What Is CBAM?
The Carbon Border Adjustment Mechanism (CBAM) is the EU's carbon tariff on imported goods. It requires EU importers to purchase CBAM certificates matching the embedded emissions of goods imported from non-EU countries. In effect, it extends the EU's carbon price to imports - levelling the playing field between EU producers who pay for emissions under the EU ETS and foreign manufacturers who do not.
For Indian exporters, CBAM is not a future concern - it is here now. The transition period began on 1 October 2023, and the definitive financial regime starts on 1 January 2026. EU importers are already requesting emissions data from their Indian suppliers. Companies that cannot provide accurate, verified data risk losing EU market access.
Which Indian Exports Are Affected?
CBAM currently covers six product categories. India is one of the most exposed countries due to its significant exports in several of these sectors.
Iron & Steel
India's largest CBAM-exposed export. Covers crude steel, pig iron, ferro-alloys, steel pipes, tubes, and downstream products. India exported over $8 billion of iron and steel to the EU in recent years.
Aluminium
Primary aluminium, aluminium alloys, bars, rods, plates, tubes, and foil. Energy-intensive smelting makes embedded emissions particularly high for Indian producers.
Cement
Portland cement, aluminous cement, and clinker. Process emissions from calcination combined with kiln fuel combustion create significant embedded carbon.
Fertilizers
Urea, ammonium nitrate, NPK compounds, and other nitrogen-based fertilizers. Natural gas feedstock and process energy drive embedded emissions.
Hydrogen
Grey and blue hydrogen produced from natural gas reforming. Only green hydrogen (produced via electrolysis with renewable energy) can achieve near-zero embedded emissions.
Electricity
Direct electricity exports to the EU. While less relevant for India currently, this category may gain importance as cross-border energy trade evolves.
Transition Period Requirements
During the transition period (October 2023 - December 2025), EU importers must submit quarterly CBAM reports to the European Commission. These reports require emissions data from the actual production installations in exporting countries. Indian manufacturers need to provide:
- Direct (Scope 1) embedded emissions per tonne of product
- Indirect emissions from electricity consumption during production
- Production process details including fuel types, electricity sources, and production routes
- Installation-level data - not company-level averages
From 2026, these reporting obligations become financial. EU importers will need to purchase CBAM certificates at the prevailing EU ETS carbon price, which has ranged between 50-100 per tonne of CO₂ in recent years.
How We Help
CBAM Exposure Assessment
Data Collection & Mapping
Embedded Emissions Calculation
CBAM Report Preparation
Verification & Submission
CBAM Exposure Assessment
Identify which of your EU-bound products fall under CBAM, quantify your exposure by product and volume, and assess the financial impact under different carbon price scenarios.
Installation-level Data Collection
Map production processes at each installation, identify all emission sources (fuel combustion, process emissions, electricity), and establish data collection systems that meet CBAM requirements.
Embedded Emissions Calculation
Calculate specific embedded emissions per tonne of product using actual production data. Apply EU-approved calculation methodologies for both direct and indirect emissions.
Understanding emission scopes →CBAM Report Preparation
Prepare quarterly CBAM reports in the format required by the EU CBAM Transitional Registry. Include all mandatory data fields, calculations, and supporting documentation.
EU Importer Coordination
Work directly with your EU importers' CBAM declarants to ensure data flows smoothly. Provide emissions data in the communication templates specified by the European Commission.
Reduction Strategy
Identify pathways to reduce embedded emissions - fuel switching, energy efficiency, renewable electricity procurement - to lower your CBAM liability and maintain EU market competitiveness.
CBAM and the Broader ESG Landscape
CBAM does not exist in isolation. It is part of the EU's broader European Green Deal and connects directly to other regulations your company may face. The EU CSRD requires sustainability reporting from companies with significant EU operations. The emissions data collected for CBAM overlaps substantially with what is needed for CSRD, BRSR, and other frameworks.
O₂log helps you build a unified emissions data infrastructure that serves CBAM reporting, CSRD compliance, and Indian domestic requirements simultaneously - reducing duplication and ensuring consistency across all your disclosures.
Industries Most Affected
Manufacturing
Steel, aluminium, and cement producers exporting to EU markets
Chemicals
Fertilizer and hydrogen producers under CBAM scope
Energy
Power generators and energy-intensive process industries
India Operations
Any Indian installation exporting CBAM-covered goods to the EU
Resources
Frequently Asked Questions
What is CBAM?
CBAM (Carbon Border Adjustment Mechanism) is the EU's carbon tariff on imported goods. It requires EU importers to purchase certificates matching the embedded emissions of goods imported from non-EU countries, covering steel, cement, aluminium, fertilizers, hydrogen, and electricity.
Which Indian products are affected by CBAM?
CBAM covers six categories: iron and steel, aluminium, cement, fertilizers, hydrogen, and electricity. For Indian exporters, steel and iron products are the most significant, followed by aluminium and cement. The scope may expand to additional products in the future.
When does CBAM start?
The transition period began on 1 October 2023 with quarterly reporting obligations. The definitive financial regime starts on 1 January 2026, when EU importers must begin purchasing CBAM certificates. Full financial obligations phase in gradually as EU ETS free allowances are phased out through 2034.
How does CBAM relate to CSRD?
CBAM and CSRD are complementary EU regulations. CSRD requires companies to disclose sustainability information including emissions data, while CBAM uses embedded emissions data to apply carbon costs on imports. Companies subject to both benefit from a unified emissions data collection process, which is why O₂log offers integrated CBAM and CSRD advisory.
Prepare for CBAM compliance
Protect your EU market access with accurate embedded emissions data and compliant CBAM reporting.
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