Should the EU expand CBAM further to additional downstream product categories via COM(2025)989 (proposed extension from 1 January 2028), we are equally well-positioned:
- We maintain batch traceability from bar to finished nut
- We can identify the production route and country of origin of all bar stock we use
- We monitor electricity consumption per production batch for internal purposes
We would still not be the CBAM declarant unless:
- We exported nuts directly to the EU ourselves as the importer of record
- Or we otherwise became the authorised CBAM declarant for an EU import
Summary:
- We are already operating within the current CBAM scope for CN 7318. We are also well-positioned for any further expansion.
34. Do we need to calculate embedded emissions for our nut-manufacturing processes today?
Yes — CN 7318 nuts are CBAM-covered goods and have been since 1 October 2023. We are not the CBAM declarant, but our EU customers who import our nuts are, and they require embedded emissions data from us.
The embedded direct emissions our EU customers must declare consist of:
- The direct embedded emissions of the steel or aluminium bar we used as precursor material (from our bar suppliers or via official default values)
- Any direct process emissions from our own production (negligible for a machining-only operation with no combustion processes on site)
Indirect emissions from electricity are excluded for CN 7318 goods under Annex II of Regulation (EU) 2023/956 and do not form part of the CBAM declaration.
We already maintain:
- Embedded direct emissions data for bar stock by grade, supplier and country of origin
- Material traceability from bar to finished nut
- An in-house CBAM reporting template for use by EU customers
Summary:
- We are already operating within the current CBAM scope for CN 7318 and provide embedded direct emissions data to our EU customers on request.
35. What emissions data do EU importers typically request from us?
EU importers request embedded direct emissions data for our finished CN 7318 nuts, supported by bar-level traceability information.
Typical requests include:
- Embedded direct emissions per tonne of finished nut (either from actual bar supplier data or official default values)
- Bar grade and CN code
- Supplier name and country of origin
- Production route (EAF/BOF, hot-rolled/cold-finished)
- Confirmation that only direct embedded emissions apply for CN 7318 goods under Annex II of Regulation (EU) 2023/956
Less commonly, they may request:
- Confirmation of our energy monitoring systems
- Traceability documentation linking bar batches to nut batches
- Information on any sub-contracted processes (e.g. heat treatment) and their direct emissions contribution
We can provide all of the above.
Summary:
- EU importers request embedded direct emissions data for our CN 7318 nuts. We can provide this, supported by bar-level traceability information.
36. If our bar supplier cannot provide emissions data, what can we do?
We can still support distributors and EU importers by using official default values published in Annex I of Implementing Regulation (EU) 2025/2621, and by providing all other available supporting information.
If bar-level actual emissions data is not available from our supplier, EU importers may use country-specific default values published by the European Commission. We can support this by providing:
- Supplier name
- Country of origin
- Bar grade and CN code
- Production route information (if known)
- Any available mill documentation including EN 10204 material certificates
- Confirmation that only direct embedded emissions apply for CN 7318 goods under Annex II
We can also:
- Request emissions data from the bar supplier on behalf of the EU importer
- Provide a structured template for bar suppliers to complete
- Identify the correct default value CN code and production route to assist the EU importer in selecting the appropriate default from Implementing Regulation (EU) 2025/2621
Summary:
- Even if a bar supplier cannot provide actual emissions data, we can support EU importers by providing all available traceability information and assisting with the selection of appropriate official default values.
37. Do we need to track which bar batches go into which nut batches?
Yes — and we already do. This is essential for providing accurate embedded emissions data to our EU customers for their CBAM declarations.
We maintain:
- Batch traceability from bar to finished nut
- Material certificates (EN 10204)
- Supplier documentation including country of origin and production route
- Internal batch records
- Electricity-use monitoring per production batch for internal purposes
This allows us to:
- Provide bar-level direct emissions data linked to specific nut batches
- Support EU importers with accurate traceability documentation
- Identify the correct default value for each batch where actual supplier data is not available
Summary:
- Yes, we track bar-to-nut batch traceability. This ensures we can provide accurate embedded direct emissions data to EU importers for their CBAM declarations.
38. Do we need to report transport emissions for bars or nuts?
No. CBAM does not require reporting of transport emissions.
CBAM covers:
- Emissions from the production of the imported good
- Up to the point of import into the EU
CBAM does not cover:
- Transport from mill to distributor
- Transport from distributor to us
- Transport from us to UK customers
- Transport from UK distributors to the EU
We can still provide transport information if requested:
- Supplier location
- Approximate transport distances
- Modes of transport (road/sea)
This is not part of CBAM reporting, though we retain this information in internal documentation for transparency.
Summary:
- Transport emissions are not part of CBAM. We can provide transport information if requested, but it is not required for CBAM reporting.
39. Do we need to provide emissions data for coatings, plating or surface treatments?
No. Coatings and surface treatments are not included in the CBAM embedded emissions calculation. For CN 7318 iron and steel goods, only direct embedded emissions from the production process are taken into account under Annex II of Regulation (EU) 2023/956, and surface treatments are excluded from the defined system boundaries.
Post-production surface treatments that are not included in CBAM embedded emissions:
- Zinc electroplating
- Hot-dip galvanising
- Phosphate coating
- Black oxide
- Passivation
- Zinc-flake coating
These processes:
- Occur after the nut has been produced in its machined form
- Are explicitly excluded from the system boundaries for iron and steel goods
- Do not alter the CN code or the embedded emissions of the finished nut
However, we can provide:
- Confirmation of which surface treatments we apply or sub-contract
- Traceability linking surface-treated nuts to bar batches
- Direct process emissions from any sub-contracted surface treatment where relevant for non-CBAM customer reporting purposes
Summary:
- Surface treatments are not included in CBAM embedded emissions for CN 7318 goods. We can provide information on coatings if requested for other purposes, but they are not part of CBAM reporting.
40. What happens if the EU importer asks for emissions data for our nuts?
We provide it. CN 7318 nuts are CBAM-covered goods and our EU customers have reporting obligations when they import our finished fasteners.
When an EU importer requests emissions data for our nuts, we provide:
- Embedded direct emissions data for the finished nut (bar precursor data from our suppliers or via official default values, plus any direct process emissions from sub-contracted heat treatment where applicable)
- Bar grade, CN code, supplier name, country of origin and production route
- Confirmation that CN 7318 is listed in Annex I of Regulation (EU) 2023/956 and has been in formal CBAM scope since 1 October 2023
- Confirmation that only direct embedded emissions apply for CN 7318 iron and steel goods under Annex II of Regulation (EU) 2023/956 — indirect emissions from electricity are excluded
- Confirmation that we are not the CBAM declarant — the EU importer is
We also provide:
- A statement confirming that we are not CBAM declarants
- A statement confirming our manufacturing process (mechanical machining only, no combustion processes on site)
- Documentation supporting the importer's declaration via our in-house CBAM reporting template
Summary:
- We provide full embedded direct emissions data for CN 7318 nuts on request, supported by bar traceability information. We confirm to EU importers that CN 7318 is CBAM-covered, that only direct emissions apply under Annex II, and that the reporting obligation rests with them as the EU importer.
41. Can EU importers ask us for full lifecycle emissions for our nuts, even though nuts are CBAM-covered?
Yes. EU importers may request emissions data that goes beyond the strict CBAM embedded emissions boundary, and we can accommodate most such requests. Our finished iron and steel nuts under CN 7318 and our aluminium fasteners under CN 7616 10 00 are CBAM-covered goods, so EU importers have a binding obligation to report their embedded direct emissions. Some EU customers will additionally request broader sustainability data beyond what CBAM strictly requires.
Why EU importers may request broader emissions data
Beyond their CBAM obligations, many EU companies are subject to, or preparing for, wider sustainability reporting requirements that call for more comprehensive emissions information than CBAM strictly requires. These include:
- The EU Corporate Sustainability Reporting Directive (CSRD), which requires large EU companies and some non-EU companies with EU operations to report on their value chain greenhouse gas emissions including Scope 3 upstream emissions from purchased goods and services
- The European Sustainability Reporting Standards (ESRS), which set out the detailed disclosure requirements under CSRD and include upstream Scope 3 emissions from purchased materials
- Voluntary carbon accounting and net zero commitments under which EU companies track the full embedded carbon of their supply chain
- Internal carbon pricing schemes where EU companies assess the carbon cost of their supply base in preparation for escalating CBAM certificate prices
What we can provide beyond strict CBAM requirements
Our CBAM embedded direct emissions data covers the production of our nuts as CBAM goods, including the precursor bar direct embedded emissions and our own direct process emissions. Note that for CN 7318 iron and steel goods and CN 7616 aluminium goods, indirect emissions from electricity are excluded under Annex II of Regulation (EU) 2023/956 and do not form part of the CBAM declaration. However, we can provide electricity consumption data separately for customers who need it for broader sustainability reporting.
For customers who need broader lifecycle context beyond CBAM, we can additionally provide:
- Bar-level embedded emissions broken down by production stage where our bar suppliers can provide that level of detail
- Our electricity consumption data per batch, which supports Scope 2 and Scope 3 upstream calculations under the GHG Protocol framework
- Material efficiency data including scrap rates, which some lifecycle assessment methodologies require
- Transport information for their own logistics emissions calculations, noting this is not part of CBAM
- Information on our bar suppliers' country of origin and production route, which supports country-level emissions benchmarking
UK CBAM relevance
The UK CBAM comes into force on 1 January 2027 and will initially cover steel and aluminium among other sectors. Indirect emissions are excluded from the UK CBAM scope initially. Our existing monitoring systems already capture the data that would be required under the UK regime.
Important framing
We should be clear with EU customers about what data is being provided in each context: what forms part of our CBAM-compliant embedded direct emissions submission, and what is being provided additionally for their broader sustainability reporting. Conflating the two could create confusion about what our CBAM obligations are and what is voluntary supplementary information.
Source: Annex I -- Regulation (EU) 2023/956 (consolidated)
42. If a distributor mixes our nuts with nuts from other manufacturers, can we still provide emissions data?
Yes, but only for our nuts. We can provide precise, batch-traceable CBAM-compliant direct emissions data for every nut we manufacture and supply. The responsibility for managing mixed batches and maintaining the traceability required for CBAM declarations rests with the distributor and ultimately with the EU importer as the CBAM declarant.
What we provide
Our data covers the nuts we produce and supply. For each batch we can provide:
- The CN code of the nuts (for example CN 7318 16 for carbon and alloy steel nuts, CN 7318 12 10 or CN 7318 14 10 for stainless steel nuts, CN 7616 10 00 for aluminium nuts)
- Specific direct embedded emissions per tonne for our nuts, calculated from our precursor bar data and any direct process emissions from our own production (noting indirect emissions from electricity are excluded for these goods under Annex II)
- The batch reference and quantity supplied, allowing our data to be matched to specific delivery records
- The bar precursor data supporting the emissions calculation, including CN code, country of origin, supplier and direct embedded emissions per tonne of bar
The mixed batch problem
When a distributor holds stock from multiple suppliers and despatches mixed consignments to EU customers, the EU importer faces a traceability challenge. CBAM requires that the embedded emissions declared correspond to the actual goods imported. If the consignment contains nuts from several manufacturers, the importer must either:
- Maintain strict lot segregation and declare separately for each manufacturer's goods, using each manufacturer's actual emissions data
- Apply a weighted average of the embedded direct emissions of the constituent lots, documented with reference to each supplier's data
- Fall back to the official CN 7318 default values for the whole consignment, which avoids the traceability problem but may result in higher declared emissions than actual, increasing CBAM certificate costs
Our batch-level traceability is designed to support the first of these approaches. Each batch we despatch carries a unique batch reference that links to our internal records, our bar supplier's material certificate and our emissions data for that production run. This gives distributors the granular data they need to maintain segregated CBAM records if they choose to do so.
Our position on distributor responsibilities
We cannot provide emissions data for nuts made by other manufacturers, and we cannot be responsible for emissions figures applied to mixed consignments where our nuts have been combined with others. We can, and should, provide clear and complete batch-level documentation for every delivery we make, so that distributors have the information needed to maintain proper segregation.
Source: Annex I -- Regulation (EU) 2023/956 (consolidated)
43. If our bar supplier changes their production route, does this affect the emissions data we provide?
Yes. Changes in bar production route can significantly change the embedded direct emissions of the bar we use as precursor material, and therefore the embedded direct emissions of the finished nuts we report to our EU customers. We treat production route changes by bar suppliers as a material data event requiring an update to our CBAM reporting.
What constitutes a production route change
Production route changes that affect embedded direct emissions include:
- A change in steelmaking process, for example from basic oxygen furnace to electric arc furnace, or vice versa. EAF steelmaking using a high proportion of recycled scrap typically produces significantly lower direct emissions than BOF steelmaking from primary iron
- A change in the proportion of recycled scrap used, even within the same furnace type
- A change from hot-rolled to cold-finished bar, or vice versa, which changes the CN code and may change the embedded direct emissions figure
- A change in the heat treatment condition of the bar as supplied (for example, a supplier moving from supplying annealed bar to supplying quenched and tempered bar)
- A change in the country of production, which affects the applicable default values
Note that for iron, steel and aluminium goods, only direct emissions are taken into account under Annex II of Regulation (EU) 2023/956. Changes to electricity supply mix at a steel mill do not affect the CBAM embedded emissions calculation for these goods.
Why we must track and update this
The CBAM methodology requires that embedded emissions reflect the actual production processes of the imported goods. If we continue to report embedded emissions based on an old production route after our bar supplier has changed their process, our data will no longer accurately represent the goods being supplied and could result in our EU customers under-declaring or over-declaring embedded emissions in their CBAM declarations. Either outcome creates compliance risk for them.
How we manage this in practice
- We request updated emissions data from our bar suppliers whenever we receive notification of a production route change or whenever mill certificates indicate a change in the production conditions of the bar
- We update our internal records and the precursor section of our in-house CBAM reporting template to reflect the new data
- We notify EU customers who hold our current CBAM data that an update is available, so they can revise their declarations if necessary
- Where a supplier changes production route part-way through a reporting year, we maintain separate records for bar received under the old and new route, to allow accurate per-batch reporting
Using default values after a route change
If our bar supplier is unable to provide updated actual emissions data following a production route change, we may need to reassess which official default value is most appropriate. For example, if a supplier moves from hot-rolled to cold-finished bar, we must switch from the default for the hot-rolled CN code to the default for the cold-finished CN code. For current country-specific default values by CN code and production route, consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
Source: Implementing Regulation (EU) 2025/2547
44. Do we need to provide emissions data for scrap or waste generated during nut manufacturing?
No. Machining swarf, off-cuts and other manufacturing waste generated at our facility are not separately reportable under CBAM. However, the material efficiency of our production process does have a bearing on our reported embedded direct emissions.
Why scrap and waste are not separately reportable
The CBAM embedded emissions methodology for iron and steel products focuses on the embedded direct carbon of the goods produced and sold, not on the waste generated in making them. Scrap and waste do not leave our facility as CBAM goods for import into the EU. They are either returned to the steel supply chain as recycled material or disposed of as waste, neither of which is a CBAM-relevant event at our end.
Material efficiency and its effect on embedded emissions
There is a direct relationship between our material efficiency and our reported embedded direct emissions per tonne of finished nuts. Our embedded emissions calculation for the precursor bar contribution is based on the quantity of bar consumed per tonne of finished nuts, not just the weight of the finished nuts themselves. If our machining process removes a significant proportion of the bar as swarf, the embedded direct emissions of the full quantity of bar consumed must be attributed to the finished nuts produced, making the per-tonne embedded emissions figure higher than it would be for a more material-efficient process.
In practice, our bar consumption per tonne of finished nuts is a monitored figure in our production records, and it feeds directly into the precursor embedded emissions calculation in our in-house CBAM reporting template.
Data we can provide on request
If customers request material efficiency information for their own sustainability or lifecycle assessment reporting, we can provide:
- Average material utilisation rate per product type (finished nut weight as a proportion of bar consumed)
- Scrap generation rates per batch
- Information on how scrap is disposed of or recycled
This data is not part of our CBAM reporting but may be useful for customers' broader Scope 3 or lifecycle assessment work.
Source: Implementing Regulation (EU) 2025/2547
45. Do we need to provide emissions data for packaging used with our nuts?
No. Packaging materials and their associated emissions are not included in CBAM embedded emissions at any stage of the supply chain.
The CBAM Regulation applies only to the goods listed in Annex I of Regulation (EU) 2023/956. Packaging materials such as cardboard boxes, polythene bags, pallet wrap and wooden pallets are not CBAM goods and do not carry CBAM-reportable embedded emissions.
The embedded emissions boundary under Article 3(22) of the CBAM Regulation covers only the production of the imported good itself, up to the point of import into the EU. Packaging applied after production at our facility is outside that boundary, and packaging applied by a distributor or freight forwarder is further outside it still.
What this means in practice
- The cardboard boxes, plastic bags or bulk containers in which we despatch our nuts do not carry any CBAM-reportable emissions
- We do not need to calculate or report the embedded carbon of our packaging materials
- The weight of packaging is not included in the net weight of CBAM goods for the purposes of the embedded emissions calculation, which uses net weight of goods only
What we can provide for wider sustainability reporting
Some EU customers operating under CSRD or voluntary sustainability commitments may request packaging information as part of their upstream Scope 3 assessment. We can assist with:
- Details of packaging types used per product category
- Approximate packaging weight per standard consignment
- Information on whether packaging is recyclable or contains recycled content
- Any packaging reduction initiatives we have underway
This is provided as supplementary sustainability information and is entirely separate from our CBAM data obligations.
Source: Regulation (EU) 2023/956 Article 3(22)
46. If EU importers request CBAM emissions data for our nuts, what do we provide?
We provide full CBAM-compliant embedded direct emissions data for our finished nuts as CBAM goods, using our own in-house CBAM reporting template. Our finished iron and steel nuts under CN 7318 and our aluminium fasteners under CN 7616 10 00 are CBAM-covered goods, and EU importers who import them have binding CBAM obligations.
The standard data we provide
When an EU importer requests CBAM data for our nuts, we provide via our in-house CBAM reporting template:
- The CN code of the nuts supplied
- Our specific direct embedded emissions per tonne, covering the bar precursor direct emissions and any direct fuel combustion emissions from our heat treatment sub-contractor's production process
- Our precursor bar data, covering the bar CN code, country of origin, supplier and specific direct embedded emissions per tonne
- Our installation details as the operator
- The reporting period to which the data applies
- Confirmation that indirect emissions from electricity are excluded for CN 7318 iron and steel goods and CN 7616 aluminium goods under Annex II of Regulation (EU) 2023/956
- Confirmation that no carbon price has been paid in the UK in connection with the production of these goods that would qualify for deduction under CBAM (noting this position will change when the UK CBAM comes into force in 2027)
Default values versus actual data
From 1 January 2026, the definitive phase of CBAM requires EU importers to use verified actual embedded emissions data where available. Where actual data is not available, official country-specific default values published in Annex I of Implementing Regulation (EU) 2025/2621 apply. Default values are subject to an annual mark-up (10% in 2026, 20% in 2027, 30% from 2028) to incentivise the use of actual data.
Where our actual embedded direct emissions are below the relevant default, providing actual data is commercially advantageous to our EU customers as it reduces the number of CBAM certificates they must surrender and therefore their CBAM certificate cost.
Verification
From 2026, CBAM declarations based on actual values are subject to verification by accredited independent verifiers. The data we provide in our in-house CBAM reporting template must be supportable by our underlying production records, including heat treatment sub-contractor fuel consumption records and bar supplier material certificates and emissions data.
