CBAM Emissions Calculation: How It Works

Embedded emissions are the total greenhouse gas emissions released during the production of your imported goods. Under UK CBAM, you must calculate and report these emissions for every covered shipment.

The calculation covers two types of emissions:

• Scope 1 (direct emissions): Emissions from sources owned or controlled by the producer — furnaces, boilers, chemical reactions in the manufacturing process, and on-site fuel combustion
• Scope 2 (indirect emissions): Emissions from the generation of purchased electricity, steam, or heat consumed by the production process

Scope 3 emissions (supply chain, transportation, and other indirect emissions) are not currently included in UK CBAM. Only the emissions from the production process itself are counted.

The basic formula is straightforward:

Embedded emissions (kg CO₂e) = Emissions intensity (kg CO₂e per tonne) × Net weight of goods (tonnes)

Emissions intensity is the figure you obtain from your supplier (verified or unverified) or from HMRC default values. It represents the greenhouse gases released per unit of product.

The net weight is the weight of the goods themselves, excluding packaging, pallets, and container weight. This should match the net weight declared on your customs entry.

For multi-material products, the calculation applies only to the CBAM-covered material content. If a product contains steel and plastic, you calculate emissions based on the steel content only.

Each CBAM sector has specific calculation rules reflecting its production process:

Iron and steel

For iron and steel, the calculation must account for the production route — blast furnace / basic oxygen furnace (BF-BOF) vs electric arc furnace (EAF). BF-BOF steel has significantly higher embedded emissions than EAF steel. You will need your supplier to identify the production route.

Aluminium

Aluminium emissions depend heavily on the electricity source used for smelting. Hydro-powered smelters have much lower Scope 2 emissions than coal-powered ones. You must separately identify Scope 1 (from the smelting process itself) and Scope 2 (from purchased electricity).

Cement

Cement emissions are dominated by the calcination process — the chemical reaction that converts limestone to clinker. This process emissions component is separate from energy-related emissions. Both must be reported.

Fertiliser

Nitrogen-based fertiliser production involves ammonia synthesis, which is energy-intensive. The calculation depends on the production technology (steam methane reformation vs coal gasification for hydrogen feedstock).

Hydrogen

Hydrogen emissions vary by production method: electrolysis using renewable energy produces near-zero emissions, while steam methane reformation (grey hydrogen) produces significant CO₂. You must report the production method and associated emissions.

Several issues commonly trip up businesses new to CBAM:

• Using gross weight instead of net weight: Packaging and container weight must be excluded
• Mixing units: Emissions intensity is per tonne of product. If your supplier reports in kg per kg, the number is numerically the same but you must ensure consistency
• Forgetting to convert CO₂ to CO₂e: Some suppliers report only CO₂, but CBAM requires CO₂ equivalent including other greenhouse gases such as methane (CH₄) and nitrous oxide (N₂O)
• Scope confusion: Reporting Scope 1 + Scope 2 when the supplier has already included both, effectively double-counting
• Period mismatch: Using emissions data from a different production period than the one you are reporting on

Oremly handles these conversions and checks automatically. The system flags unit inconsistencies, validates scope reporting, and ensures every figure is matched to the correct period and product.

HMRC requires you to retain the evidence supporting every figure in your CBAM calculation for six years. This includes:

• Supplier emissions data (emails, certificates, spreadsheets)
• Calculations showing how embedded emissions were derived from source data
• Records of any default values used and the reason for using them
• Import ledgers and customs declarations for covered shipments
• Correspondence with suppliers regarding data requests

Oremly stores all of this automatically in a checksummed evidence store with an append-only audit log. Every figure in your return is linked to its source document.

Oremly automates the entire calculation workflow:

• Import your ledgers from CSV or connect via broker API
• Oremly maps your products to CBAM CN codes and identifies covered goods
• Supplier data requests are sent automatically with a no-login portal for responses
• AI extracts emissions data from PDFs, spreadsheets, and scanned documents
• The calculation engine applies the correct methodology for each sector
• Results are presented in HMRC field order, ready for transcription into the government portal