An operational manual for verification, pricing, reporting and decarbonisation under Regulation (EU) 2023/956 as amended by Regulation (EU) 2025/2083
Simple and Complex Goods Principle
CBAM distinguishes between simple and complex goods.
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· Simple Goods are produced directly from raw materials without requiring other CBAM-covered goods as input materials. Simple goods are CN 7601 – Unwrought Aluminium.
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· Complex Goods are produced using other CBAM-covered raw materials as precursors e.g ingots or billets. Complex goods are CN 7603-7609: Aluminum bars, rods, wires, plates, sheets, and strip, tubes and pipes etc.
What is not included in CBAM:
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Emissions from the alumina refinery (even if they own it), because alumina is not a CBAM precursor;
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Emissions from bauxite mining (even if they own the mines).
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Emissions of the alloying metals as below the threshold of 5%: As long as alloying elements are below 5% of the total mass of the exported products, their emissions can be ignored. Still, the metal content has to be reported for information purposes.
European Parliament Regulatory Update: 7th July 2026
The CBAM regulatory update issued on 7th July 2026 announced the revised CBAM certificate price and provided clarifications on scope coverage:
Methodological Update: The (re-) inclusion of Scope 2 coverage for Aluminium and Iron & Steel products has been disregarded as such:
- Simple goods (CN 7601 – Unwrought Aluminium): Only Scope 1 emissions from the producer/exporter are required to be reported.
- Complex goods (CN 7603–7609): For the 2026/2027 reporting period, the EU has streamlined requirements to include only Scope 1 emissions at both the exporter and precursor levels. Scope 2 emissions are expected to be reintroduced following a review in September 2026, with implementation anticipated from 2028 onward.
Expanded product coverage: Additional downstream aluminium products will fall under CBAM emissions reporting and liability obligations starting in 2028. The complete list of affected CN codes will be released later in 2026.
Updated CBAM certificate price: The certificate price for the current quarter is set at €75.28 per tonne CO₂.
Example Calculation – Turkish Aluminium Exporter
This guidance has been created by Mining, Metals and Materials Markets, an international consulting practice specialised in CBAM compliance, decarbonization, carbon trading and risk management.
The guidance and calculations presented in this document are based on a representative, hypothetical Turkish aluminium exporter and focus on a single product category. While this scenario is designed to illustrate the general CBAM methodology, calculation structures, and compliance processes, the specific inputs, emission factors, and supply chain dynamics must be tailored to match the unique operational reality of each individual company.
Example Company Profile
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- Exporter: Turkish aluminium extrusion producer without on-site casting
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- Precursor: Pre-Alloyed Extrusion Billets (CN 7601)
Malaysian supplier uses standard billets, aluminium scrap and alloying elements such as magnesium-silicon for the production of the precursor pre-alloyed extrusion billets.
- Precursor: Pre-Alloyed Extrusion Billets (CN 7601)
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- Final Product: aluminium profiles AA6060 (CN 7604).
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- Destination: Exported to the EU via an EU-based importer.
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- Campaign Volume: 2,000 tonnes
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- Fuel for reheating: Natural Gas
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- Aging process for 4-8 hours with natural gas
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- Yield Loss / Material Consumption Factor (MCF): 90% yield (requires 2200t of billets to produce 2,000 tonnes of profiles).
Calculation of the emissions
In order to calculate the CBAM embedded emissions for a Turkish aluminium extrusion producer producing aluminium profiles AA6060 (CN 7604) using pre-alloyed extrusion billets (CN 7601), purchased from Malaysia, we must treat the profiles as a complex good under the EU CBAM regulation.
Under the CBAM methodology, the embedded emissions of a complex good must include both the direct emissions (Scope 1) of the extrusion plant and the embedded emissions (Scope 1) of the precursor (the billets).
Calculate Direct Scope 1 Emissions of the Turkish Extrusion Plant
In an Extrusion plant, the primary source of Scope 1 (direct) emissions is the combustion of fuel (we assume natural gas) in the reheating furnace to heat the billets to extrusion temperature and the ageing oven emissions, as for 6060-T5 profiles, the extrusion plant uses ageing ovens to achieve the required mechanical properties.