Source: Annex I -- Regulation (EU) 2023/956 (consolidated) and Implementing Regulation (EU) 2025/2547
47. Can we provide emissions data for nuts manufactured several years ago?
Yes, provided we still hold the traceability and supplier documentation for the relevant bar and nut batches. Our record-keeping obligations under CBAM and our existing quality management systems mean we should be able to reconstruct emissions data for historical batches within the retention period.
Why historical data may be requested
EU importers may need historical emissions data in several circumstances:
- They imported our nuts before they had established their CBAM data collection process and need to retrospectively populate their CBAM declarations
- They are subject to a review or correction procedure initiated by their National Competent Authority and need to provide supporting evidence for past declarations
- They are conducting a sustainability audit or lifecycle assessment covering historical purchases
- They are benchmarking their embedded emissions performance over time
What our records allow us to reconstruct
Implementing Regulation (EU) 2025/2547 requires records relevant to the calculation of embedded emissions to be retained for at least four years after the relevant reporting period. Our quality management system independently requires retention of EN 10204 material certificates and batch records. For historical batches within the retention window, we can typically provide:
- The bar grade, CN code, supplier and country of origin for the bar used in a specific nut batch
- The direct embedded emissions of that bar, either from the original supplier data or from the official default values applicable at the time
- Heat treatment sub-contractor records for the relevant period, if applicable
- The batch reference and production dates, allowing the data to be matched to specific delivery records and EU customs entries
Limitations
For batches produced before we implemented our current CBAM monitoring systems, we may not hold granular per-batch energy consumption data. In those cases we can provide production period records to the extent they exist. We cannot fabricate data we do not hold, and where records genuinely do not exist we will say so clearly, as transparency is required under the CBAM accountability framework.
Source: Implementing Regulation (EU) 2025/2547
48. If a bar supplier provides only partial emissions data, can we still support EU importers?
Yes. We can support EU importers even when bar supplier data is incomplete, using a combination of the partial data available, official default values and our own production data. The key is being transparent about which elements of the reported embedded emissions are based on actual data and which are based on estimates or defaults.
How partial data situations arise
Bar suppliers may provide partial data in several ways:
- They provide data for some grades or production routes but not others
- They provide data for some reporting periods but not for the current period
- They provide qualitative production route information (for example confirming EAF steelmaking) but no quantified emissions figure
- They provide a single combined figure that does not align with the per-CN-code format required for CBAM
How we handle each situation
Missing supplier data for some grades: We apply the official default values for the appropriate bar CN code for those grades. For current country-specific default values, consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
Partial period data: Where supplier data exists for some of the reporting year but not all, we use actual data for the covered period and default values for the uncovered period, provided the default-based portion remains within the 20% threshold for estimated values.
Entirely missing supplier data: We apply the full official default values for the appropriate bar CN code and document this clearly in the data we provide to EU customers.
The 20% threshold
The CBAM rules permit estimated values (including defaults) to be used for precursor contributions that represent less than 20% of the total embedded direct emissions of the finished goods. For our nuts, the bar precursor contribution is typically the dominant element of total embedded direct emissions, far exceeding 20%. This means that we should make every reasonable effort to obtain actual bar data rather than relying on defaults, as using defaults for the bar precursor element will likely push us above the 20% threshold.
Documentation we provide regardless of data completeness
- Supplier name and country of origin
- Bar grade and CN code
- Production route information drawn from mill certificates or supplier declarations
- A clear statement identifying which elements use actual data and which use defaults or estimates
- Supporting documentation for the actual data elements we do hold
Source: Implementing Regulation (EU) 2025/2547
49. Do we need to provide emissions data for heat treatment of our nuts?
Yes. Heat treatment of our finished nuts is part of our production process as the operator producing CN 7318 goods, and the direct emissions arising from it must be included in the embedded emissions data we provide to our EU customers. This applies even though the heat treatment is sub-contracted to a third party rather than performed at our own facility.
This question is addressed in detail in question 16, which explains the full treatment of sub-contracted heat treatment in our CBAM reporting. The key points are as follows.
Direct emissions from heat treatment
Our heat treatment sub-contractor uses fuel-fired furnaces. The CO2 produced by combustion of that fuel is a direct emission of our production process for CN 7318 nuts. We must obtain fuel consumption data per tonne of nuts treated from our sub-contractor and include the resulting direct emissions in our in-house CBAM reporting template. This data forms part of the specific direct embedded emissions per tonne that we report to EU customers.
Indirect emissions from heat treatment
CN 7318 iron and steel nuts are listed in Annex II of Regulation (EU) 2023/956, meaning only direct emissions are taken into account. Electricity consumed during heat treatment -- whether at our own facility or at our sub-contractor's -- does not form part of the CBAM embedded emissions declaration for our nuts. We record electricity consumption data for internal and wider sustainability purposes but it is excluded from the CBAM figure.
Why sub-contracting does not remove the obligation
The CBAM Regulation defines an operator as any person who operates or controls an installation in a third country. We control the production of our nuts end to end, including the specification and commissioning of heat treatment from our sub-contractor. The direct emissions from that sub-contracted process are our production process emissions for CBAM purposes. We are responsible for obtaining the data from them and including it in our reporting.
Using default values
If we provide the CN 7318 default values to EU customers rather than actual data, those defaults implicitly represent a typical production process including heat treatment. In that scenario we do not need to separately account for heat treatment emissions, as the default already covers them. However, actual data is required from 2026 onwards for the main body of the declaration and will likely be more commercially favourable to our EU customers if our actual direct emissions are below the default. For current country-specific default values, consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
Source: Annex I -- Regulation (EU) 2023/956 (consolidated) and Implementing Regulation (EU) 2025/2547
50. What documentation can we provide to demonstrate our CBAM compliance and readiness?
We can provide a comprehensive documentation pack showing that we are operating as a fully compliant operator for our CN 7318 and CN 7616 10 00 CBAM goods, and that our systems and records meet the standards required by the CBAM Regulation and Implementing Regulation (EU) 2025/2547 for the definitive period from 2026 onwards.
Core CBAM compliance documentation
- Our in-house CBAM reporting template, completed with specific direct embedded emissions per tonne for each CN code we produce, for the relevant reporting period
- The precursor data underlying our calculation, including bar CN codes, countries of origin, supplier names and specific direct embedded emissions per tonne of bar
- Confirmation that indirect emissions are excluded for our CN 7318 and CN 7616 goods under Annex II of Regulation (EU) 2023/956
- Heat treatment sub-contractor emissions data covering fuel consumption per tonne of nuts processed
- Batch traceability records linking incoming bar deliveries to finished nut production runs and outgoing despatch records
Supporting quality and traceability documentation
- EN 10204 material certificates for bar stock, providing independent third-party verification of bar grade, chemical composition and mechanical properties
- Bar supplier country of origin declarations where available
- Internal works order and batch records
- Heat treatment sub-contractor process records and certificates
Documentation demonstrating readiness for verification
From 2026, CBAM declarations based on actual values are subject to verification by accredited independent verifiers appointed by EU importers. The documentation we hold must be sufficient to support verification of the figures we have provided. Specifically:
- Our heat treatment sub-contractor records must support the direct emissions from that process step
- Our bar purchase records and material certificates must support the precursor embedded direct emissions figures we use
- Our batch records must support the link between specific bar deliveries and specific nut consignments despatched to EU customers
Retention of records
Our documentation practices align with the requirements of Implementing Regulation (EU) 2025/2547, which requires records relevant to the calculation of embedded emissions to be retained for at least four years after the relevant reporting period.
Bar CN codes for which we hold or can obtain emissions data
- CN 7213, CN 7214 and CN 7215 (non-alloy steel bars)
- CN 7222 (stainless steel bars)
- CN 7228 (alloy steel bars)
- CN 7604 (aluminium bars and profiles)
Finished goods CN codes for which we report embedded direct emissions
- CN 7318 16 (Nuts, iron and steel)
- CN 7318 12 10 and CN 7318 14 10 (Stainless steel fasteners)
- CN 7616 10 00 (Aluminium nuts and fasteners)
Source: Annex I -- Regulation (EU) 2023/956 (consolidated) and Implementing Regulation (EU) 2025/2547
51. Do we need to provide emissions data for machining operations when producing nuts?
Yes, in part. As the operator of an installation producing CBAM goods under CN 7318, our machining operations form part of our production process. However, CN 7318 iron and steel nuts are listed in Annex II of Regulation (EU) 2023/956, which means only direct embedded emissions are taken into account. Indirect emissions from electricity - including all electricity consumed in CNC turning, automatic lathe work, drilling, tapping and all other machining steps - are excluded from the CBAM embedded emissions declaration for our nuts.
What our machining operations contribute to CBAM reporting
Our machining does not generate direct emissions at our facility, as our machine tools are electrically driven and we do not combust fuel on the shop floor. The electricity consumed by our machine tools is an indirect emission in the CBAM sense. However, for CN 7318 iron and steel goods, indirect emissions are excluded under Annex II of Regulation (EU) 2023/956 and do not form part of the CBAM embedded emissions declaration. We record electricity consumption per production batch for internal purposes and for customers who request it for broader sustainability reporting, but it is not included in the CBAM figure.
What our machining does not contribute
The CBAM embedded emissions boundary ends at the point of import into the EU. Our machining adds to the characteristics of the finished nuts we produce, but the embedded direct emissions of those nuts are determined by the upstream bar production route, not by our machining process. Our machining adds no metallurgical process emissions and its electricity consumption is excluded under Annex II.
If customers request machining-specific data for other purposes
For customers who require more granular information for their own sustainability reporting under CSRD or for lifecycle assessment purposes, we can provide production-level electricity consumption data that can be apportioned to machining operations. This is supplementary to our CBAM data and is not required for or included in our CBAM embedded emissions declaration.
Source: Annex I - Regulation (EU) 2023/956 (consolidated) and Implementing Regulation (EU) 2025/2547
52. Do we need to provide emissions data for thread-rolling or nut-forming?
No, not as part of our CBAM declaration. Thread-rolling and nut-forming are part of our production process, but CN 7318 iron and steel nuts are listed in Annex II of Regulation (EU) 2023/956, meaning only direct emissions are taken into account. Thread-rolling and nut-forming are electrically driven processes that generate no direct emissions. The electricity they consume is an indirect emission and is excluded from the CBAM embedded emissions declaration for our nuts.
What thread-rolling and nut-forming do not affect
These operations do not change the CN code of the goods we produce. Our finished nuts remain classified under CN 7318 regardless of the forming and threading method used to make them. They also do not add to the embedded direct emissions of the bar precursor material.
Electricity consumption for broader sustainability reporting
We can provide electricity consumption data for our full production process, including thread-rolling and forming, for customers who require it for CSRD, lifecycle assessment or voluntary carbon accounting purposes. This is supplementary information and is not part of our CBAM embedded emissions declaration.
Source: Annex I - Regulation (EU) 2023/956 (consolidated) and Implementing Regulation (EU) 2025/2547
53. Do we need to provide emissions data for heat treatment of bars performed by our suppliers?
Yes. Heat treatment performed on bar stock by our suppliers outside the UK forms part of the direct embedded emissions of that bar as a precursor material, and those embedded direct emissions must be included in the data we report to our EU customers.
This is one of two distinct heat treatment scenarios relevant to our CBAM reporting. The other, which is addressed fully in questions 16 and 49, concerns heat treatment of our finished nuts, which we sub-contract and which also forms part of our production process direct emissions.
Heat treatment of bars by suppliers: what must be included
Heat treatment is a recognised production process in the CBAM methodology. When our bar suppliers perform heat treatment on bar stock outside the UK as part of delivering that bar in its specified condition, the fuel combustion emissions from that heat treatment contribute to the direct embedded emissions of the bar. Our bar suppliers should include heat treatment direct emissions in the specific embedded emissions data they provide to us. If they use official default values for their CN code, those defaults implicitly cover the standard production route including typical heat treatment processes.
The heat treatment operations that a bar supplier might perform and that must be included in bar direct embedded emissions are:
- Annealing, including bright annealing, full annealing and process annealing
- Normalising
- Quenching and tempering, including the full cycle of hardening and tempering
- Solution treatment, particularly relevant for stainless steel and aluminium alloys
- Stress relieving
- Age hardening and precipitation hardening
- Spheroidising
Note that for bar CN codes (7214, 7215, 7222, 7228, 7604), only direct emissions are taken into account under Annex II of Regulation (EU) 2023/956. Electricity consumed in heat treatment is an indirect emission and is excluded.
Heat treatment performed inside the UK by our bar supplier or stockholder
If our bar supplier or a UK-based stockholder performs heat treatment on bar stock in the UK before delivering it to us, that heat treatment is a UK-based process performed after the bar entered the UK. It falls outside the CBAM embedded emissions boundary for the bar as a precursor material. However, if that heat treatment changes the condition of the bar in a way that is relevant to classification, we must use the correct CN code for the bar as received.
What we can request from our bar suppliers
We request from our bar suppliers:
- Confirmation of whether the bar was heat treated as part of its production and in what condition it is supplied
- The specific direct embedded emissions per tonne including any heat treatment steps
- Where actual data is unavailable, confirmation of the production route so we can apply the most appropriate official default value
Heat treatment of our finished nuts
This is a separate matter covered in questions 16 and 49. The heat treatment our sub-contractor performs on our finished nuts is part of our own production process as a CBAM operator, not a precursor material issue. Its direct fuel combustion emissions are reported as part of our direct production emissions, not as bar precursor emissions.
Source: Implementing Regulation (EU) 2025/2547
54. Do we need to provide emissions data for cold-finished bars used in nut manufacturing?
Yes. Cold-finished bars classify under different CN codes from hot-rolled bars, and using the wrong classification or the wrong emissions figure would result in inaccurate CBAM data being provided to our EU customers.
How cold finishing changes the CN code
The Combined Nomenclature distinguishes between hot-rolled and cold-finished bars explicitly, and classifies them under different headings:
- Hot-rolled non-alloy steel bars: CN 7214
- Cold-finished non-alloy steel bars: CN 7215
- Hot-rolled alloy steel bars: CN 7228 10, 7228 20, 7228 30
- Cold-finished alloy steel bars: CN 7228 50, 7228 60
- Hot-rolled stainless steel bars: CN 7222 11, 7222 19
- Cold-finished stainless steel bars: CN 7222 20
Cold finishing comprises processes including cold drawing, peeling, centreless grinding, bright drawing and precision turning, any of which applied to a hot-rolled bar will reclassify it as cold-finished.
How cold finishing affects embedded direct emissions
All bar CN codes are Annex II goods, so only direct emissions are taken into account. Where actual data is used rather than defaults, cold-finished bar will typically show measurably higher actual embedded direct emissions than hot-rolled bar of the same grade, because the cold-finishing process energy and fuel inputs are explicitly captured. Using the hot-rolled default for cold-finished bar may therefore understate embedded direct emissions. For current country-specific default values by CN code and production route, consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
Our practical obligations
We do not cold-draw or cold-finish bars ourselves. We purchase bar that has already been classified and supplied by our bar suppliers in either a hot-rolled or cold-finished condition. Our obligation is to:
- Identify correctly from the mill certificate and supplier documentation whether the bar we purchase is hot-rolled or cold-finished
- Record the correct CN code for the condition in which the bar was supplied
- Apply the correct embedded direct emissions figure, either actual data from the supplier or the official default for the correct CN code
- Include this in our in-house CBAM reporting template precursor data section
If we misidentify the finishing condition and record a hot-rolled CN code for what is in fact cold-finished bar, we will report the wrong CN code to our EU customers, who will in turn declare the wrong goods classification in their CBAM submission. This creates compliance risk for our EU customers and reflects poorly on the quality of our CBAM data.
Source: EU Combined Nomenclature and Implementing Regulation (EU) 2025/2547
55. Do we need to provide emissions data for coatings or plating applied to our nuts?
No, not as a separate line item in our CBAM declaration, and not even indirectly for electricity purposes. CN 7318 iron and steel nuts are Annex II goods and only direct emissions are taken into account. Coating and plating operations are electrically driven processes with no direct fuel combustion emissions, so they contribute nothing to the CBAM embedded emissions declaration for our nuts.
Why surface treatments are not reportable
The CBAM methodology for iron and steel products does not list surface treatment processes such as zinc electroplating, hot-dip galvanising, phosphate coating, black oxide or passivation as distinct production steps. These processes do not change the CN classification of the nut. They are also indirect-emissions-only processes (electricity driven) and indirect emissions are excluded for CN 7318 goods under Annex II. There is therefore no CBAM reporting obligation for coatings or plating, whether performed at our own facility or sub-contracted.
Sub-contracted surface treatment
If we sub-contract surface treatment to a third party, no additional CBAM data obligation arises. The sub-contractor's electricity consumption is an indirect emission and is excluded under Annex II for our CN 7318 goods.
What we can provide for broader sustainability reporting
For customers who require surface treatment information for CSRD, lifecycle assessment or voluntary carbon accounting purposes, we can provide process descriptions, electricity consumption data and information on whether coatings contain any hazardous or restricted substances. This is supplementary information and is not part of our CBAM data.
Source: Annex I - Regulation (EU) 2023/956 (consolidated) and Implementing Regulation (EU) 2025/2547
56. Do we need to provide emissions data for bar transport to our facility?
No. Transport emissions are not included in CBAM embedded emissions at any point in the supply chain, including transport of bar from steel mill to stockholder, from stockholder to us, from our facility to our heat treatment sub-contractor, or from our facility to the point of export.
The CBAM embedded emissions boundary is defined in Article 3(22) of Regulation (EU) 2023/956 as covering direct and indirect emissions released during the production of goods up to the time of import into the EU. Transport is not a production process and falls outside this definition regardless of where in the supply chain it occurs or what mode of transport is used.
Practical confirmation
- Transport of bar from an overseas steel mill to a UK port: not included
- Transport of bar from a UK stockholder to our facility: not included
- Transport of part-formed nuts from our facility to our heat treatment sub-contractor and back: not included
- Transport of finished nuts from our facility to a UK distributor: not included
- Sea freight from UK port to EU port: not included
- Onward distribution within the EU after customs clearance: not included
This exclusion applies regardless of the carbon intensity of the transport mode. Air freight, road haulage, sea freight and rail transport all fall equally outside the CBAM scope.
Relationship to other frameworks
Transport emissions are relevant under other reporting frameworks including the GHG Protocol Scope 3 categories, CSRD and the EU Corporate Sustainability Reporting Standards. Some EU customers may request transport information for these purposes. We can provide:
- Typical transport routes and approximate distances from our facility to major EU ports
- Mode of transport for standard consignments
- Any carrier-provided freight emission data where available
This is provided as supplementary sustainability information, entirely separate from our CBAM obligations.
Source: Regulation (EU) 2023/956 Article 3(22)
57. Do we need to provide emissions data for bar cutting before nut production?
No. Cutting bar to length before nut production does not add reportable direct emissions, does not change the CN code of the bar, and does not affect the embedded direct emissions figure we provide to EU customers.
Cutting is a minor mechanical preparation operation. The Combined Nomenclature Explanatory Notes for Chapter 72 confirm that cutting to length does not affect the classification of bars and rods. A bar cut to 3 metre lengths remains classified under the same CN code as the same bar in 6 metre lengths. Its embedded direct emissions per tonne are unchanged.
This applies equally whether:
- The bar arrives at our facility already cut to length by the supplier or stockholder
- We cut bar to length ourselves at our facility using a saw or cropping machine
- The bar is cut as part of our automatic lathe bar-feed process
Cutting does consume a small amount of electricity, but as an indirect emission that electricity is excluded under Annex II for our CN 7318 goods and does not form part of the CBAM declaration.
