How to Calculate Embedded Carbon for CBAM Reporting: Step-by-Step Guide for Indian Exporters

From 1 January 2026, EU importers must purchase CBAM certificates for embedded carbon in goods imported from non-EU countries. Indian exporters of steel, cement, aluminium, fertiliser, hydrogen, and electricity must provide actual embedded carbon data — or face default values that are significantly higher than reality.

This guide walks Indian exporters through the step-by-step process of calculating embedded carbon per EU CBAM methodology, based on the CBAM Implementing Regulation (EU) 2023/1773.

Step 1: Identify Your Installation Boundary

CBAM calculations are installation-level, not company-level. An installation is a stationary technical unit where one or more CBAM goods are produced. Define your installation boundary to include all emission sources directly connected to the production of CBAM goods, including auxiliary processes (raw material preparation, cooling, waste treatment) located at the same site.

Step 2: Map Direct (Scope 1) Emissions

Calculate all direct GHG emissions from your installation:

• Fuel combustion emissions: CO2 from burning coal, natural gas, petroleum coke, etc. Use actual fuel consumption × emission factor × oxidation factor.
• Process emissions: CO2 from chemical reactions (e.g., calcination in cement, reduction in iron ore, anode consumption in aluminium).
• Fugitive emissions: Methane, N2O, PFCs from process leaks, equipment, and specific chemical processes.

Step 3: Calculate Indirect (Scope 2) Emissions

For aluminium and hydrogen only, indirect emissions from electricity consumption are included. For other CBAM goods, only direct emissions count. Use: Electricity consumed (MWh) × Grid emission factor (tCO2/MWh). India’s CEA grid emission factor for FY2024 is approximately 0.71 tCO2/MWh.

Step 4: Attribute Emissions to Products

If your installation produces multiple products, attribute emissions to each CBAM good using the production route methodology. For complex installations, use mass balance, heat content, or economic allocation per the EU Monitoring and Reporting Regulation.

Step 5: Calculate Specific Embedded Emissions

Specific embedded emissions = Total attributed emissions (tCO2e) ÷ Total production quantity (tonnes of product). This gives you the embedded carbon per tonne of exported product — the figure your EU importer needs for CBAM certificate purchase calculations.

Step 6: Apply Carbon Price Deductions

Under CBAM Article 9, if a carbon price has been effectively paid in the country of origin (e.g., through CCTS compliance, CCC purchases), this amount may be deducted from the CBAM obligation. Document: the carbon pricing instrument, amount paid, and evidence that the price was not rebated or compensated.

Step 7: Prepare the CBAM Communication

Compile data into the format required by your EU importer: installation details, production processes, emission sources, calculation methodologies, emission factors used, specific embedded emissions, and any carbon price paid. The EU CBAM transitional registry requires quarterly reporting during the transitional phase.