Reheating emissions
- We assume the reheating furnace consumes 60 GJ/t of natural gas per tonne of extruded aluminium produced.
- Finished profiles 2,000t, requiring 2,200t billets with 90% yield
- Total Energy Consumed: 2,200 * 0.6GJ = 1,320 GJ
- Natural Gas Emission Factor: Standard IPCC default value of 0.0561 tCO₂ /GJ
- Direct Emissions from Reheating: 1,320 * 0.0561 = 05 tCO₂
Aging oven emissions
- Typical energy consumption (gas-fired aging ovens) 0.20 GJ/t finished profile.
- 2,000 t finished profiles * 0.20 GJ/t = 400 GJ
- Emissions from aging ovens: 400 GJ * 0.0561 t CO₂/GJ = 22.4 t CO₂
Total direct emissions: 74.05 t CO₂ + 22.4 t CO₂ =96.45t CO₂
Embedded Emissions of the Casthouse of the Precursor Billets
Our example company needs to obtain accurate and verified emissions of its Malaysian billets producer for the amount of billets used for the production of the imported window frames. If they use more than one billet supplier, they need to obtain the emissions of each of them.
Under the definitive CBAM rules, precursor embedded emissions must be fully calculated, verified and reported to determine the total embedded carbon footprint of the final “complex good.”
If the exporter produces and exports slabs/billets (simple goods), then the exporter’s embedded emissions are only their own direct (Scope 1) emissions.
Scope 1 Embedded Direct Casthouse Emissions of the Precursor Billets
We assume the Malaysian supplier has provided a verified emissions statement stating that their specific direct embedded emissions are 0.028 t CO₂/t billets, totalling 61.71 t CO₂ for the 2,200 t order.
- Process steps using natural gas: melting furnaces (primary aluminium, scrap, alloying metals), holding furnaces, fluxing/degassing, homogenization treatment (if applicable)
- Typical energy consumption:50 GJ/t billet in using natural gas.
· Energy consumption for the order = 2,200 t × 0.50 GJ/t = 1,100 GJ· Direct Emissions = 1,100 GJ × 0.0561 t CO₂/GJ = 61.71 t CO₂
Calculate the Total Emissions
96.45 tCO₂ + 61.71 tCO₂ = 158.16 tCO₂
Assuming a CBAM certificate price of €75.28, a total of zero EU free-allocation benchmark for Turkey and a CBAM factor of 2.5% at the time of surrender:
- Total production volume: 2,000 tonnes (CN 7604)
- Total emissions: 158,16 tCO₂
- Per tonne emissions: 0,079 tCO₂/t
- CBAM EU benchmark* (tCO₂/t) for Aluminum Profiles (CN 7604 2990): 0.06 tCO₂/t
- CBAM Certificate price: €75.28/tCO₂
Total CBAM Liability: (0,079 tCO₂/t – (0,06 tCO₂/t × 0,975)) × 2000 × €75,28/tCO₂ = €3.086,5
| *EU Benchmark Value EU Benchmark values are used to calculate the emission difference in tCO2/t between the specific producer (exporter) and the average tCO2/t emissions of the top 10 greenest producers (of the same type of industrial process) within the EU. The EU Benchmark Values are published on the Commission website and they differ as per product type (CN) and verification route (verified/not verified) |
Default Turkish values
If actual, verified emissions data cannot be provided, including the emission of the precursor, our company must use the official country-specific default values.
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- Turkish Default Value for CN 7604 1090 (2026): 4.1155 tCO2 (includes the mandatory 10% mark-up).