Cutting as distinct from cold finishing
It is important to distinguish cutting from cold-finishing operations such as peeling or drawing. Cold finishing changes the CN code and may add to embedded direct emissions. Cutting does not. If a bar supplier supplies bar that has been cold-drawn and then cut to length, the cold-drawing changes the CN code and the embedded direct emissions figure. The cutting does not.
Source: EU Combined Nomenclature
58. Do we need to provide emissions data for bar straightening?
No, not for straightening as a standalone operation. Straightening does not change the CN code of the bar, does not generate direct emissions, and is not listed as a distinct production process in the CBAM methodology.
Straightening as a standalone operation
Roller straightening, press straightening and tension straightening correct the dimensional form of the bar without altering its chemical composition, metallurgical condition or CN classification. Standalone straightening is an electrically driven operation that generates no direct emissions. Even if it were not excluded on those grounds, it generates no process emissions and the CBAM methodology does not treat it as an emissions-relevant process step.
Straightening as part of a cold-finishing sequence
Straightening becomes relevant to CBAM when it is part of a broader cold-finishing sequence. For example, if a bar producer cold-draws bar and then straightens it, the cold-drawing operation changes the CN code from a hot-rolled heading to a cold-finished heading and may add to the embedded direct emissions. The straightening in that sequence is an ancillary step. The reportable element is the cold-drawing, not the straightening.
Our practical position
When reviewing mill certificates and supplier documentation for bar we receive, we check whether the finishing condition description indicates cold drawing, peeling or grinding (all of which change the CN code) or whether it indicates only straightening (which does not). Where a certificate describes the bar as drawn and straightened, we classify the bar as cold-finished and use the cold-finished CN code accordingly. Where it describes bar as hot-rolled and straightened, we classify it as hot-rolled.
Source: EU Combined Nomenclature and Implementing Regulation (EU) 2025/2547
59. Do we need to provide emissions data for pickling or descaling of bars?
No. Pickling and descaling are surface-cleaning operations that do not change the CN code or classification of the bar, are not listed as distinct production processes in the CBAM methodology, and do not generate separately reportable direct embedded emissions.
Pickling removes scale, oxide and surface contamination from bar using acid or alkaline solutions. Descaling achieves the same result by mechanical means such as shot blasting. Neither process alters the chemical composition, metallurgical structure or dimensional form of the bar in a way that is relevant to its CN classification. A pickled bar remains in the same CN heading as an unpickled bar of the same grade and finishing condition.
Where pickling does become relevant
Pickling becomes relevant to CBAM only where it is an integral step within a broader cold-finishing or heat-treatment process sequence. For example:
- If a bar producer hot-rolls bar, pickles it to remove mill scale, and then cold-draws it, the cold-drawing is the reportable production process. The pickling is an ancillary step within that sequence
- If a bar producer anneals stainless steel bar and then pickles and passivates it as part of the bright annealed finish, the annealing is the heat treatment production process. The pickling and passivation are surface preparation steps within that sequence
In both cases, the direct emissions from the full process sequence should be captured in the supplier's actual emissions data or within the official default value for the finished condition CN code. There is no requirement to separately identify and report pickling emissions as a standalone item.
Standalone pickling operations
Where bar is received by a UK-based stockholder who pickles it as a standalone operation before supplying it to us, that pickling is a UK-based process performed after the bar entered the UK. It falls outside the CBAM embedded emissions boundary entirely.
Source: Implementing Regulation (EU) 2025/2547
60. How do we ensure our emissions reporting remains compliant as CBAM evolves?
We maintain a systematic approach to CBAM compliance that covers our current obligations as the operator of an installation producing CN 7318 and CN 7616 10 00 CBAM goods, and that positions us to adapt efficiently to regulatory changes in both the EU and UK frameworks.
Our current compliance foundation
We are already operating in the definitive phase of EU CBAM, which began on 1 January 2026. Our current obligations as a CBAM operator include:
- Calculating and providing specific direct embedded emissions per tonne of finished nuts for each CN code we produce (indirect emissions are excluded for CN 7318 and CN 7616 goods under Annex II of Regulation (EU) 2023/956)
- Maintaining full batch traceability from incoming bar through production to finished goods despatch
- Obtaining and retaining embedded direct emissions data from our bar suppliers for use as precursor data in our calculations
- Obtaining and retaining direct emissions data from our heat treatment sub-contractor covering their fuel consumption per tonne of nuts processed
- Providing all of the above to our EU customers via our in-house CBAM reporting template in a format that enables them to complete their CBAM declarations
- Retaining all supporting records for a minimum of four years as required by Implementing Regulation (EU) 2025/2547
How we monitor regulatory developments
CBAM is a live and evolving regulatory framework. We monitor the following sources for changes that may affect our obligations:
- Official Journal of the European Union for new implementing regulations, delegated acts and amendments to the core CBAM Regulation
- European Commission CBAM webpage for updated guidance, Q and A documents and new default values
- UK Government and HMRC publications for developments in the UK CBAM, which starts on 1 January 2027
- Industry bodies and trade associations for sector-specific interpretations and practical guidance
Key areas of regulatory evolution we are tracking
Default values: From 2026, country-specific default values apply under Implementing Regulation (EU) 2025/2621, with an upward mark-up applied annually (10% in 2026, 20% in 2027, 30% from 2028) to incentivise the provision of actual data. We refer EU customers to Implementing Regulation (EU) 2025/2621 for current applicable values.
Verification: From 2026, CBAM declarations based on actual values are subject to verification by accredited independent verifiers. Our record-keeping is designed to support verification. We will cooperate with any verification requests from our EU customers' appointed verifiers.
Indirect emissions scope: For CN 7318 iron and steel goods and CN 7616 aluminium goods, indirect emissions are excluded under Annex II of Regulation (EU) 2023/956. The UK CBAM also initially excludes indirect emissions. If the scope of either framework changes, our existing electricity monitoring infrastructure already captures the data that would be needed.
Scope expansion: Article 30(2) of the CBAM Regulation requires the European Commission to review the possibility of extending CBAM to other goods and sectors. Although CN 7318 fasteners are already in scope, other goods we produce that fall under different CN codes may be brought in by future legislative amendments. We will assess the impact of any scope expansion as it is announced.
UK CBAM: The UK CBAM coming into force on 1 January 2027 will initially cover steel and aluminium in imported goods. As a UK manufacturer we will not be the UK CBAM declarant, but our UK customers who import CBAM-covered goods into the UK will face similar data requirements to those our EU customers face today. Our existing monitoring and documentation systems will support those requests with minimal additional effort.
CN codes for which we currently provide CBAM-compliant data
Finished goods we produce and report embedded direct emissions for:
- CN 7318 16 (iron and steel nuts)
- CN 7318 12 10 and CN 7318 14 10 (stainless steel fasteners)
- CN 7616 10 00 (aluminium nuts and fasteners)
Bar precursor CN codes for which we obtain and report embedded direct emissions:
- CN 7213, CN 7214, CN 7215 (non-alloy steel bars)
- CN 7222 (stainless steel bars)
- CN 7228 (alloy steel bars)
- CN 7604 (aluminium bars and profiles)
Source: Annex I - Regulation (EU) 2023/956 (consolidated) and Implementing Regulation (EU) 2025/2547
61. Do we need to provide emissions data for the electricity used in our nut-manufacturing processes?
No, not as part of our CBAM declaration. CN 7318 iron and steel nuts and CN 7616 aluminium fasteners are both listed in Annex II of Regulation (EU) 2023/956, which means only direct embedded emissions are taken into account. Indirect emissions from electricity - including all electricity consumed in our nut-manufacturing processes - are excluded from the CBAM embedded emissions declaration for these goods.
What our electricity consumption does not contribute to CBAM
Our machine tools are electrically driven and we do not combust fuel on the shop floor. Our machining, forming, threading and all other production operations generate no direct emissions at our facility. The electricity they consume is an indirect emission and is excluded under Annex II. We do not report electricity consumption as part of our CBAM embedded emissions declaration for CN 7318 or CN 7616 goods.
What we do report
The only direct emissions we report are those from our heat treatment sub-contractor's fuel-fired furnaces, as set out in questions 16 and 49. Our own facility contributes no direct process emissions as we have no combustion equipment in our production process.
Electricity monitoring for other purposes
We monitor and record our electricity consumption per production batch for internal purposes and for customers who require it for broader sustainability reporting under CSRD or the GHG Protocol. This data is available on request but does not form part of our CBAM embedded emissions declaration.
On-site solar generation
We generate a proportion of our electricity from on-site solar panels. This reduces our electricity costs and our carbon footprint for voluntary sustainability reporting purposes. It has no bearing on our CBAM declaration, as electricity consumption is excluded for Annex II goods regardless of source.
UK CBAM from 2027
The UK CBAM coming into force on 1 January 2027 is also expected initially to exclude indirect emissions from its scope. Our electricity monitoring infrastructure is already in place to capture this data if the scope of either framework changes in future.
Source: Annex I - Regulation (EU) 2023/956 (consolidated) and Implementing Regulation (EU) 2025/2547
62. Do we need to provide emissions data for the heat treatment of our nuts when they are exported to the EU?
Yes. The direct fuel combustion emissions from heat treatment of our finished nuts must be included in the embedded emissions data we provide to EU customers who import our nuts. This is true regardless of whether the nuts reach the EU through direct export or via a UK distributor.
This question is addressed in full in questions 16, 49 and 53. The key points are as follows.
Why heat treatment direct emissions are included in CBAM
Our finished nuts under CN 7318 and CN 7616 10 00 are CBAM goods. We are the operator of the installation that produces them. The CBAM Regulation defines embedded emissions as those released during the production of goods. Heat treatment of our nuts is a step in the production of those goods: we sub-contract it as part of our manufacturing sequence, and the nuts are not in their final saleable condition until heat treatment is complete.
The fact that heat treatment is sub-contracted to a third party does not remove it from our production process for CBAM purposes. We commission the heat treatment, specify the process parameters, and retain ownership of the parts throughout. The operator of a CBAM installation is responsible for all direct emissions from the production process, including those arising from sub-contracted process steps.
What data we must include
- Direct emissions from our heat treatment sub-contractor: arising from combustion of fuel in their furnaces. We obtain fuel type and consumption per tonne of nuts processed from our sub-contractor and calculate the CO2 equivalent.
- Indirect emissions from heat treatment are excluded: CN 7318 and CN 7616 are Annex II goods. Electricity consumed by our sub-contractor during heat treatment is not included in our CBAM declaration.
The direct fuel combustion figure is included in our in-house CBAM reporting template as part of our total specific direct embedded emissions per tonne of finished nuts.
Default values
If we use the official CN 7318 default values rather than actual data, those defaults already implicitly cover a typical production process including heat treatment direct emissions. In that scenario no separate heat treatment accounting is needed. However, actual data is required for the definitive period from 2026 onwards and is likely more favourable to our EU customers where our actual direct process emissions are below the default. For current country-specific default values, consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
Source: Annex I - Regulation (EU) 2023/956 (consolidated) and Implementing Regulation (EU) 2025/2547
63. Do we need to separately provide emissions data for each upstream raw material used by our bar supplier?
No, not individually. We do not separately identify and report the emissions from pig iron, scrap, DRI or each individual ferro-alloy used by our bar supplier. Instead, the embedded direct emissions of the bar as a whole - covering all upstream inputs and all production processes - are captured in a single specific embedded direct emissions figure per tonne of bar. It is that single figure which feeds into our CBAM reporting as the precursor embedded emissions contribution.
How upstream direct emissions are captured in practice
The CBAM methodology requires that embedded direct emissions include the emissions from the production of precursor materials. For our bar suppliers, this means their specific embedded direct emissions figure must already incorporate:
- Ironmaking emissions, whether from blast furnace pig iron production, DRI production, or scrap-based EAF routes
- Emissions from ferro-alloy production used as alloying additions
- Casting, rolling, heat treatment and finishing fuel combustion emissions
If our bar supplier provides us with actual specific embedded direct emissions data, that figure is their comprehensive measurement of all of the above as a single tCO2e per tonne number. If we use official default values for the bar CN code instead, those defaults capture the full upstream chain as a single number.
In neither case do we receive or report separate line items for pig iron, scrap, each ferro-alloy, rolling and heat treatment. The bar supplier's actual data or the CN code default is the single precursor embedded direct emissions input to our calculation.
When detailed production route information is relevant to us
Although we do not separately report each upstream input, we do need to know enough about our bar supplier's production route to:
- Determine whether the actual data they provide is plausible and consistent with their declared process
- Select the most appropriate default value where actual data is unavailable (for example distinguishing between BOF and EAF routes, or between hot-rolled and cold-finished conditions)
- Verify that any claimed low-emissions credentials are supported by documented actual data
For this purpose we request from our bar suppliers a production route description confirming the steelmaking process, the bar finishing condition and the country of production, alongside their specific embedded direct emissions figure.
Source: Implementing Regulation (EU) 2025/2547
64. Do we need to provide emissions data for the energy sources used by our bar supplier?
Yes, in the sense that the energy sources used by our bar supplier directly determine the specific embedded direct emissions of the bar, and we must ensure that the emissions figure we use accurately reflects those energy sources. However, we do not separately report the energy sources as standalone data points. They are the underlying factors that drive the bar's specific embedded direct emissions figure.
Why energy sources matter for bar embedded direct emissions
The choice of energy source at the steel mill is one of the most important variables in determining direct embedded emissions for metallic bars. Two bars of identical grade and dimensions can have very different embedded direct emissions depending on how they were made:
- An EAF-produced carbon steel bar using a high proportion of recycled scrap typically produces significantly lower direct emissions than BOF steelmaking from primary iron. EAF steel with high scrap content can achieve direct emissions of under 0.5 tCO2e per tonne, compared to over 1.8 tCO2e per tonne for BOF steelmaking.
Note: for bar CN codes, only direct emissions are taken into account under Annex II of Regulation (EU) 2023/956. The electricity source at the mill affects indirect emissions only, which are excluded. The steelmaking route (BOF vs EAF, scrap ratio, fuel type for heat treatment) drives the direct emissions figure.
How we capture energy source effects in our reporting
If our bar supplier provides actual specific embedded direct emissions data, the energy source effects are already embedded in that figure. A bar supplier with a high scrap EAF route and gas-fired heat treatment will declare lower direct emissions per tonne than one using BOF from primary iron, and those lower direct emissions flow into our precursor embedded emissions calculation and reduce our EU customers' CBAM certificate costs.
What we request from bar suppliers
We request from our bar suppliers, as part of our CBAM data-gathering process:
- Confirmation of steelmaking route (BOF, EAF, hybrid)
- Confirmation of heat treatment fuel type where applicable
- Their specific embedded direct emissions per tonne
- Supporting documentation or declaration confirming the production route
Source: Implementing Regulation (EU) 2025/2547
65. Do we need to provide emissions data for the bar supplier's cold-finishing electricity use?
No. Cold-finishing electricity is an indirect emission. All bar CN codes are listed in Annex II of Regulation (EU) 2023/956, meaning only direct emissions are taken into account. The electricity consumed in cold-finishing operations is excluded from the CBAM embedded emissions calculation for bar goods.
Why the CN code is still the key
Even though cold-finishing electricity is excluded, correctly identifying whether the bar we purchase is hot-rolled or cold-finished and using the appropriate CN code remains essential. Using the correct CN code ensures that:
- We apply the correct official default value, which reflects the typical production route for that finishing condition including any direct fuel combustion emissions from cold-finishing processes
- We correctly characterise the goods being supplied to our EU customers, which is required for a compliant CBAM declaration
Cold-finishing direct emissions
Cold-finishing operations such as cold drawing and peeling are primarily electricity-driven. They do not typically involve significant fuel combustion. As an Annex II product, the bar's embedded direct emissions figure will reflect any fuel combustion involved in the cold-finishing facility (for example space heating or annealing in a combined process) but not the electricity consumption.
Cold-finishing performed in the UK
If a UK-based stockholder cold-draws or otherwise cold-finishes bar after it enters the UK, the cold-finishing occurred after the bar's CBAM embedded emissions boundary was established. The bar would still be classified under the cold-finished CN code, but the cold-finishing direct emissions attributable to UK processing are outside the CBAM boundary. We would apply the cold-finished CN code default value in such cases, noting this distinction.
Source: EU Combined Nomenclature and Implementing Regulation (EU) 2025/2547
66. Do we need to provide emissions data for the fuel used in heat treatment of bars by our supplier?
Yes, but not as a separate line item. Heat treatment fuel combustion contributes to the bar supplier's direct embedded emissions, and those direct emissions are captured in their overall specific embedded direct emissions figure per tonne of bar. When our bar supplier provides us with actual data, or when we apply the official CN code default, heat treatment fuel direct emissions are already included.
Direct emissions from bar supplier heat treatment
Where our bar supplier heat-treats bar as part of their production process, the combustion of natural gas, oil or other fuels in their furnaces generates CO2. That CO2 is a direct emission from their installation. Under the CBAM monitoring methodology, the bar supplier is required to calculate these direct emissions as part of their total specific embedded direct emissions per tonne of bar, using measured fuel consumption and the applicable emission factors for each fuel type.
A bar supplier who uses gas-fired furnaces for annealing or quench-and-temper heat treatment will typically show higher direct embedded emissions per tonne than the same facility without heat treatment, because gas combustion is a direct emission source.
Our practical approach
We do not attempt to separately verify the heat treatment fuel emissions reported by our bar suppliers. We rely on the accuracy of their declared specific embedded direct emissions figures, supported by their production process documentation. Where we use official default values, those defaults represent a global average for the CN code, implicitly including typical heat treatment fuel usage for that bar category.
Where our bar supplier cannot provide actual data and we fall back to defaults, we select the default for the CN code that correctly reflects whether the bar was supplied in a heat treated condition (for example quenched and tempered alloy bar) or in an as-rolled condition. Using a lower-emissions default for a higher-specification heat treated product would understate embedded direct emissions.
Source: Implementing Regulation (EU) 2025/2547
67. Do we need to provide emissions data for the scrap ratio used by our bar supplier?
Yes, in the sense that scrap ratio is one of the most significant determinants of a steel bar's specific embedded direct emissions, and the figure we use must accurately reflect the production route actually used. However, we do not separately report scrap ratio as a standalone data point. It is a production route characteristic that drives the bar supplier's specific embedded direct emissions figure, which is what we actually report.
Why scrap ratio is so important for direct emissions
The proportion of recycled scrap used as steelmaking feedstock has a profound effect on direct embedded emissions:
- Basic oxygen furnace steelmaking uses approximately 10 to 30% scrap alongside primary iron from the blast furnace. Direct emissions are dominated by the carbon reduction chemistry of ironmaking and are typically 1.6 to 2.0 tCO2e per tonne of steel.
- Electric arc furnace steelmaking can use 90 to 100% recycled scrap. Without the ironmaking step, direct emissions can be as low as 0.1 to 0.4 tCO2e per tonne of steel.
- These differences mean that two bars with identical chemical composition and CN code can have specific embedded direct emissions differing by a factor of four or more depending on the steelmaking route.
Note that indirect emissions from electricity are excluded for all bar CN codes under Annex II, so the EAF route's higher electricity intensity does not affect the CBAM embedded emissions figure.
How we capture scrap ratio effects
If our bar supplier provides actual specific embedded direct emissions data, the scrap ratio effect is already incorporated in their declared figure. We do not need to separately request or validate the scrap ratio itself, though knowledge of the steelmaking route (BOF versus EAF) gives us a useful sanity check on the plausibility of the declared figure.
If we use official default values, we use the default that corresponds to the most appropriate production route. Where a bar supplier can confirm EAF production with high scrap content and this results in actual direct emissions materially below the global default, we have a strong commercial incentive to obtain and use their actual data, as this will reduce our EU customers' CBAM certificate costs.
Source: Implementing Regulation (EU) 2025/2547
68. Do we need to provide emissions data for alloying additions used by our bar supplier?
Yes, in the sense that the embedded direct emissions of ferro-alloys and other alloying additions form part of the bar's total specific embedded direct emissions and must be included. However, as with other upstream inputs, we do not separately identify and report each alloying addition. They are captured within the bar supplier's overall specific embedded direct emissions figure.
Why alloying additions matter for embedded direct emissions
Alloying additions significantly affect the embedded direct emissions of bar, particularly for stainless steel and high-alloy grades. The upstream production of key alloying materials is energy and carbon intensive:
- Nickel production, involving smelting of laterite or sulphide ores, is very energy intensive and contributes substantially to the high embedded direct emissions of stainless steel bars. This is a primary reason why stainless steel bars under CN 7222 carry significantly higher default embedded direct emissions than non-alloy steel bars.
- Ferrochromium production involves high-temperature reduction of chromite ore and is a significant direct emission source.
- Ferromolybdenum and ferronickel production similarly involve energy-intensive smelting processes.
- Even relatively minor additions such as ferromanganese and ferrosilicon carry upstream direct emissions that must be included in a complete embedded emissions calculation for alloy steel bars.
How alloying addition direct emissions are captured in practice
A bar supplier performing a full CBAM-compliant calculation will include the specific embedded direct emissions of each ferro-alloy used, weighted by the quantity consumed per tonne of bar. The result feeds into their total specific embedded direct emissions figure as a single number per tonne. When we obtain actual data from our bar supplier, those alloying addition emissions are already included. When we use official default values, the defaults are derived from analysis that includes representative alloying compositions for each CN code category.
Practical implication for grade selection
The significantly higher embedded direct emissions of stainless steel and high-alloy grades compared to plain carbon steel grades is a genuine CBAM cost factor for our EU customers. When helping customers understand their CBAM exposure, we can explain that switching from stainless to carbon steel or from high-alloy to low-alloy grades would reduce embedded direct emissions, though this must be balanced against the technical requirements of the application.
Source: Implementing Regulation (EU) 2025/2547
69. Do we need to provide emissions data for the casting process used by our bar supplier?
Yes, in the sense that casting is an explicit production process in the CBAM methodology and its direct emissions must be included in the bar's total specific embedded direct emissions. However, we do not separately report casting emissions as a standalone figure. They are one component of the bar supplier's overall specific embedded direct emissions calculation.
Casting in the CBAM methodology
The Implementing Regulation explicitly lists casting as one of the production processes whose direct emissions must be included in the embedded emissions of iron and steel products. For steel bars, continuous casting from liquid steel into billets or blooms, followed by rolling into bar form, is the standard production route for the vast majority of commercially available bar stock. Any fuel combustion during the casting process is included in the bar supplier's calculation of specific embedded direct emissions.
Ingot casting
For speciality grades or small-volume production, ingot casting followed by forging or rolling may be used. Ingot casting is generally less energy efficient than continuous casting and typically results in higher embedded direct emissions per tonne of finished bar. This is reflected in the higher default values assigned to forged bar sub-headings under CN 7214 10 00 and CN 7228 40 compared to the rolled bar equivalents. For current country-specific default values, consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
Our practical approach
We note the casting route from mill certificates and supplier documentation as part of our production route records. Where a bar is described as forged, we apply the forged bar CN code and its corresponding higher default value. Where bar is described as continuously cast and rolled, we apply the appropriate rolled bar CN code. This distinction is particularly relevant for any heavy hex or large-diameter bar that may be forged rather than rolled.
Source: Implementing Regulation (EU) 2025/2547
70. Do we need to provide emissions data for the rolling process used by our bar supplier?
Yes, and in this case rolling is particularly important because it directly determines the CN code of the bar, which in turn determines which embedded direct emissions figure we apply. Getting the rolling process identification right is one of our most fundamental CBAM data obligations.
Why rolling is central to CBAM classification
Rolling is the production process that converts cast billet or bloom into bar form, and it is the process that most directly defines the CN classification of the finished bar. The Combined Nomenclature distinguishes explicitly between:
- Hot-rolled bars: produced by rolling at temperatures above the recrystallisation temperature of the steel, leaving the bar in an as-rolled or potentially heat-treated but not cold-worked condition
- Cold-finished bars: produced by further working of hot-rolled bar at room temperature using processes such as cold drawing, peeling or centreless grinding
Using the wrong rolling process classification means using the wrong CN code, which means either applying incorrect default values or misidentifying the goods in our in-house CBAM reporting template. This creates compliance risk for our EU customers' declarations.
Hot rolling versus cold finishing in practice
Our bar suppliers typically supply the following combinations which we must correctly identify:
- Hot-rolled black bar: as-rolled surface, mill scale present, wider dimensional tolerances. Classified as hot-rolled under the appropriate CN code (for example CN 7214 for non-alloy, CN 7228 10 to 7228 30 for alloy steel)
- Bright drawn bar: cold-drawn from hot-rolled, smooth bright surface, tighter dimensional tolerances. Classified as cold-finished (for example CN 7215 for non-alloy, CN 7228 50 to 7228 60 for alloy steel)
- Turned and polished bar: centreless ground or precision turned from hot-rolled, smooth surface, tight tolerances. Also classified as cold-finished
- Peeled bar: surface layer removed by peeling to clean the surface and improve dimensional consistency. Also classified as cold-finished
We identify the finishing condition from mill certificates, supplier delivery notes and our own inspection on receipt. Where there is any ambiguity, we clarify with the supplier before confirming the CN code in our records.
Source: EU Combined Nomenclature and Implementing Regulation (EU) 2025/2547
71. Do we need to separately provide emissions data for our bar supplier's furnace type, such as EAF or BOF?
No, not as a separate data point. The furnace type used by our bar supplier is not itself a reportable item under CBAM. What CBAM requires is the total specific embedded direct emissions per tonne of bar, expressed as tCO₂e per tonne. The furnace type is relevant to us as background information that helps us assess the plausibility of our supplier's declared emissions and select the most appropriate default value where actual data is unavailable, but it does not appear as a standalone figure in our in-house CBAM reporting template.
Note that for all bar CN codes, only direct emissions are taken into account under Annex II of Regulation (EU) 2023/956. Indirect emissions from electricity are excluded regardless of furnace type.
Why furnace type is nonetheless important to understand
The steelmaking furnace is the largest single source of variation in the embedded direct emissions of carbon and alloy steel bars. Understanding which type was used helps us interpret supplier emissions data and identify whether actual data is commercially worth pursuing.
Basic oxygen furnace (BOF): Uses liquid pig iron from a blast furnace as the primary input, with typically 10 to 30% recycled scrap. The ironmaking process is the dominant direct emissions source, producing approximately 1.6 to 2.0 tCO₂e per tonne of crude steel from carbon reduction chemistry.
Electric arc furnace (EAF): Melts predominantly recycled scrap using electrical energy. Direct emissions from the melting process itself are very low, typically 0.1 to 0.4 tCO₂e per tonne of crude steel. Because indirect emissions from electricity are excluded under Annex II, EAF-produced bar will generally show significantly lower CBAM embedded emissions than BOF-produced bar of the same grade.
Direct Reduced Iron Electric Arc Furnace (DRI-EAF) route: Uses directly reduced iron as feedstock for an EAF. This route offers lower direct emissions than BOF steelmaking and avoids the high scrap dependency of conventional EAF. Where the DRI is produced using green hydrogen, this route can achieve very low direct embedded emissions.
How we use furnace type information
When we receive a specific embedded direct emissions figure from our bar supplier, knowing their furnace type allows us to sense-check the figure. A BOF producer declaring 0.5 tCO₂e per tonne direct would be implausible; an EAF producer declaring 1.8 tCO₂e per tonne direct would similarly raise questions. Where the declared figure seems inconsistent with the stated production route, we follow up with the supplier before using the data.
Source: Implementing Regulation (EU) 2025/2547
72. Do we need to separately provide emissions data for our bar supplier's rolling mill efficiency?
No. Rolling mill efficiency is not a separately reportable item under CBAM. The energy consumed in the rolling mill, including any inefficiencies in heating, rolling and cooling, is captured within the bar supplier's total specific embedded direct emissions figure. We report that single figure per tonne of finished bar and do not disaggregate it by process step.
Rolling mill efficiency influences embedded direct emissions through two mechanisms. First, a less efficient mill may consume more fuel in reheating furnaces per tonne of bar rolled, increasing direct emissions from fuel combustion. Second, yield losses in the rolling process, where bar is cropped, scrapped or downgraded, mean that the emissions from melting and casting a larger quantity of steel must be spread across a smaller quantity of saleable finished bar, increasing the specific embedded direct emissions per tonne.
Both effects are captured automatically in a properly calculated specific embedded direct emissions figure. A mill that monitors its energy consumption and calculates emissions in accordance with the CBAM methodology will include all rolling fuel use and yield-adjusted emissions in its declared figure. Where we use official default values, those defaults implicitly reflect typical industry-average rolling efficiency.
In practice, rolling efficiency is one of the factors that creates variation between actual supplier data and global default values. A highly efficient modern rolling mill may declare actual direct emissions significantly below the global default, giving us a commercial incentive to obtain actual data where the supplier operates to high efficiency standards.
Source: Implementing Regulation (EU) 2025/2547
73. Do we need to separately provide emissions data for our bar supplier's reheating furnaces?
No. Reheating furnace emissions are not separately reportable. They are part of the bar supplier's direct embedded emissions and are captured within the total specific embedded direct emissions per tonne of finished bar that we include in our in-house CBAM reporting template.
Before hot rolling, steel billets or blooms must be reheated to rolling temperature, typically around 1,100 to 1,250 degrees Celsius for carbon and alloy steels. This reheating is carried out in furnaces generally fired with natural gas, although some modern mills use electrically heated or hybrid furnaces. The fuel combustion in gas-fired reheating furnaces is a direct emission source and can account for a significant proportion of the mill's total direct emissions, particularly for long product rolling mills producing bar and rod.
For a bar supplier using actual data, reheating furnace fuel consumption will be measured and included in their direct emissions calculation per tonne of bar produced. For a bar supplier where we use the official default value, the default reflects typical reheating practice for that CN code category.
We do not receive separate reheating furnace data from our bar suppliers and we do not request it. The single specific embedded direct emissions figure per tonne covers reheating alongside all other direct emission sources in the production process.
Source: Implementing Regulation (EU) 2025/2547
74. Do we need to separately provide emissions data for our bar supplier's quenching and tempering operations?
No. Quenching and tempering emissions are not separately reportable. They are included within the bar supplier's total specific embedded direct emissions and are captured in the single figure per tonne of bar that we use in our CBAM reporting.
Quenching and tempering is a heat treatment sequence applied to alloy steel bars to achieve specified mechanical properties. Quenching involves rapid cooling from above the austenitising temperature, followed by tempering at a lower temperature to relieve internal stresses. Both steps consume energy, primarily in the furnace heating cycles, and any fuel combustion during these steps contributes to the bar supplier's direct embedded emissions.
For alloy steel grades such as 817M40, 708M40 and similar that we use for high-strength nuts, quenched and tempered condition is a common supply requirement. The heat treatment may be performed by the bar mill as part of their standard production, or by a specialist heat treatment facility before despatch to the UK. In the latter case those direct emissions are still part of the upstream bar production chain and must be included in the bar's embedded direct emissions figure, whether through actual data from the supplier or via the appropriate default value for the heat treated bar CN code.
If heat treatment is performed by a UK-based stockholder after the bar enters the UK, it falls outside the CBAM embedded emissions boundary for the bar as precursor material.
Source: Implementing Regulation (EU) 2025/2547
75. Do we need to separately provide emissions data for our bar supplier's refining processes such as desulphurisation or vacuum degassing?
No. Secondary metallurgy and refining processes are not separately reportable under CBAM. Their energy consumption and associated direct emissions are part of the bar supplier's total specific embedded direct emissions and are included in the single figure per tonne of finished bar.
Secondary metallurgy processes applied between the primary steelmaking furnace and the continuous caster include desulphurisation, ladle furnace refining, vacuum degassing, argon rinsing and calcium treatment. These processes are used to achieve tight control of chemical composition, low inclusion content and specific mechanical property profiles required for demanding applications.
For the grades we typically use in high-specification nut manufacture, including 316 stainless, 817M40, 708M40 and similar grades, secondary metallurgy is a standard part of the production route. These processes consume electricity and in some cases inert gases, and they contribute to the mill's energy consumption profile. However, these contributions are relatively minor compared to the dominant direct emission sources of ironmaking, steelmaking and rolling, and they do not require separate identification or reporting in the CBAM framework.
A bar supplier calculating their specific embedded direct emissions will include all secondary metallurgy fuel use in their total fuel consumption figures. The resulting direct emissions are then captured in their declared specific embedded direct emissions per tonne. Electricity consumed in secondary metallurgy is an indirect emission and is excluded under Annex II.
Source: Implementing Regulation (EU) 2025/2547
76. Do we need to separately provide emissions data for casting yield losses at our bar supplier?
No. Casting yield losses are not a separately reportable item. Their effect on embedded direct emissions is automatically captured in the specific embedded direct emissions figure per tonne of saleable finished bar, because that figure is calculated by attributing all production emissions to the saleable output.
Yield loss is an important concept in understanding embedded emissions. When a steel mill melts and casts steel, not all of the liquid steel becomes saleable bar. Losses arise from:
- Cropping of cast billet ends to remove segregated or unsound material
- Surface conditioning to remove defects before rolling
- Cobbles and rejected lengths during rolling
- Off-specification product that cannot be sold as prime bar
These losses mean that the total energy consumed in melting, casting and rolling a given heat of steel must be attributed to a smaller weight of finished saleable bar than the original charge weight. The specific embedded direct emissions per tonne of finished bar are therefore higher than they would be at 100% yield.
For a bar supplier using actual data, yield losses are automatically accounted for in the calculation methodology. The total direct emissions for the production period are divided by the total saleable output for that period, which inherently includes the effect of all yield losses. For official default values, the analysis that underpins the defaults is based on observed actual production data and therefore reflects typical industry yield levels for each product category.
We do not receive or report yield data from our bar suppliers separately. The yield effect is embedded in the per-tonne direct emissions figure.
Source: Implementing Regulation (EU) 2025/2547
77. Do we need to separately provide emissions data for our bar supplier's scrap recycling processes?
No. The processing of recycled scrap used as steelmaking feedstock is not separately reportable. Where scrap forms part of the steelmaking input, its processing direct emissions are included in the bar supplier's total specific embedded direct emissions figure.
The treatment of scrap in the CBAM methodology follows a specific principle: recycled scrap is treated as a zero-embedded-emissions input to the steelmaking process, because the emissions associated with its original production have already been attributed to the products in which it was first used. This is the standard approach under lifecycle assessment principles and is consistent with the EU ETS methodology that CBAM mirrors.
However, the processing of scrap before it can be charged to a steelmaking furnace does consume energy. Sorting, shredding, baling, drying and pre-heating of scrap all involve electricity and in some cases gas. Direct emissions from any gas use in scrap processing are real and are captured in the bar supplier's total fuel consumption for the production process. Electricity consumed in scrap processing is an indirect emission and is excluded under Annex II for all bar CN codes.
We do not separately identify or report scrap processing emissions, and we do not need to request scrap processing energy data from our bar suppliers. The total specific embedded direct emissions figure covers everything.
Source: Implementing Regulation (EU) 2025/2547
78. Do we need to separately provide emissions data for our bar supplier's alloy-melting furnaces?
No. Alloy-melting furnaces used in the production of ferro-alloys are part of the upstream supply chain of the bar supplier's raw materials. Their direct emissions are captured as part of the precursor embedded direct emissions of the ferro-alloys used as alloying additions, and those precursor emissions are in turn included in the bar supplier's total specific embedded direct emissions per tonne of finished bar.
The production of ferro-alloys including ferromanganese, ferrochromium, ferronickel and ferromolybdenum involves energy-intensive pyrometallurgical processes in electric submerged arc furnaces or other specialist furnaces. These furnaces consume very large amounts of electricity and in some cases carbon-based reducing agents that generate CO₂. Direct emissions from carbon reduction in these processes are significant and are captured as precursor emissions in a CBAM-compliant bar embedded emissions calculation.
In practice, a bar supplier performing a full CBAM-compliant calculation will either obtain actual embedded direct emissions data from their ferro-alloy suppliers or apply default values for the ferro-alloy CN codes. The result feeds into the bar's total specific embedded direct emissions as a component of the precursor contribution. We receive only the final bar-level figure and do not see the ferro-alloy sub-calculations.
Source: Implementing Regulation (EU) 2025/2547
79. Do we need to separately provide emissions data for our bar supplier's gas consumption during rolling?
No. Gas consumption during rolling is a direct emission source at the bar supplier's installation and its associated direct emissions are captured in the bar supplier's specific embedded direct emissions per tonne of finished bar. We report that single figure and do not disaggregate it by fuel type or process step.
Gas is consumed in rolling mill operations primarily in reheating furnaces that bring billets or blooms to rolling temperature, and in some cases in annealing or heat treatment furnaces integrated into the rolling line. In a gas-fired reheating furnace, the combustion of natural gas produces CO₂ as a direct emission. The quantity of CO₂ depends on the gas consumption rate, the furnace efficiency and the calorific value and carbon content of the gas.
For a bar supplier calculating their specific embedded direct emissions in accordance with the CBAM methodology, they must measure their total gas consumption across the production process and apply the appropriate CO₂ emission factor for natural gas. The resulting direct emissions per tonne of bar are the figure they declare to us.
Some mills have begun replacing gas-fired reheating with induction heating or other electrically powered alternatives as part of their decarbonisation strategies. Such a change would reduce direct emissions. The effect on CBAM embedded emissions is straightforward for Annex II goods: lower direct emissions mean a lower CBAM declaration, regardless of any increase in electricity consumption, since indirect emissions are excluded.
Source: Implementing Regulation (EU) 2025/2547
80. Do we need to separately provide the electricity grid emission factor used by our bar supplier?
No, not as a standalone data point, because indirect emissions are excluded for all bar CN codes under Annex II of Regulation (EU) 2023/956. The electricity grid emission factor is relevant only to the calculation of indirect emissions, which do not form part of the CBAM embedded emissions declaration for iron, steel or aluminium bar goods. We therefore neither request nor report the electricity grid emission factor from our bar suppliers for CBAM purposes.
Why this differs from the transitional period position
During the transitional phase (October 2023 to December 2025), EU importers reported both direct and indirect emissions for all goods including iron and steel bars. Some guidance and template documentation from that period includes indirect emissions and electricity emission factor fields for bar CN codes. From 1 January 2026 in the definitive phase, only direct emissions apply for Annex II goods. The electricity emission factor field is not required for bar CN codes and should not be populated for our goods in the definitive period.
For broader sustainability reporting
If our EU customers or their auditors request electricity grid emission factor information for our bar suppliers as part of a broader Scope 3 or lifecycle assessment, we can request this from our bar suppliers and pass it on as supplementary information. This is separate from our CBAM data and clearly labelled as such to avoid confusion with the CBAM declaration.