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- Default Emissions for the Campaign: 2,000t * 4.1155 tCO2 = 8,231.0 tCO2
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- Default Financial Liability:
(4.1155 tCO2/t – (1.493 tCO2/t * 0.975)) * 2000 * €75.36/tCO2 = €400,888
- Default Financial Liability:
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- Comparison: Actual vs. Default (Financial Penalty)
€400,888 – €24,341.3 = €376,547
- Comparison: Actual vs. Default (Financial Penalty)
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- Failing to provide actual verified emissions data will cost this company €376,546.72 for the single 2,000-tonne campaign. By 2034, as free allocations phase out completely and the CBAM financial adjustment factors (currently at 2.5% in 2026, this will increase progressively, e.g., 2.5% in 2026, 5% in 2027 etc.) and EU ETS prices are projected to rise past €140/tCO2, this penalty gap will quadruple for the same volume.
Independent Verification of the Emission Data
CBAM requires the emissions to be independently verified.
Accredited Verifiers
Only validation and verification bodies (VVBs) accredited by an EU National Accreditation Body (NAB) can issue valid CBAM verification reports. Verifiers must request registration in the CBAM Registry not before 1 September 2026.
To achieve accreditation, VVBs must comply with EN ISO 17029 and EN ISO 14065, demonstrate deep knowledge of CBAM monitoring and free-allocation rules, and maintain independence from both the operator and EU authorities. Furthermore, the audit team must include at least one CBAM lead auditor competent in English and one auditor fluent in the language of the production facility.
This means that already in July 2026, we can assume which bodies will be able to become accredited verifiers as holding the requested ISO certificates and competence, but we don’t know for sure until the bodies are published in the CBAM registry.
Verification Process
A physical site visit to the Turkish Extrusion Plant is mandatory for the first verification cycle. Because, in the example, complex goods are exported, the emissions of the Malay billets supplier must also be verified. This requires the Malay billets producer to undergo an audit by an accredited VVB, including a site visit in Malaysia. If the Malay supplier fails to provide verified actual emission data, the Turkish producer is forced to use default values for the precursor, neutralising the cost advantage of the Turkish mill’s efficient rolling process.
As site visits are required, we suggest international verification bodies with EN ISO 17029 and EN ISO 14065 certificates, and offices in Turkey, and ideally in the countries of the billet producers.
MM Markets maintains active partnerships with prominent international validation and verification bodies (VVBs) that meet the requirements of the CBAM regulation, and we know they plan to be accredited.
Timeline risk
To mitigate compliance bottlenecks, aluminium exporters should immediately engage with their precursor suppliers to compile accurate, audit-ready precursor emissions datasets. Furthermore, establishing early contact with a number of prospective verification bodies is highly recommended to secure auditing capacity for 2027, ensuring all emission reports are finalised in advance of the annual declaration deadline. MM Markets can guide aluminium exporters in this process and make introductions.
Risk Management / Hedging
The price of CBAM Certificates (currently at €75.28/tCO2) is calculated based on the auction price of EU ETS allowances, as a quarterly average in 2026 and as a weekly average from 2027 onwards. The shift to weekly pricing in 2027 will provide more frequent prices and reduce the pricing gap that currently exists with quarterly updates, though it may also expose importers to greater short-term volatility.
Despite notable differences between institutional forecasts (ranging from €80 to €147/tCO2), the consensus suggests robust expectations for continued upward movement of carbon prices in the EU Emissions Trading System.
We don’t know the future CBAM Certificates pricing, but there is a reasonable risk of an increase in the price of CBAM Certificates, which will increase the future CBAM liability of the company.
There are a few options to reduce the risk:
- Our Turkish Exporter can transfer the price risk to the EU buyer, defining the price for the hot-rolled sheets (CN 7208) as the benchmark aluminium price (e.g. LME) + CBAM Costs.
- Our Turkish Exporter can purchase CBAM certificates already now at current prices or at any time till the deadline in February 2027.
- Our Turkish Exporter can also purchase EU ETS Allowances in the large EU market for ETS allowances to lock the price.
2) and 3) are only profitable if the CBAM Certificates pricing increases more than the current price + transaction costs (roughly € 4-5/tonne), e.g. the price will be higher than ca. €80/tCO2. In order to monitor the price development, we suggest purchasing CBAM Certificates or EU ETS Allowances in tranches, adjusting volumes as the price develops.