Source: Annex II - Regulation (EU) 2023/956 (consolidated) and Implementing Regulation (EU) 2025/2547
81. Do we need to separately provide emissions data for our bar supplier's ladle metallurgy processes such as ladle furnace (LF), vacuum degassing (VD) or argon oxygen decarburisation (AOD)?
No. Ladle metallurgy processes are not separately reportable under CBAM. Their energy consumption and any associated direct emissions are included within the bar supplier's total specific embedded direct emissions per tonne of finished bar, and it is that single figure which we report in our in-house CBAM reporting template. Electricity consumed in these processes is an indirect emission and is excluded under Annex II of Regulation (EU) 2023/956 for all bar CN codes.
Ladle furnace (LF) refining, vacuum degassing (VD), vacuum oxygen decarburisation (VOD), argon oxygen decarburisation (AOD) and similar secondary metallurgy processes are applied between the primary melting furnace and the continuous caster. They are used to refine the liquid steel's chemical composition, reduce harmful elements such as sulphur, hydrogen and nitrogen, and achieve the precise specification required for demanding engineering grades.
For the grades we use in high-specification nut manufacture, several of these processes are routinely employed. AOD is the standard process for producing stainless steel grades such as 303, 304 and 316, where it enables precise control of chromium content while minimising oxidation losses. VD or VOD is commonly applied to high-alloy grades such as 817M40 where very low hydrogen content is required to avoid hydrogen-induced cracking in quenched and tempered condition.
These processes consume electricity, argon, oxygen and other consumables. Any direct emissions from gas or oxygen use in these processes are real and form part of the bar supplier's total production direct emissions. A bar supplier calculating their specific embedded direct emissions in accordance with the CBAM methodology will aggregate all fuel and process gas consumption across the entire production route, including secondary metallurgy, and report a single specific embedded direct emissions figure per tonne of finished bar. We receive and report that aggregated figure without needing to see the sub-process breakdown.
Source: Implementing Regulation (EU) 2025/2547
82. Do we need to separately provide emissions data for our bar supplier's fluxes, gases and consumables used during steelmaking?
No. Consumables used in steelmaking are not separately reportable under CBAM. Their upstream production direct emissions and their in-process use are captured within the bar supplier's total specific embedded direct emissions, whether through the precursor emissions sub-calculation or through direct process emissions.
Consumables used in steel production include lime and dolomite for slag chemistry control, fluorspar as a flux, oxygen blown into the converter or EAF, argon and nitrogen for stirring and blanketing, carbon electrodes in the EAF, and refractory materials lining furnaces and ladles. Each of these has some associated upstream direct emissions from its own production, and some generate direct emissions when used.
Under the CBAM methodology, certain upstream inputs including lime and coke are outside the CBAM system boundary for iron and steel, and this is built into the methodology and into the analysis underpinning the official default values. A bar supplier performing a full CBAM calculation will apply these boundary rules consistently, meaning that only the relevant in-scope upstream materials and direct process emissions are included.
We do not receive or request a consumable-by-consumable breakdown from our bar suppliers. The single specific embedded direct emissions figure per tonne captures everything within the CBAM system boundary.
Source: Implementing Regulation (EU) 2025/2547
83. Do we need to separately provide emissions data for the casting route used by our bar supplier, such as continuous casting versus ingot casting?
No, not as a separate reportable item. However, the casting route is practically relevant because it influences the CN code appropriate for the bar and the level of embedded direct emissions, and in one specific case it directly affects which default value we should apply.
Continuous casting
The overwhelming majority of commercial steel bar production uses continuous casting, where liquid steel is cast directly into billets or blooms of constant cross-section. Continuous casting is more energy efficient than ingot casting, achieves higher yields, and produces a more consistent product. For the CN codes covering hot-rolled and cold-finished carbon, alloy and stainless steel bars that we routinely purchase, continuous casting is the standard assumed production route.
Ingot casting
Ingot casting, where liquid steel is poured into individual moulds to solidify as discrete ingots before reheating and rolling or forging, is used for certain speciality grades, large cross-sections and products where the as-cast grain structure is significant. Ingot casting is less efficient than continuous casting and typically results in higher specific embedded direct emissions per tonne of finished product due to lower yields and higher reheating energy requirements.
Why this matters for our CBAM reporting
The forged bar sub-headings under CN 7214 10 00 (forged non-alloy steel bars) and CN 7228 40 (forged alloy steel bars) carry higher official default values than their rolled equivalents, partly because forged products are typically produced via ingot casting rather than continuous casting, and partly because forging itself adds energy and fuel consumption. If we receive forged bar, we must use the forged bar CN code and its higher default value rather than the hot-rolled bar default. Using the wrong default for a forged product would understate embedded direct emissions.
For standard hot-rolled or cold-finished bar produced by continuous casting, no special action is needed beyond confirming the correct CN code for the finishing condition.
Source: EU Combined Nomenclature and Implementing Regulation (EU) 2025/2547
84. Do we need to separately provide emissions data for our bar supplier's rolling passes and deformation energy?
No. The energy consumed in individual rolling passes is not separately reportable. It forms part of the bar supplier's total energy consumption during the production process and is captured within their specific embedded direct emissions figure per tonne of finished bar. Electricity consumed in rolling is an indirect emission and excluded under Annex II for all bar CN codes; fuel consumed in reheating between passes is a direct emission and is included.
Hot rolling of steel bar involves passing heated billet or bloom through a series of roll stands, each of which reduces the cross-section progressively towards the finished bar dimensions. The total energy consumed across all rolling passes is monitored as part of the mill's overall energy consumption. Mills that roll a wide range of bar sizes typically report a single average energy consumption figure per tonne of output for the relevant CN code category, reflecting their actual production mix.
Where we use official default values rather than actual supplier data, the default direct emissions figure for each CN code reflects typical rolling fuel energy consumption for that product category.
Source: Implementing Regulation (EU) 2025/2547
85. Do we need to separately provide emissions data for our bar supplier's finishing operations such as peeling, grinding or polishing?
No, not as separate line items. However, finishing operations are critically important to our CBAM reporting because they determine the CN code of the bar we purchase, and the CN code determines which embedded direct emissions figure we apply. Getting the finishing condition right is more important than understanding the energy breakdown of the finishing operations themselves.
Why finishing operations matter for CN code classification
As covered in question 54, finishing operations that qualify as cold finishing change the CN code of the bar:
- Peeling removes the outer surface of a hot-rolled bar by a cutting action, producing a bright, clean surface with improved dimensional tolerance. A peeled bar is classified as cold-finished.
- Centreless grinding achieves similar results by a grinding action and is also classified as cold-finished.
- Bright drawing through a die reduces the diameter and improves the surface finish and dimensional tolerance of a hot-rolled bar, and is classified as cold-finished.
- Polishing is typically a surface improvement operation applied to already cold-finished or stainless bar and does not change the CN classification beyond the condition already established.
The direct emissions consequence of correct classification
Where finishing operations performed outside the UK change the CN code, we must use the cold-finished CN code and its corresponding default or actual embedded direct emissions figure. For alloy steel bars this means using CN 7228 50 or 7228 60 rather than CN 7228 10 to 7228 30. For non-alloy bars it means using CN 7215 rather than CN 7214. For stainless steel bars it means using CN 7222 20 rather than CN 7222 11.
The energy consumed in finishing operations is partly electricity (indirect, excluded under Annex II) and partly any fuel used in associated heat treatment. What we must ensure is that we correctly identify the bar as cold-finished and use the appropriate CN code so that the relevant direct emissions are captured within whichever default or actual value we apply.
Source: EU Combined Nomenclature and Implementing Regulation (EU) 2025/2547
86. Do we need to separately provide emissions data for our bar supplier's annealing or normalising cycles?
No. Annealing and normalising are heat treatment processes whose direct emissions from fuel combustion are included within the bar supplier's total specific embedded direct emissions per tonne of finished bar. We do not report them separately.
Annealing involves heating steel to a specified temperature and cooling slowly in a controlled atmosphere furnace, to soften the material, relieve internal stresses or improve machinability. Normalising involves heating above the upper critical temperature and air cooling to refine grain structure and achieve a consistent mechanical property baseline. Both processes consume significant furnace energy, primarily from gas combustion in atmosphere-controlled batch or continuous furnaces, generating direct emissions.
For the free-machining grades we use extensively, such as 230M07 and 11SMnPb30, bright annealing is commonly applied to achieve the soft, machinable condition preferred for automatic lathe work. For stainless steel grades such as 316 and 304, solution annealing is the standard finishing heat treatment that dissolves chromium carbides and restores corrosion resistance. These heat treatments are part of the bar's standard production route and their direct emissions are included in the bar supplier's calculation.
Where annealing or normalising causes a bar to be supplied in a condition reflected in a specific CN sub-heading, we ensure we use the correct sub-heading. For most standard grades, annealing does not change the CN code: a hot-rolled and annealed bar remains a hot-rolled bar for CN purposes. Only where the bar has been cold-finished after heat treatment, or where the heat treatment forms part of a cold-finishing sequence, does the CN code change.
Source: Implementing Regulation (EU) 2025/2547
87. Do we need to separately provide emissions data for our bar supplier's solution treatment or age hardening processes for aluminium bars?
No. Solution treatment and age hardening are heat treatment processes applied to aluminium alloy bars and their direct fuel combustion emissions are included within the bar supplier's total specific embedded direct emissions per tonne. We do not report them separately.
These processes are significant for the aluminium alloy grades we use:
Solution treatment: The bar is heated to a temperature at which the alloying elements dissolve into solid solution, then rapidly quenched. For 6082 aluminium alloy bar, solution treatment at approximately 530 degrees Celsius followed by water or air quenching is a standard production step. The process requires controlled furnaces and significant energy input.
Artificial ageing (T6 temper): Following solution treatment and quenching, the bar is aged at an elevated temperature, typically 160 to 180 degrees Celsius for several hours, to precipitate fine hardening phases that give the alloy its strength. 6082-T6, the most common condition for structural aluminium bar, is produced by this sequence.
Natural ageing (T4 temper): Some alloys achieve adequate strength by natural ageing at room temperature after quenching, without a separate artificial ageing cycle, reducing energy consumption compared to T6 treatment.
These heat treatment steps contribute to the bar supplier's fuel consumption through furnace gas use, generating direct emissions that are included in the specific embedded direct emissions figure. For aluminium bars (CN 7604), only direct emissions are taken into account under Annex II of Regulation (EU) 2023/956. The heat treatment contribution is relatively minor compared to the direct emissions from aluminium smelting, but it is properly captured in a CBAM-compliant specific embedded direct emissions figure and in the official default values for CN 7604.
Source: Implementing Regulation (EU) 2025/2547
88. Do we need to separately provide emissions data for our bar supplier's scrap sorting and preparation processes?
No. Scrap sorting and preparation processes are not separately reportable. As discussed in question 77, recycled scrap is treated as a zero-embedded-emissions input to the steelmaking process under the CBAM methodology, and the direct emissions from any gas use in scrap preparation are captured within the bar supplier's total production direct emissions.
Scrap preparation activities include sorting by grade and composition, shredding of bulky scrap, baling of light scrap, removal of non-metallic contaminants, drying of wet scrap, and in some cases pre-heating of scrap using EAF off-gases to reduce electricity consumption. Direct emissions from any fuel combustion in these preparatory steps are part of the steel mill's total direct emissions for the production period and are included in the bar supplier's specific embedded direct emissions calculation.
The scrap zero-rating principle means that EAF-based steelmakers are not penalised in their CBAM calculations for the historical emissions embodied in the scrap they use, giving a structural advantage to high-scrap-content routes that reflects their genuinely lower direct carbon intensity compared to primary production routes.
Source: Implementing Regulation (EU) 2025/2547
89. Do we need to separately provide emissions data for our bar supplier's alloying furnace efficiency?
No. The efficiency of furnaces used in producing ferro-alloys and other alloying materials is not separately reportable by us. Those direct furnace emissions are embedded in the upstream production direct emissions of the ferro-alloys themselves, which in turn form part of the bar supplier's precursor embedded direct emissions calculation, which in turn feeds into the single specific embedded direct emissions figure per tonne of bar that we report.
The production of ferro-alloys such as ferrochromium, ferronickel, ferromanganese and ferromolybdenum involves energy-intensive pyrometallurgical processes in submerged arc furnaces or other specialist reactors. These furnaces use carbon-based reducing agents that generate CO₂ as direct emissions. The efficiency of these furnaces, in terms of energy and carbon consumed per tonne of ferro-alloy produced, varies with furnace age, design, raw material quality and operational practice.
For our CBAM reporting purposes, these furnace efficiencies are already reflected in the embedded direct emissions figures for the ferro-alloy CN codes that our bar supplier uses in their precursor sub-calculation. If our bar supplier obtains actual embedded direct emissions data from their ferro-alloy suppliers, those data already incorporate whatever furnace efficiency those suppliers achieved. If our bar supplier uses default values for ferro-alloy inputs, those defaults reflect typical industry-average performance for each ferro-alloy category.
Either way, the effect reaches us as a component of the bar's total specific embedded direct emissions figure, and we report that figure without needing visibility of the intermediate ferro-alloy furnace efficiency data.
Source: Implementing Regulation (EU) 2025/2547
90. Do we need to separately provide emissions data for country-specific industrial emissions regulations applicable to our bar supplier?
No. The regulatory environment in the country where the bar is produced is not itself a reportable item under CBAM. However, it is highly relevant to understanding the embedded direct emissions of the bar, because country-specific factors such as the presence or absence of an emissions trading system and the stringency of industrial emissions standards all directly influence the specific embedded direct emissions that the bar supplier will declare or that will be represented by the applicable default value.
The Annex II indirect emissions exclusion applies across all iron, steel and aluminium CN codes
Annex II of Regulation (EU) 2023/956 lists goods by sector, not by individual CN code. The sectors listed are iron and steel, aluminium and hydrogen. Every CBAM good within those sectors has only direct emissions taken into account - indirect emissions from electricity are excluded across the board. This applies equally to:
- Bar CN codes: CN 7213, 7214, 7215, 7222, 7228 and 7604
- Finished fastener CN codes: CN 7318 (iron and steel nuts, bolts, screws and washers) and CN 7616 (aluminium fasteners and machined articles)
There is no distinction between primary, semi-finished or downstream goods within these sectors for the purposes of the Annex II exclusion. CN 7318 fasteners and CN 7616 aluminium goods are iron and steel and aluminium goods respectively, and indirect emissions are excluded for both in exactly the same way as for bar CN codes.
The practical consequence is that the electricity grid emission factor in the country of production has no bearing on the CBAM embedded emissions declaration for any iron, steel or aluminium good - whether bar or finished fastener - and we do not request or report it for CBAM purposes for any of our goods or our bar suppliers' goods.
How country-specific factors affect embedded direct emissions
Carbon pricing: Where a carbon price is effectively paid in the country of production, for example through participation in an Emissions Trading System (ETS) or through a carbon tax, that carbon price may be deductible from the CBAM certificate obligation faced by the EU importer. Our EU customers may therefore ask us to confirm whether any qualifying carbon price has been paid in the UK in connection with the production of our nuts. Currently the UK does not operate an ETS-linked carbon price that qualifies for CBAM deduction. This position will be reviewed when the UK CBAM comes into force in 2027.
Industrial emissions standards: A country with stringent industrial emissions regulations may require steel mills to operate more efficient equipment or to use lower-emission fuels, resulting in lower declared embedded direct emissions. Conversely, mills in countries with limited environmental regulation may operate with older, less efficient equipment and higher emissions. These differences are captured in actual declared direct emissions data and in the country-weighted aspects of the official default values.
Electricity grid emission factor: For all iron, steel and aluminium CN codes - including both bar CN codes and finished fastener CN codes such as CN 7318 and CN 7616 - indirect emissions are excluded under Annex II of Regulation (EU) 2023/956. The national grid emission factor therefore has no bearing on the CBAM embedded emissions declaration for any of these goods.
What this means in practice for us
We do not separately research or report the regulatory environment of our bar suppliers' countries. What we do is obtain actual specific embedded direct emissions data from our bar suppliers where possible, which automatically reflects whatever regulatory and operational conditions exist at their facility. Where we use official default values, those defaults reflect a global average that includes producers across a range of regulatory environments.
For EU customers who ask about country of origin, we provide the bar supplier's country of production as documented on mill certificates. This allows them or their verifiers to apply appropriate scrutiny to the plausibility of declared direct emissions figures relative to known country-level benchmarks.
Source: Annex II - Regulation (EU) 2023/956 (consolidated) and Implementing Regulation (EU) 2025/2547
91. Do we need to separately provide emissions data for our bar supplier's internal quality control processes such as ultrasonic testing or eddy current inspection?
No. Quality control inspection processes are not separately reportable under CBAM. For bar CN codes, only direct emissions are taken into account under Annex II of Regulation (EU) 2023/956, and quality control processes generate no direct emissions. Any electricity they consume is an indirect emission and is excluded.
Quality control processes applied to bar stock include ultrasonic testing for internal defects, eddy current inspection for surface and near-surface flaws, magnetic particle inspection for surface-breaking cracks, dimensional gauging, and visual and surface finish checks. These are electrically driven processes with no fuel combustion and therefore generate no direct emissions whatsoever. They are outside the scope of what we report for bar precursor embedded emissions.
The same principle applies to any quality control activities we carry out ourselves on incoming bar or on finished nuts. Our CMM (coordinate measuring machine) inspection, thread gauging, hardness testing and visual inspection all consume electricity, but as indirect emissions they are excluded under Annex II for our CN 7318 nut production.
Source: Annex II - Regulation (EU) 2023/956 (consolidated)
92. Do we need to separately provide emissions data for our bar supplier's water usage or cooling systems?
No. Water usage and cooling systems are not separately reportable under CBAM. Pumping and cooling equipment consumes electricity, which is an indirect emission excluded under Annex II for all iron, steel and aluminium CN codes. The water itself does not generate greenhouse gas emissions in normal use.
Water and cooling are used extensively throughout steel and aluminium bar production. Continuous casting requires large volumes of water for strand cooling. Rolling mills use water for roll cooling and scale suppression. Heat treatment furnaces use water or polymer quench media for quenching. All pumping and cooling equipment is electrically driven - no fuel combustion is involved in normal cooling water circuits.
At our own facility, we use coolant systems on our CNC lathes and automatic lathes for chip clearance and tool cooling. These are also electrically driven and generate no direct emissions. They are excluded under Annex II in the same way.
Source: Annex II - Regulation (EU) 2023/956 (consolidated)
93. Do we need to separately provide emissions data for our bar supplier's maintenance activities such as mill repairs or furnace servicing?
No. Maintenance activities are not separately reportable under CBAM. The direct emissions from any fuel combustion during maintenance - for example welding gas, cutting torch fuel, or heating during refractory relining - are captured within the bar supplier's total direct emissions for the reporting period and therefore within their declared specific embedded direct emissions per tonne of bar.
Maintenance at a steel mill encompasses roll changes, refractory lining replacement in furnaces and ladles, mechanical and electrical repairs, and major planned shutdowns. Where maintenance involves fuel combustion - gas cutting, welding, furnace warm-up after refractory repair - those direct emissions are included in the bar supplier's total direct emissions for the year. Electrical energy consumed during maintenance is an indirect emission and excluded under Annex II.
At our own facility, our maintenance activities are primarily electrical - machine tool servicing, spindle replacement, tooling changes and similar. We have no fuel combustion associated with maintenance and therefore no direct emissions from this source. This is consistent with our position as a machining-only operation with no combustion processes on site.
Source: Implementing Regulation (EU) 2025/2547
94. Do we need to separately provide emissions data for our bar supplier's internal transport such as forklifts or overhead cranes?
No. Internal transport operations are not separately reportable, but direct emissions from diesel-powered internal transport at the bar supplier's facility are captured within their total specific embedded direct emissions figure.
Internal transport at a steel mill includes overhead cranes, ladle cranes, coil and billet transfer systems, forklifts and yard vehicles. Electrically powered equipment - overhead cranes, electric forklifts, conveyors - generates indirect emissions excluded under Annex II. Diesel-powered forklifts and internal combustion yard vehicles generate direct CO₂ emissions from fuel combustion. Under the CBAM methodology, direct emissions from all fuel combustion within the installation boundary are included in the specific embedded direct emissions calculation.
At our own facility, our internal transport consists of manual handling and a small electric forklift used for moving raw material and finished goods within the building. Our forklift is electrically powered and generates no direct emissions. Indirect emissions from its electricity consumption are excluded under Annex II for our CN 7318 goods.
Source: Implementing Regulation (EU) 2025/2547
95. Do we need to separately provide emissions data for our bar supplier's laboratory testing such as chemical analysis or tensile testing?
No. Laboratory testing activities are not separately reportable. All laboratory equipment is electrically driven, generating only indirect emissions which are excluded under Annex II for all iron, steel and aluminium CN codes.
A steel mill laboratory performs optical emission spectrometry for chemical composition verification, tensile and yield strength testing, impact testing, hardness measurement and microstructural examination. These activities are entirely electricity-based with no direct emissions. They are therefore entirely outside the CBAM embedded direct emissions calculation for bar CN codes.
At our own facility, we carry out dimensional inspection, thread gauging, torque testing and hardness checks on finished nuts. All of our inspection equipment is electrically powered. As with our machining operations, these generate only indirect emissions which are excluded under Annex II for our CN 7318 nuts. We do not report them in our CBAM data.
Source: Annex II - Regulation (EU) 2023/956 (consolidated)
96. Do we need to separately provide emissions data for the packaging of bars before shipment by our bar supplier?
No. Packaging applied to finished bars before shipment is not a separately reportable emission under CBAM, and the weight of packaging materials is not included in the net weight of CBAM goods for the purposes of the embedded emissions calculation.
CBAM does not apply to packaging at any point in the supply chain. The strapping, protective wrapping, wooden dunnage, plastic sleeves and end caps used to protect bar in transit do not carry CBAM-reportable embedded emissions. The same applies to the packaging we use when despatching finished nuts to our customers - cardboard boxes, polythene bags, bulk containers and pallets are all excluded.
The only practical effect of packaging on our CBAM reporting is that we use the net weight of bar when calculating bar consumption per tonne of finished nuts, not the gross weight including packaging. Mill certificates and delivery notes state both gross and net weight, and we use the net weight figure consistently in our in-house CBAM reporting template.
Source: Regulation (EU) 2023/956 Article 3(22)
97. Do we need to separately provide emissions data for our bar supplier's administrative operations such as offices or IT systems?
No. Administrative operations are explicitly outside the CBAM production process boundary. The CBAM methodology focuses on the industrial production process within the installation, not on the administrative overhead of running the business.
The CBAM Implementing Regulation defines embedded emissions as those arising from the production process within the installation. Administrative offices, canteen facilities and general site services lie outside the production process boundary, even if physically located on the same site as the production plant. The monitoring plan for a CBAM installation defines the installation boundary accordingly.
This applies equally to our own facility. Our office area, reception, and any general non-production electricity consumption are outside the CBAM production process boundary. Our in-house CBAM reporting template uses electricity consumption attributable to our production operations only - our CNC and automatic lathes, drilling and tapping machines, auxiliary production equipment, production area lighting and environmental control - not our office or administrative areas.
Source: Implementing Regulation (EU) 2025/2547
98. Do we need to separately provide emissions data for our bar supplier's waste management or recycling of mill by-products?
No, but this question has some nuance worth understanding, because certain mill by-products interact with the CBAM embedded direct emissions calculation in ways that are not immediately obvious.
By-products that reduce embedded direct emissions
The CBAM methodology includes a mechanism for handling exportable by-products that carry embedded emissions value. Where a steel mill produces a saleable by-product alongside its main steel output - for example blast furnace slag used as a cement substitute or blast furnace gas exported to generate power - the methodology may allow some of the production direct emissions to be attributed to that by-product rather than entirely to the steel. The effect is to reduce the specific embedded direct emissions attributed to the steel output.
If our bar supplier applies this absorption approach in their emissions calculation, it will result in a lower declared specific embedded direct emissions per tonne than would otherwise be the case. We should be aware of this when assessing the plausibility of unusually low declared direct emissions figures from suppliers who operate integrated steelworks with significant by-product streams.
Machining swarf at our own facility
Our own production generates machining swarf - steel, stainless steel and aluminium turnings - as a by-product of bar turning. As covered in question 44, our swarf does not affect our CBAM reporting. The embedded direct emissions of the bar we consumed are fully attributed to the finished nuts we produce, proportional to the quantity of bar used per tonne of nuts. Our swarf is sold or disposed of as recycled metal and carries no separate CBAM obligation.
Source: Implementing Regulation (EU) 2025/2547
99. Do we need to separately provide emissions data for our bar supplier's environmental control systems such as dust filters or scrubbers?
No. Environmental control systems are not separately reportable. All such equipment is electrically driven and generates only indirect emissions, which are excluded under Annex II of Regulation (EU) 2023/956 for all iron, steel and aluminium CN codes.
Environmental control equipment at a steel mill includes bag filter dust collection systems, wet and dry scrubbers for gas cleaning, electrostatic precipitators, selective catalytic reduction systems for NOx control, and wastewater treatment plant. All of this equipment consumes electricity. No fuel combustion is involved in normal operation of these systems and therefore no direct emissions arise from them.
At our own facility, we operate extraction and filtration systems on our CNC and automatic lathes to manage coolant mist and metal dust. These are electrically driven. They generate no direct emissions and their electricity consumption is an indirect emission excluded under Annex II for our CN 7318 nuts. We do not report them in our CBAM data.
Source: Annex II - Regulation (EU) 2023/956 (consolidated)
100. Do we need to separately provide emissions data for our bar supplier's site-wide energy efficiency measures or carbon reduction initiatives?
No, and this is one of the most commercially important aspects of the CBAM framework to understand. Energy efficiency measures and carbon reduction initiatives do not need to be reported separately, but they directly and immediately improve the specific embedded direct emissions figure that the bar supplier declares, which in turn reduces the CBAM certificate costs faced by our EU customers when they import our nuts.
How efficiency improvements flow through to our CBAM reporting
The CBAM methodology is performance-based: it asks what the actual specific embedded direct emissions were per tonne of finished goods produced, not what processes or investments were used to achieve that result. Any measure our bar supplier takes to reduce their fuel consumption or shift to lower-carbon fuels automatically reduces their declared specific embedded direct emissions per tonne, without needing to separately report the measure itself.
Examples of how specific initiatives translate into improved CBAM performance for our nuts:
Transition to EAF steelmaking or increased scrap content: EAF steelmaking with high scrap content can achieve direct embedded emissions of 0.1 to 0.4 tCO₂e per tonne of steel compared to 1.6 to 2.0 tCO₂e per tonne for BOF steelmaking from primary iron. A bar supplier who transitions from BOF to EAF production will declare materially lower specific embedded direct emissions, which flows directly into our precursor data and reduces our EU customers' CBAM certificate costs.
Heat recovery and furnace efficiency improvements: Recovering waste heat from furnace exhaust gases to preheat combustion air or incoming scrap reduces fuel consumption per tonne of bar. Lower fuel consumption means lower direct embedded emissions per tonne.
DRI-EAF production using green hydrogen: For bar suppliers transitioning to hydrogen-based steelmaking, DRI-EAF production using hydrogen-reduced iron dramatically lowers direct emissions and can approach near-zero direct emissions for the steelmaking and ironmaking steps where green hydrogen is used.
The commercial implication for us and our EU customers
Our EU customers' CBAM certificate costs are directly proportional to the specific embedded direct emissions of the nuts they import from us. Those direct emissions are driven largely by the bar precursor. A bar supplier who achieves genuine direct emissions reductions creates a quantified commercial benefit for our EU customers in the form of reduced certificate costs.
We communicate this clearly to our EU customers when discussing our CBAM data. Where we can offer nuts made from bar sourced from lower-emission producers, with actual data to support the claim, we can quantify the CBAM cost saving compared to the global default or to higher-emission alternatives. This makes our CBAM data capability a commercial differentiator, not just a compliance exercise.
Source: Annex II - Regulation (EU) 2023/956 (consolidated) and Implementing Regulation (EU) 2025/2547
101. Do we need to separately provide emissions data for our bar supplier's use of renewable energy certificates or guarantees of origin?
No, and this point is critically important to understand correctly. Under CBAM rules, renewable energy certificates and guarantees of origin cannot be used to reduce the electricity emission factor applied to indirect embedded emissions. However, for all iron, steel and aluminium CN codes - including both bar CN codes and our finished CN 7318 nuts - indirect emissions are excluded under Annex II of Regulation (EU) 2023/956 entirely. The question of how to calculate an electricity emission factor therefore does not arise for any of our goods or our bar suppliers' goods.
Why this matters despite the Annex II exclusion
This rule is worth understanding clearly because the CBAM guidance and monitoring regulations contain detailed provisions on electricity emission factors that were relevant during the transitional phase and remain relevant for goods outside Annex II (such as cement and fertilisers). It is easy to mistakenly assume these provisions apply to iron, steel and aluminium goods. They do not. For our goods and our bar suppliers' goods, the entire indirect emissions methodology is inapplicable because indirect emissions are excluded at source under Annex II.
For completeness: the rule where it does apply
Where the indirect emissions exclusion does not apply (goods outside Annex II), the CBAM Implementing Regulation explicitly prohibits the use of Guarantees of Origin (GoOs), Renewable Energy Certificates (RECs) or similar tradeable certificates to justify using an electricity emission factor lower than the applicable national grid default. Only two mechanisms justify a below-grid emission factor in those cases:
- A direct technical connection between the installation and a renewable generation source
- A qualifying power purchase agreement meeting the conditions in Annex III of Implementing Regulation (EU) 2025/2547
This is noted here for completeness as it may be relevant if CBAM scope is extended to goods for which indirect emissions are included in future.
Source: Annex II - Regulation (EU) 2023/956 (consolidated) and Implementing Regulation (EU) 2025/2547
102. Do we need to separately provide emissions data for our bar supplier's carbon capture and storage (CCS) systems?
No, not as a separate data item. However, carbon capture and storage (CCS) is specifically addressed in the CBAM methodology and where a bar supplier operates a qualifying CCS system, it can reduce their declared specific embedded direct emissions per tonne of bar, which flows directly through to our EU customers' CBAM certificate costs on our nuts.
How CBAM treats CCS
The CBAM Regulation confirms that carbon capture and storage (CCS) or carbon capture and use (CCU) may reduce the embedded emissions attributed to a production process, but only where the captured CO₂ is permanently stored in a geological formation or permanently bound in a product in a way that prevents it from ever being released to the atmosphere. Temporary storage or CO₂ that is eventually released does not qualify for an emissions reduction credit.
Where a bar supplier operates a qualifying CCS system, the quantity of CO₂ permanently captured and stored per tonne of bar produced may be deducted from their specific embedded direct emissions. The deduction must be documented in the monitoring plan.
Practical relevance for our bar suppliers
CCS deployment in the steel industry is at an early commercial stage. Very few steel mills currently operate CCS at commercial scale. For the bar grades and supply sources we currently use, CCS is unlikely to be a factor in the near term. However, as CBAM certificate costs escalate, CCS may become more commercially deployed. If our bar suppliers in future claim CCS-based emissions reductions in their actual data, we would need to ensure those claims are properly documented in their CBAM monitoring plan before including them in our in-house CBAM reporting template.
Source: Annex I - Regulation (EU) 2023/956 (consolidated) and Implementing Regulation (EU) 2025/2547
103. Do we need to separately provide emissions data for our bar supplier's use of hydrogen in hydrogen-based steelmaking?
No, not as a separate item. Where a bar supplier uses hydrogen in their steelmaking process, the effect on their specific embedded direct emissions is already captured in their declared direct emissions per tonne of bar. Hydrogen-based steelmaking is one of the most significant emerging decarbonisation pathways for the steel industry and understanding how it affects CBAM is commercially relevant to us as a nut manufacturer, because lower bar direct emissions directly reduce the CBAM certificate costs our EU customers face when importing our nuts.
How hydrogen use reduces embedded direct emissions
Conventional blast furnace steelmaking uses coke to reduce iron ore, producing pig iron and large quantities of CO₂ as a direct emission. Hydrogen-based steelmaking replaces this chemistry with hydrogen as the reductant, producing water vapour rather than CO₂. Two main approaches are relevant:
Hydrogen direct reduction (H-DRI): Iron ore is reduced using hydrogen in a shaft furnace or fluidised bed reactor, producing direct reduced iron (DRI). The DRI is then melted in an EAF. Where green hydrogen is used, direct emissions from the ironmaking step approach zero. This route is being deployed commercially by producers including SSAB in Sweden and Salzgitter in Germany.
Hydrogen enrichment of blast furnace operations: Some producers inject hydrogen into conventional blast furnaces to partially replace coke, reducing direct CO₂ emissions per tonne of pig iron. This is a transitional approach that reduces but does not eliminate blast furnace direct emissions.
How this appears in our CBAM reporting for nuts
A bar supplier using H-DRI-EAF with green hydrogen will declare very low specific embedded direct emissions per tonne - potentially approaching 0.1 to 0.3 tCO₂e per tonne compared to 1.6 to 2.0 tCO₂e per tonne for conventional BOF steelmaking. Because indirect emissions are excluded under Annex II for all iron and steel CN codes, the higher EAF electricity consumption has no bearing on the CBAM declaration. The result is a bar with very low CBAM-relevant embedded direct emissions.
We do not separately report hydrogen consumption. We report the specific embedded direct emissions per tonne that result from the bar supplier's production process. The commercial value of a supplier's low-carbon technology is visible to our EU customers in the difference between that supplier's actual declared direct emissions and the official default value - which translates directly into a lower CBAM certificate cost on our nuts.
Source: Implementing Regulation (EU) 2025/2547
104. Do we need to separately provide emissions data for our bar supplier's use of recycled or secondary aluminium?
No, not as a separate item. However, the distinction between primary and secondary aluminium is one of the most significant variables in aluminium bar embedded direct emissions and has a direct bearing on which default values are appropriate and on the CBAM certificate costs our EU customers face when importing our aluminium nuts.
Primary versus secondary aluminium: the direct emissions difference
Primary aluminium is produced by electrolytic reduction of aluminium oxide in the Hall-Heroult process. Secondary aluminium is produced by remelting recycled scrap, requiring only approximately 5 to 10% of the energy of primary production. Because indirect emissions are excluded under Annex II for all aluminium CN codes, the enormous electricity consumption of primary smelting does not enter the CBAM calculation. What does matter for CBAM is the direct emissions from fuel combustion in melting furnaces and any process direct emissions.
Secondary aluminium remelting typically involves lower direct emissions per tonne than primary production because the melting temperatures and fuel requirements are lower and there are no reduction chemistry emissions. A bar supplier using predominantly secondary aluminium will therefore declare lower specific embedded direct emissions per tonne than one using predominantly primary aluminium, and this flows through to lower CBAM certificate costs on our aluminium nuts.
Why this matters for our specific aluminium grades
The aluminium grades we use for nut manufacture include 6082, 2011, 6026 and 7075. These are all wrought alloys that may be produced from primary aluminium, secondary aluminium with careful chemistry control, or a blend of both. For current country-specific default values for CN 7604, consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
Where an aluminium bar supplier can provide actual direct emissions data showing low embedded direct emissions from secondary production, we include that figure in our in-house CBAM reporting template. The secondary aluminium content is the underlying driver of those low direct emissions, but it is the emissions figure rather than the material source description that is the CBAM-reportable item.
Source: Implementing Regulation (EU) 2025/2547
105. Do we need to separately provide emissions data for our bar supplier's use of primary aluminium smelted with hydroelectric power?
No, not as a separate item, and for CN 7604 aluminium bars the hydroelectric power source is entirely irrelevant to the CBAM embedded emissions declaration. Aluminium is an Annex II good under Regulation (EU) 2023/956 and only direct emissions are taken into account. The electricity source at the smelter - whether hydroelectric, coal-fired or otherwise - has no bearing on the CBAM embedded direct emissions figure for aluminium bar or for our finished aluminium nuts under CN 7616.
Why this is important to state clearly
Hydroelectric-powered aluminium smelting is widely discussed in the context of low-carbon aluminium, and the full lifecycle emissions of hydro-powered primary aluminium are genuinely much lower than coal-powered primary aluminium. However, the lifecycle benefit arises from the low indirect emissions of the smelting electricity, not from lower direct emissions. Because Annex II excludes indirect emissions for all aluminium goods, that environmental advantage is invisible in the CBAM calculation. Two bars of identical grade produced from primary aluminium, one using hydroelectric power and one using coal-fired grid electricity, will declare identical embedded direct emissions per tonne for CBAM purposes.
What does matter for aluminium bar direct emissions
The direct emissions from aluminium production include perfluorocarbon (PFC) emissions from the electrolytic reduction process and fuel combustion in casting and rolling furnaces. PFC emissions vary with operational practice and cell technology but are not affected by the electricity source. For our CBAM reporting purposes, what matters is the bar supplier's declared specific embedded direct emissions per tonne, whatever electricity source they use.
For current country-specific default values for CN 7604 and CN 7616, consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
Source: Annex II - Regulation (EU) 2023/956 (consolidated)
106. Do we need to separately provide emissions data for our bar supplier's use of ferro-alloys such as ferrochromium (FeCr) or ferromolybdenum (FeMo)?
No, not as separate items. As discussed in detail in question 68, the embedded direct emissions of ferro-alloys used as alloying additions are included within the bar supplier's total specific embedded direct emissions per tonne of finished bar. We report that single aggregated figure and do not disaggregate it by individual alloy addition.
Ferrochromium (FeCr) is the dominant alloying addition in stainless steel, present at 10.5% or more by mass for all grades classified as stainless. Its production in submerged arc furnaces involves carbon-based reduction of chromite ore, generating direct CO₂ emissions and contributing materially to the elevated embedded direct emissions of stainless steel bars under CN 7222 compared to carbon steel bars. Ferromolybdenum (FeMo) is used in smaller quantities in alloy steel grades such as 817M40 and in some stainless steel grades, and also carries significant upstream production direct emissions.
These upstream ferro-alloy direct emissions are already captured in the bar supplier's actual specific embedded direct emissions calculation as precursor material contributions, or implicitly in the official default values for each CN code. The higher default values for stainless steel bars compared to carbon steel bars reflect, among other factors, the higher embedded direct emissions of the chromium and nickel alloying additions essential to stainless steel.
This is directly relevant to our nut manufacturing: when we machine stainless steel nuts our EU customers will face higher CBAM certificate costs per tonne than for equivalent carbon steel nuts, driven by the higher precursor bar direct emissions from chromium and nickel alloying. We can quantify this difference clearly from the bar-level data we hold.
Source: Implementing Regulation (EU) 2025/2547
107. Do we need to separately provide emissions data for our bar supplier's scrap blending or charge mix optimisation?
No. The scrap blending and charge mix decisions made by our bar supplier are internal production management activities whose combined effect on direct emissions is fully captured in the declared specific embedded direct emissions per tonne of finished bar.
Charge mix optimisation in steelmaking involves determining the most appropriate combination of scrap grades, pig iron, DRI and ferro-alloys to achieve the specified steel chemistry. A BOF operator may optimise the hot metal to scrap ratio. An EAF operator may blend different scrap grades or supplement with DRI to achieve the required chemistry. These decisions directly affect the bar supplier's specific embedded direct emissions per tonne: a charge mix that uses more recycled scrap and less primary iron will yield lower direct emissions.
The net effect of all charge mix decisions appears in the declared specific embedded direct emissions figure. We do not need to understand the charge mix details to report the outcome correctly. What matters for our in-house CBAM reporting template is the specific embedded direct emissions per tonne of finished bar, however it was achieved.
Source: Implementing Regulation (EU) 2025/2547
108. Do we need to separately provide emissions data for our bar supplier's use of protective atmospheres during heat treatment?
No. Protective atmosphere gases used during heat treatment are consumables whose associated upstream direct emissions are captured within the bar supplier's total specific embedded direct emissions figure without requiring separate identification.
Protective atmospheres used in heat treatment furnaces include nitrogen, argon, hydrogen and mixed atmosphere gases such as endothermic gas. These atmospheres prevent surface oxidation during annealing, normalising and case hardening. Bright annealing of stainless steel bars and free-machining steel bars such as 230M07 requires a carefully controlled atmosphere to achieve the surface quality specified.
The upstream direct emissions of these gases - from natural gas reforming to produce hydrogen or endothermic gas, or from combustion of vented CO in endothermic gas - are minor contributions captured in the bar supplier's direct emissions monitoring. Nitrogen and argon production by air separation is electricity-based and therefore excluded under Annex II.
At our own facility, we do not perform heat treatment and we use no protective atmosphere gases. Any protective atmosphere used during heat treatment of our finished nuts is performed by our sub-contractor. Their gas consumption is addressed in questions 16 and 49.
Source: Implementing Regulation (EU) 2025/2547
109. Do we need to separately provide emissions data for our bar supplier's use of lubricants or coolants during machining or finishing?
No. Lubricants and coolants used during cold finishing operations at the bar supplier's facility are consumables with negligible direct emissions impact. Their electricity consumption in pumping and cooling circuits is an indirect emission excluded under Annex II for all iron, steel and aluminium CN codes.
Cold drawing lubricants, peeling coolants and grinding fluids are applied during cold finishing operations to reduce friction and carry away swarf. The quantities used per tonne of bar are small and the associated upstream direct emissions from their production are a minor fraction of total bar embedded direct emissions. Pumping, cooling and filtration of these fluids is electrically driven and therefore excluded under Annex II.
The same applies at our own facility. We use cutting fluid on our CNC and automatic lathes for tool cooling and chip clearance. Our coolant systems are electrically driven. They generate no direct emissions and their electricity consumption is excluded under Annex II for our CN 7318 nuts.
Source: Annex II - Regulation (EU) 2023/956 (consolidated)
110. Do we need to separately provide emissions data for our bar supplier's use of refractory materials in furnaces?
No. Refractory materials are consumables used to line furnaces, ladles and high-temperature vessels. Their upstream production direct emissions are a minor element of total bar embedded direct emissions and are captured within the bar supplier's overall specific embedded direct emissions figure without requiring separate identification.
Refractory materials include firebrick, castable refractory, ceramic fibre and magnesia-carbon bricks. Their production involves high-temperature firing processes that generate CO₂ from fuel combustion. The embedded direct emissions of refractories per tonne of steel produced are small relative to the ironmaking, steelmaking and rolling direct emissions.
One case worth noting: where magnesia-carbon bricks containing carbon are used in BOF or EAF linings, the carbon in the bricks can be partially oxidised during steelmaking, contributing a small amount of CO₂ to the direct emissions of the process. This recognised but minor contribution is included in the bar supplier's direct emissions monitoring alongside the dominant CO₂ from ironmaking and steelmaking chemistry.
We do not use refractory materials in our own production. Our CNC turning and machining operations involve no furnaces, no high-temperature processes and no refractory-lined vessels. This is one of the reasons our direct process emissions at our own facility are negligible - we are a cold machining operation only.
111. Do nuts produced by bar turning create CBAM-reportable emissions under EU CBAM (European Union Carbon Border Adjustment Mechanism)?
Yes. Nuts produced by bar turning are CBAM goods under CN 7318, explicitly listed in Annex I of Regulation (EU) 2023/956, and their embedded direct emissions must be reported when they are imported into the EU.
The question of whether the bar turning process itself creates reportable emissions has a specific answer under the CBAM methodology. CN 7318 iron and steel nuts are listed in Annex II of Regulation (EU) 2023/956, which means only direct embedded emissions are taken into account. Indirect emissions from electricity - including all electricity consumed in bar turning, drilling, tapping, thread-rolling and other machining operations - are excluded from the CBAM embedded emissions declaration.
The full picture of what bar turning contributes to our CBAM reporting is as follows:
Precursor embedded direct emissions from the bar: The bar we turn is a CBAM precursor material. Its embedded direct emissions, covering the full upstream production chain at the steel or aluminium mill, are included in our total embedded direct emissions figure as the precursor contribution. They are typically the dominant component.
Direct emissions from sub-contracted heat treatment: Where our sub-contracted heat treatment involves fuel combustion in gas-fired furnaces, those direct emissions are included as specific embedded direct emissions per tonne of finished nuts.
Our own machining operations: Our CNC and automatic lathe operations, drilling, tapping and thread-rolling are electrically driven and generate no direct emissions. As indirect emissions, they are excluded under Annex II and do not form part of the CBAM declaration.
For current country-specific default values for CN 7318 16 (Nuts), consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
Source: Annex I - Regulation (EU) 2023/956 (consolidated) and European Commission CBAM homepage
112. Do nuts produced by bar turning create CBAM-reportable emissions under UK CBAM (United Kingdom Carbon Border Adjustment Mechanism)?
No, not directly. Under the UK CBAM coming into force on 1 January 2027, we as a UK manufacturer are not the CBAM declarant. The UK CBAM, like the EU CBAM, places the reporting and financial obligation on the importer into the relevant territory, not on the domestic manufacturer. Our finished nuts produced by bar turning and sold to UK customers will not trigger UK CBAM obligations for us or for them, as they are UK-manufactured goods and UK CBAM applies to imports.
However, the indirect effect of UK CBAM on our business is worth understanding:
Bar we import from overseas: We purchase bar from suppliers outside the UK. When that bar is imported into the UK from 2027 onwards, it will be subject to UK CBAM if it falls within the UK CBAM scope. The UK importer of that bar, which may be us directly or a UK stockholder, will face CBAM reporting obligations and potential certificate costs. These costs may be passed on to us in the bar price, increasing our material costs.
UK CBAM scope for finished goods: The UK CBAM as currently designed covers steel and aluminium products at the basic material and semi-finished level. Finished fasteners are not in the initial UK CBAM scope. Any future extension of UK CBAM to cover finished goods including CN 7318 nuts would require amendment of the UK CBAM framework.
Data we may be asked to provide: If any of our finished nuts are exported to a country with a CBAM-style mechanism covering finished fasteners, the importer in that country may request embedded emissions data from us. Our existing monitoring and documentation systems would support such requests.
Source: UK CBAM Policy Summary HMRC
113. If an EU importer requests CBAM emissions data for nuts produced by bar turning, what can we provide?
We provide comprehensive CBAM-compliant embedded direct emissions data for our finished nuts as CBAM goods. This is our standard response to a standard CBAM data request, because our CN 7318 nuts are CBAM goods and EU importers who import them have binding obligations to declare their embedded direct emissions.
Using our in-house CBAM reporting template we provide:
Specific direct embedded emissions per tonne of finished nuts: Covering the direct combustion emissions from our heat treatment sub-contractor's fuel-fired furnaces, expressed as tCO₂e per tonne. Our own machining operations generate no direct emissions.
Confirmation of Annex II exclusion: CN 7318 iron and steel nuts are listed in Annex II of Regulation (EU) 2023/956. Only direct embedded emissions are taken into account. Indirect emissions from electricity consumed in bar turning and all other machining operations are excluded from the CBAM declaration.
Precursor embedded direct emissions: Covering the specific embedded direct emissions of the bar stock used, identified by CN code, supplier and country of origin, expressed as tCO₂e per tonne of bar, either from actual supplier data or official default values.
Installation and reporting period details: Our name, address and the reporting period to which the data applies.
Carbon price confirmation: Confirmation that no qualifying carbon price has been paid in the UK in connection with production that would be deductible under CBAM rules, noting this position will be reviewed when the UK CBAM comes into force in 2027.
For EU customers who also require broader sustainability data beyond CBAM requirements, we can additionally provide batch-level electricity consumption breakdowns and material efficiency data for their Scope 3 or lifecycle assessment purposes.
Source: Annex I - Regulation (EU) 2023/956 (consolidated) and Implementing Regulation (EU) 2025/2547
114. How do bar-level precursor emissions and our own manufacturing emissions relate to each other in our CBAM reporting?
They are both components of the total specific embedded direct emissions per tonne of finished nuts that we report to our EU customers. The bar precursor direct emissions are typically the dominant component. Our own manufacturing direct emissions are limited to fuel combustion at our heat treatment sub-contractor, as our machining operations are electrically driven and their electricity consumption is excluded under Annex II.
The relationship between the two components is as follows:
Bar precursor embedded direct emissions: These represent the direct carbon cost of producing the steel or aluminium bar we use as our raw material. They cover the full upstream chain at the mill including ironmaking or aluminium smelting, steelmaking or alloy production, casting, rolling, heat treatment and finishing - all fuel combustion direct emissions. We obtain these as a specific embedded direct emissions figure per tonne of bar, either as actual data from our bar supplier or as the official default value for the relevant bar CN code.
Our own direct production emissions: These are limited to fuel combustion at our heat treatment sub-contractor. Our bar turning, drilling, tapping, thread-rolling and all other machining at our own facility involve no fuel combustion and generate no direct emissions. The heat treatment sub-contractor's furnace fuel combustion is the only direct emissions source in our production process for which we bear responsibility as the CBAM operator.
How they combine: Our in-house CBAM reporting template calculates the total specific embedded direct emissions per tonne of finished nuts by adding the precursor bar contribution to our heat treatment sub-contractor's direct emissions contribution, with appropriate adjustment for material consumption ratios - the bar consumed per tonne of finished nuts, which accounts for turning scrap.
What is excluded: The electricity consumed in all our machining operations is an indirect emission excluded under Annex II. It does not appear in the CBAM declaration and is not combined with the above figures for CBAM purposes. It may be provided separately for customers requiring broader Scope 3 or lifecycle assessment data.
Source: Annex II - Regulation (EU) 2023/956 (consolidated) and Implementing Regulation (EU) 2025/2547
115. If EU CBAM scope expands to cover additional goods beyond its current Annex I list, how would our data on nut production help?
Our existing monitoring, traceability and data management systems already position us to respond immediately to any expansion of CBAM scope, because we are already operating as a CBAM operator for our CN 7318 nuts, which are in the current Annex I scope.
The CBAM Regulation requires the European Commission to review the possibility of extending CBAM to other goods and sectors. Any expansion of scope requires a legislative proposal and adoption by the European Parliament and Council. We monitor Commission announcements on this point, including the proposed downstream extension under COM(2025)989.
For any additional goods we might produce that could be brought into CBAM scope by a future amendment, our existing infrastructure would support compliance with relatively low incremental effort:
Direct emissions monitoring: We already identify and report direct emissions from sub-contracted heat treatment for our current CBAM production. If additional product lines came into scope, the same approach would apply - identifying any fuel combustion in sub-contracted processes attributable to those products.
Batch traceability: Our bar-to-finished-goods traceability system covers all production, not only CN 7318 nuts. Traceability records for other product types we produce would support CBAM compliance for those products if they came into scope.
Bar precursor data infrastructure: Our established data-gathering process with bar suppliers covers all bar grades we purchase. The same data would support any new CBAM-covered product categories using the same bar inputs.
In-house CBAM reporting template: Our reporting template is designed to accommodate multiple CN code product lines. Adding new CBAM goods would require new entries but no structural change to our reporting approach.
Electricity monitoring: We monitor electricity consumption per production batch. While electricity is excluded under Annex II for current iron, steel and aluminium goods, if scope expansion brought in goods for which indirect emissions apply, our monitoring infrastructure would support that calculation without new systems.
Source: Regulation (EU) 2023/956 Article 30
116. How does scrap generated during nut production by bar turning affect our CBAM reporting?
Scrap generated during our bar turning and machining operations affects our CBAM reporting indirectly through the material consumption ratio - the quantity of bar consumed per tonne of finished nuts produced. A higher scrap rate means more bar is consumed per tonne of saleable nuts, which increases the bar precursor embedded direct emissions attributed to each tonne of finished nuts.
The mechanism works as follows. Our total embedded direct emissions for the bar precursor are calculated based on the actual quantity of bar consumed in production, not just the weight of the finished nuts. If we consume 1.15 tonnes of bar to produce 1 tonne of finished nuts due to turning scrap of approximately 13%, then the bar precursor embedded direct emissions attributable to 1 tonne of finished nuts are 1.15 times the specific embedded direct emissions per tonne of bar. A higher scrap rate would increase the precursor contribution proportionally.
This is why machining efficiency matters to CBAM performance. Improving our bar utilisation rate by reducing scrap directly reduces the precursor embedded direct emissions per tonne of finished nuts, which benefits our EU customers through lower CBAM certificate costs.
The scrap itself, once generated as swarf or off-cuts, does not carry any additional CBAM reporting obligation. As discussed in question 44, scrap and waste from our manufacturing process are not separately reportable. The scrap is returned to the steel recycling chain and its embedded emissions are not tracked further once it leaves our facility.
We monitor scrap rates per batch as part of our production records. This data supports accurate calculation of the bar consumption ratio used in our CBAM embedded direct emissions calculations and is retained as part of our CBAM supporting documentation.
Source: Implementing Regulation (EU) 2025/2547
117. Are the emissions from our nut production by bar turning classified as direct or indirect emissions under CBAM?
Our nut production by bar turning generates both direct and indirect embedded emissions. However, because CN 7318 iron and steel nuts are listed in Annex II of Regulation (EU) 2023/956, only direct embedded emissions are taken into account in the CBAM declaration. Indirect emissions from electricity - which is the primary energy source in our machining operations - are excluded entirely.
Direct embedded emissions from our production: Direct emissions arise from fuel combustion within the production process. Our bar turning and other machining operations on CNC and automatic lathes use no on-site fuel combustion and therefore generate no direct emissions at our facility. The only direct emissions attributable to our production process arise from our heat treatment sub-contractor's fuel-fired furnaces, as discussed in questions 16, 49 and 62. This is the figure that appears in our CBAM declaration as specific embedded direct emissions per tonne of finished nuts.
Indirect embedded emissions from our production: Indirect emissions arise from the consumption of electricity. All electricity consumed in our bar turning, drilling, tapping, thread-rolling, forming and auxiliary production operations generates indirect emissions. These are excluded under Annex II for CN 7318 goods and do not form part of our CBAM declaration. We monitor and record them for internal purposes and for customers requiring Scope 3 or lifecycle assessment data.
Precursor embedded direct emissions: The bar precursor embedded direct emissions are a separate component that covers all direct fuel combustion emissions from the bar's full upstream production chain at the mill. These are reported as precursor data in our in-house CBAM reporting template and form part of the total specific embedded direct emissions of the finished nut for CBAM declaration purposes. They are typically the dominant component of our total declared figure.
Source: Annex II - Regulation (EU) 2023/956 (consolidated) and Implementing Regulation (EU) 2025/2547
118. Can EU importers combine our nut embedded emissions data with other supply chain emissions data in their own reporting?
Yes. Our EU customers can and should combine our CBAM-compliant embedded direct emissions data for our finished nuts with whatever other emissions data they hold for their own operations and logistics in their wider sustainability and corporate reporting. For CBAM declaration purposes specifically, the data we provide forms the basis of the embedded direct emissions they must declare for the CN 7318 nuts they import.
For CBAM declarations: Our EU customers use the specific embedded direct emissions data we provide via our in-house CBAM reporting template to complete their CBAM declarations. The declared embedded direct emissions for our nuts will be the figures we provide, either our actual calculated figures or the official default values if actual data is not available. Our customers cannot substitute other emissions data for our declared figures in their CBAM declarations.
For GHG Protocol Scope 3 reporting: Many EU companies are required or choose to report their Scope 3 upstream emissions under the GHG Protocol framework, including Category 1 purchased goods and services. Our embedded emissions data for the nuts they buy from us is directly applicable as Category 3 Scope 3 data. Our customers can combine this with data from their other suppliers to produce their total upstream Category 1 inventory. Where customers require electricity-based indirect emissions data for this purpose, we can provide it separately as supplementary data, clearly labelled as outside the CBAM declaration.
For CSRD and European Sustainability Reporting Standards (ESRS) reporting: Large EU companies subject to the Corporate Sustainability Reporting Directive (CSRD) must report on material upstream emissions under ESRS E1. Our embedded emissions data supports the value chain emissions disclosures required under that framework.
Data segregation: We always provide our CBAM data and any supplementary sustainability data in clearly labelled formats so that our EU customers can correctly attribute each figure to the appropriate reporting framework. CBAM-compliant embedded direct emissions data and broader lifecycle or Scope 3 data are clearly distinguished in our communications.
Source: Annex I - Regulation (EU) 2023/956 (consolidated) and Implementing Regulation (EU) 2025/2547
119. How does our electricity monitoring for nut production support future UK CBAM developments?
Our electricity monitoring system, which records electricity consumption per production batch for all our manufacturing operations, provides the data infrastructure that would be needed to respond to any future UK CBAM developments that bring finished goods or indirect emissions within scope.
The UK CBAM as enacted for 1 January 2027 will initially cover basic steel and aluminium products imported into the UK among other carbon-intensive goods. As discussed in question 112, this directly affects the bar we import, not the nuts we manufacture. However, there are several ways in which future UK CBAM developments could make our electricity monitoring data directly relevant:
If UK CBAM expands to include indirect emissions: The initial UK CBAM design excludes indirect emissions. If indirect emissions are brought into scope, our per-batch electricity monitoring would immediately provide the data needed to calculate indirect embedded emissions for any UK CBAM-covered goods we produce, without requiring new monitoring infrastructure.
If UK CBAM expands to cover finished goods including fasteners: Were the UK to extend its CBAM to cover CN 7318 fasteners imported into the UK, businesses importing finished nuts into the UK would need embedded emissions data from their non-UK suppliers. As a UK manufacturer we would not face this obligation ourselves for domestic sales. However, if we were ever in a position of exporting nuts to a market with a CBAM covering finished fasteners, our monitoring would immediately support the required embedded emissions calculation.
For data requests from UK customers: As awareness of carbon footprint in supply chains grows, UK customers and procurement teams may request emissions data for the nuts they purchase from us independently of any formal CBAM obligation. Our electricity monitoring allows us to provide credible, batch-specific indirect emissions data to support those requests.
Source: UK CBAM Policy Summary HMRC
120. What is our official position on the CBAM status of nuts produced by bar turning?
Our official position is that finished iron and steel nuts produced by bar turning and classified under CN 7318 are CBAM-covered goods under Regulation (EU) 2023/956, explicitly listed in Annex I of that Regulation, and that we are the operator of the installation that produces them. We have obligations as a CBAM operator to calculate and provide accurate specific embedded direct emissions data to our EU customers. Our EU customers have binding obligations as authorised CBAM declarants to report those embedded direct emissions and surrender CBAM certificates from 1 January 2026 onwards.
The key elements of our position are:
On CBAM scope: CN 7318 fasteners including nuts are listed in Annex I of Regulation (EU) 2023/956. CN 7318 is also an iron and steel good listed in Annex II of that Regulation, meaning only direct embedded emissions are taken into account. Indirect emissions from electricity consumed in our bar turning and other machining operations are excluded from the CBAM declaration. For current country-specific default values for CN 7318, CN 7318 12 10, CN 7318 14 10 and CN 7616 10 00, consult Annex I of Implementing Regulation (EU) 2025/2621 directly.
On our role: We are the operator of the installation producing these CBAM goods. We are not the CBAM declarant - that obligation rests with our EU customers as the EU importers. However, we are responsible for providing accurate embedded direct emissions data to those customers to enable them to fulfil their declarations. Failure to provide accurate data exposes our EU customers to penalties and potential restrictions on importing CBAM goods.
On our current compliance state: We operate an in-house CBAM reporting template and monitor electricity consumption per production batch for internal and Scope 3 reporting purposes. We obtain bar precursor embedded direct emissions data from our bar suppliers or apply official default values. We collect heat treatment direct emissions data from our sub-contractor. We maintain batch traceability from incoming bar to finished goods despatch and retain all supporting records for the required minimum of four years in accordance with Implementing Regulation (EU) 2025/2547.
On future developments: We monitor EU CBAM regulatory developments and UK CBAM implementation continuously and will adapt our reporting systems as requirements evolve.
Source: Annex I - Regulation (EU) 2023/956 (consolidated) and Implementing Regulation (EU) 2025/2547 and UK CBAM Policy Summary
121. Does the use of sub-contractors for nut machining affect our CBAM (Carbon Border Adjustment Mechanism) reporting?
Yes, it can, depending on what sub-contracted operations are involved. As the operator of the installation producing CN (Combined Nomenclature) 7318 CBAM goods, we are responsible for the embedded direct emissions of the entire production process, including any sub-contracted steps. Sub-contracting a production step does not remove it from our CBAM reporting obligations; it changes where the data comes from.
Sub-contracted heat treatment
This is addressed fully in questions 16, 49 and 62. Heat treatment of our finished nuts is sub-contracted to a third-party facility. The direct emissions from fuel combustion in their furnaces must be included in our specific embedded direct emissions per tonne of finished nuts. We obtain fuel consumption data from our sub-contractor and include it in our in-house CBAM reporting template. Note that electricity consumed by our sub-contractor during heat treatment is an indirect emission and is excluded under Annex II of Regulation (EU) 2023/956 for our CN 7318 goods.
Sub-contracted machining operations
If we were to sub-contract bar turning or other primary machining operations to a third-party facility in the UK, those operations are electrically driven and generate no direct emissions. As indirect emissions, the electricity consumed would be excluded under Annex II and would not form part of our CBAM declaration. We would record such electricity consumption for internal and Scope 3 reporting purposes.
Sub-contracted surface treatment
As discussed in question 55, sub-contracted surface treatment such as electroplating or hot-dip galvanising is electrically driven and generates no direct emissions. It is excluded under Annex II and does not form part of our CBAM declaration.
The key principle
The CBAM Regulation defines an operator as any person who operates or controls an installation producing CBAM goods. We control the production of our nuts end to end. Where we sub-contract individual steps, we retain control over the specification, commissioning and acceptance of those steps. The direct emissions from any sub-contracted combustion processes within our production sequence are our production process direct emissions for CBAM purposes.
Location of sub-contractors
The location of a UK-based sub-contractor does not affect our CBAM reporting. All production steps that occur at any UK location form part of our UK installation's production process. CBAM embedded emissions cover all production steps regardless of where in the UK they occur.
Source: Annex I - Regulation (EU) 2023/956 (consolidated)
122. How do we handle CBAM-related emissions when nuts are produced from bars sourced from multiple suppliers?
We handle this through strict batch-level traceability and supplier-specific emissions allocation. Because our CN 7318 nuts are CBAM goods and our EU customers must declare their embedded direct emissions, the accuracy and auditability of our per-batch emissions data is a compliance matter, not merely a record-keeping preference.
Our allocation approach
Each bar batch is recorded with its own supplier-specific embedded direct emissions factor. Where a supplier has provided actual specific embedded direct emissions data, we use that figure for all nuts produced from that supplier's bar. Where actual data is unavailable, we apply the official default value for the relevant bar CN code. We never blend or average emissions factors across different bar suppliers for a given production batch.
Our bar-to-nut batch mapping links each nut production batch uniquely to the bar batch or batches from which those nuts were machined. This allows us to identify, for any given nut batch:
- Which bar supplier's material was used
- The CN code and embedded direct emissions factor of that bar
- The quantity of bar consumed and the corresponding precursor embedded direct emissions contribution
- Any direct emissions from sub-contracted heat treatment for that batch
Why supplier-specific allocation matters
CBAM requires that embedded emissions correspond to the actual goods being imported. If we were to blend emissions factors across suppliers, the declared direct emissions for a given nut batch could either overstate or understate the actual embedded direct carbon of those specific nuts. Either outcome creates compliance risk for our EU customers: overstating increases their certificate costs unnecessarily, while understating creates a declaration accuracy risk and potential penalty exposure.
Where a nut batch is produced from bar drawn from two or more different suppliers' stock, we allocate the bar precursor embedded direct emissions on a mass-weighted basis, using the supplier-specific factor for each portion of bar consumed.
Commercial implications
This approach means that nuts made from lower-emission bar will carry lower declared embedded direct emissions than nuts made from higher-emission bar of the same grade and CN code. EU customers who are cost-conscious about CBAM certificate expenditure may therefore request that we source bar for their orders from our lowest-emission suppliers where possible. Our traceability system supports this preference.
Source: Implementing Regulation (EU) 2025/2547
123. How do we document and allocate emissions when bars are only partially consumed in a production batch?
We allocate bar precursor embedded direct emissions proportionally to the mass of bar actually consumed in each nut production batch. This is consistent with the CBAM methodology, which requires embedded emissions to reflect the actual inputs to the production process, and it ensures that our per-batch emissions data is accurate and auditable.
Our allocation method follows these steps:
- Step 1: Establish the bar embedded direct emissions factor per kilogram.
We take the specific embedded direct emissions per tonne of bar, either from our supplier's actual data or from the official default value for the bar CN code, and divide by 1,000 to give a figure in tCO₂e per kilogram of bar.
- Step 2: Determine bar mass consumed for the nut batch.
From our production records we establish the total bar mass issued to the production batch. We record starting bar lengths and diameters, the quantity of bar issued and the weight of scrap generated, allowing us to confirm the net bar consumed per batch.
- Step 3: Allocate bar precursor direct emissions to the nut batch.
Bar precursor embedded direct emissions for the batch equal the bar mass consumed in kilograms multiplied by the direct emissions factor per kilogram. This gives the total precursor embedded direct emissions for that batch in tCO₂e.
- Step 4: Add our own direct production emissions.
We add the direct emissions from our heat treatment sub-contractor's furnace fuel combustion for that batch to give total embedded direct emissions for the batch.
- Step 5: Calculate specific embedded direct emissions per tonne of finished nuts.
Total embedded direct emissions for the batch divided by the weight of finished nuts produced gives the specific embedded direct emissions in tCO₂e per tonne of finished nuts, which is the figure we report in our in-house CBAM reporting template.
Note that indirect emissions from electricity are excluded under Annex II of Regulation (EU) 2023/956 for our CN 7318 nuts and do not form part of the CBAM declaration.
The treatment of turning scrap in this calculation is discussed in detail in question 116. Scrap increases the bar consumed per tonne of finished nuts and therefore increases the precursor embedded direct emissions per tonne of finished nuts. Improving material utilisation directly reduces the CBAM direct emissions intensity of our nuts.
Source: Implementing Regulation (EU) 2025/2547
124. Do different nut standards such as ISO, DIN or ASTM affect our CBAM reporting?
No, the technical standard to which a nut is manufactured does not affect its CN code or its CBAM status. Our finished iron and steel nuts are CBAM goods under CN 7318 regardless of whether they are manufactured to ISO 4032, DIN 934, ASTM A563 or any other standard. The CN code is determined by the nature, material and form of the goods, not by the technical specification they are manufactured to.
However, the manufacturing standard can indirectly affect the specific embedded direct emissions per tonne of finished nuts we declare, through several mechanisms:
Material specification: Some standards require specific material grades or heat treatment conditions. A standard that mandates a stainless steel grade will result in higher embedded direct emissions per tonne than one that permits a carbon steel grade, reflecting the higher embedded direct emissions of stainless steel bar precursor. This affects the bar precursor embedded direct emissions we report.
Scrap rates: Standards with stringent surface finish, dimensional or mechanical property requirements may result in higher rejection rates during production or inspection, increasing the bar consumed per tonne of saleable finished nuts. As discussed in question 116, a higher bar consumption ratio increases the precursor embedded direct emissions per tonne of finished nuts.
Heat treatment requirements: Some standards mandate specific hardness ranges or other mechanical property requirements that can only be achieved through heat treatment. Where heat treatment is required by the standard, the fuel combustion direct emissions from our heat treatment sub-contractor's furnaces form part of our specific embedded direct emissions per tonne of finished nuts, as discussed in questions 16 and 49.
Machining intensity: Tighter dimensional tolerances may require additional machining passes or slower cutting conditions. This increases electricity consumption per tonne, but as electricity is excluded under Annex II for CN 7318 goods, this has no bearing on the CBAM declaration.
We can differentiate our CBAM direct emissions data by product type where our monitoring systems capture the relevant batch-level data. Where a particular standard requires significantly different processing from our standard production, we treat it as a distinct product type with its own specific embedded direct emissions calculation.
Source: Annex I - Regulation (EU) 2023/956 (consolidated)
125. Do coatings or plating applied to our nuts affect our CBAM reporting?
No. Surface treatments applied to our nuts are not separately reportable under CBAM and do not form part of our CBAM declaration. As covered in question 55, coating and plating operations are electrically driven processes with no direct fuel combustion emissions. They are therefore indirect emissions only, and indirect emissions are excluded under Annex II of Regulation (EU) 2023/956 for our CN 7318 iron and steel nuts and CN 7616 aluminium nuts.
For convenience, the key points are:
- Surface treatments including zinc electroplating, hot-dip galvanising, phosphate coating, black oxide and passivation are not listed as distinct production processes in the CBAM methodology and do not generate separately reportable embedded direct emissions
- All coating and plating processes are electrically driven and generate no direct emissions, making them excluded under Annex II regardless of whether they occur at our own facility or are sub-contracted
- The weight of coating material is typically negligible relative to the net weight of the nuts and is not included in the net weight used for the embedded emissions calculation
For customers requiring broader sustainability information beyond CBAM requirements, for example for CSRD compliance or product carbon footprinting, we can provide additional data on coating process electricity consumption and consumable usage. This is supplementary to our CBAM data and clearly labelled as such.
Source: Annex II - Regulation (EU) 2023/956 (consolidated)
126. How do we report CBAM emissions for nuts supplied with washers or as part of assemblies?
Each component in a nut and washer assembly or fastener kit retains its own CN code and its own CBAM status. We report embedded direct emissions separately for each CBAM-covered component rather than attempting to aggregate them into a single assembly-level figure.
Nuts under CN 7318
Our finished nuts under CN 7318 16, CN 7318 12 10, CN 7318 14 10 and related subheadings are CBAM goods and carry specific embedded direct emissions that we report via our in-house CBAM reporting template. Where nuts are supplied as part of an assembly, the nut component's embedded direct emissions are reported against the nut CN code in the normal way.
Washers under CN 7318 21 and CN 7318 22
Plain washers (CN 7318 22 00) and spring washers and lock washers (CN 7318 21 00) are also classified under CN 7318 and are therefore CBAM goods in the same way as nuts. If we supply washers alongside nuts and both items are imported into the EU, our EU customer must declare the embedded direct emissions of each item separately. We can provide embedded direct emissions data for washers using the same methodology as for nuts: bar precursor embedded direct emissions plus any direct emissions from sub-contracted processing, allocated on a per-tonne basis.
Assemblies and kits
Where we supply assembled fastener kits containing multiple components, the CBAM declaration is made at the individual component CN code level, not at the assembly level. There is no CBAM CN code for a fastener kit as an assembled product. The EU importer declares each CBAM-covered component in the kit separately. We provide data for each component we supply that carries CBAM obligations.
Components outside CBAM scope
Some ancillary items that might be included in an assembly, such as plastic inserts, rubber seals or non-metallic components, are not CBAM goods and do not require CBAM emissions reporting. We clearly identify which components in any assembly are CBAM-covered goods and which are not.
Source: Annex I - Regulation (EU) 2023/956 (consolidated)
127. Does the recycled content of the bar affect our CBAM emissions reporting for finished nuts?
Yes, in the sense that bar recycled content directly drives the bar supplier's specific embedded direct emissions, which is the dominant component of our finished nut embedded direct emissions. The higher the recycled scrap content of the bar, the lower the direct embedded emissions of the bar are likely to be, and consequently the lower the total specific embedded direct emissions of our finished nuts.
The mechanism is explained in detail in question 67. In summary: BOF steelmaking uses approximately 10 to 30% recycled scrap alongside primary iron, resulting in specific direct embedded emissions of approximately 1.6 to 2.0 tCO₂e per tonne of steel. EAF steelmaking using 90 to 100% recycled scrap achieves direct emissions as low as 0.1 to 0.4 tCO₂e per tonne. A high-scrap EAF bar supplier can therefore declare actual embedded direct emissions materially below the global default value, directly reducing the CBAM certificate costs of our EU customers importing our nuts.
Note that because indirect emissions are excluded under Annex II for all iron and steel CN codes, the higher electricity consumption of EAF operations relative to BOF has no bearing on the CBAM declaration. Only the direct emissions difference matters, and that difference strongly favours high-scrap EAF production.
Our role in capturing recycled content effects
We do not calculate or verify the recycled content of bar ourselves. The effect of recycled content on direct emissions is already reflected in the bar supplier's actual specific embedded direct emissions data or implicitly in the official default value for the bar CN code. Where our bar suppliers voluntarily provide recycled content information on their material certificates or emissions declarations, we can pass this on to EU customers who require it for their own GHG Protocol or CSRD reporting.
Source: Implementing Regulation (EU) 2025/2547
128. How do we calculate specific embedded emissions per tonne of finished nuts for our CBAM reporting?
We calculate specific embedded direct emissions per tonne of finished nuts by combining two components: bar precursor embedded direct emissions and our own direct production emissions from sub-contracted heat treatment. Indirect emissions from electricity are excluded under Annex II of Regulation (EU) 2023/956 for our CN 7318 nuts and do not form part of the CBAM declaration, though we record electricity consumption separately for internal and Scope 3 reporting purposes.
Component 1: Bar precursor embedded direct emissions
We obtain the specific embedded direct emissions per tonne of bar from our supplier's actual data or from the official default value for the bar CN code. We then determine the bar consumption ratio - the mass of bar consumed per tonne of finished nuts produced - by dividing the total bar mass consumed in a production batch by the weight of finished nuts produced. The bar precursor embedded direct emissions per tonne of finished nuts equal the bar specific embedded direct emissions multiplied by the bar consumption ratio.
Component 2: Direct production emissions from heat treatment
Our heat treatment sub-contractor's fuel combustion per tonne of nuts processed generates direct CO₂ emissions. We obtain fuel type and consumption data from the sub-contractor and apply the appropriate CO₂ emission factor. The result is expressed as tCO₂e per tonne of nuts heat treated and is added to the bar precursor contribution.
Combining the components
Total specific embedded direct emissions per tonne of finished nuts equals the direct emissions component of the bar precursor data plus our own direct production emissions from heat treatment.
This total is the figure we enter in our in-house CBAM reporting template and provide to our EU customers.
Checking against default values
As a validation step we compare our calculated actual figures against the official CN 7318 default direct values published in Annex I of Implementing Regulation (EU) 2025/2621. Where our actual figures are below the defaults, providing actual data benefits our EU customers through reduced CBAM certificate costs. Where our actual figures exceed the defaults, we investigate the reasons, as this may indicate an unusually high-emission bar source or an opportunity to reduce heat treatment fuel consumption.
Source: Implementing Regulation (EU) 2025/2547
129. Do packaging, labelling or palletisation of nuts affect our CBAM reporting?
No. Packaging, labelling and palletisation are not included in the CBAM embedded emissions calculation for our finished nuts. CBAM does not apply to packaging at any point in the supply chain.
The CBAM embedded emissions boundary is defined as covering the production of the goods up to the point of import into the EU. Packaging applied to finished nuts at our facility - whether individual polybags, bulk boxes, cardboard cartons, wooden pallets or steel strapping - is applied after the nuts are in their finished saleable condition. It falls outside the production process boundary and its embedded emissions are not included in the specific embedded direct emissions per tonne of finished nuts that we declare.
The weight of packaging is also excluded from the net weight calculation used in the embedded emissions formula. We report and declare embedded direct emissions per tonne of nuts as goods, using the net weight of the nuts themselves, not the gross weight of the packed consignment.
For EU customers who require complete upstream supply chain emissions data for CSRD or GHG Protocol Scope 3 purposes, we can provide supplementary information on packaging materials and approximate packaging weights per consignment type. This is provided as sustainability supplementary information and is clearly distinguished from our CBAM data.
Source: Regulation (EU) 2023/956 Article 3(22)
130. How do we ensure full traceability from bar to finished nut for CBAM emissions documentation?
We maintain a closed, auditable traceability chain from each incoming bar batch through production to each outgoing finished nut batch. This traceability system is the foundation of our CBAM compliance as an operator, because it allows us to calculate batch-specific embedded direct emissions, respond to verification requests from our EU customers' appointed verifiers, and demonstrate the accuracy of the data we provide in our in-house CBAM reporting template.
Our traceability structure operates as follows:
Incoming bar identification: Each bar delivery is recorded on receipt with supplier name and address, country of origin, bar grade and specification, CN code, heat or cast number from the mill certificate, EN 10204 certificate reference, and the specific embedded direct emissions figure applicable to that bar, either from supplier actual data or the official default value for that CN code.
Internal batch assignment: Each incoming bar delivery is assigned an internal batch identifier that travels with the bar through our production system. Where bar from a single delivery is consumed across multiple production orders, the batch identifier links each production order back to the originating bar delivery.
Production order records: Each production order records the bar batch or batches consumed, the weight of bar issued, the production quantity and weight of finished nuts produced, the weight of turning scrap generated, and the electricity consumption for that production run. Heat treatment sub-contractor job records are linked to the relevant production order by job reference.
Finished nut batch identification: Each batch of finished nuts is assigned a unique batch reference that links back to the production order and therefore to the bar batch and all associated direct emissions data. This reference appears on delivery documentation and allows any specific delivery to an EU customer to be traced back to the underlying bar and production data.
Emissions calculation records: For each nut batch, our in-house CBAM reporting template records the specific embedded direct emissions per tonne calculated for that batch, with references to the supporting source data. These records are retained for a minimum of four years in accordance with Implementing Regulation (EU) 2025/2547.
This traceability system allows us to respond confidently to any verification request, customer query or regulatory audit concerning the embedded direct emissions of any specific batch of nuts we have supplied to an EU customer.
Source: Annex I - Regulation (EU) 2023/956 (consolidated) and Implementing Regulation (EU) 2025/2547
This page is updated regularly. Last reviewed: June 2026. This content is provided for information purposes only and does not constitute legal or regulatory advice. For specific compliance questions, consult a qualified trade compliance adviser.