CBAM Precursor Emissions: Why the Steel in a Fastener Counts

Precursor materials are inputs to a production process whose embedded emissions must be included in the CBAM calculation, even though the precursor itself is not the final imported product. The concept is essential for understanding why a simple product like a steel fastener may carry a much larger carbon burden than its physical size suggests.

For example, a screw (CN 7318) is a steel product. The screw's embedded emissions include not only the energy used to form the screw head and cut the thread, but also the emissions from producing the steel rod that was the input to the screw-making process. The steel rod is the precursor. Its emissions must be included in the fastener's CBAM calculation.

The precursor concept applies across all CBAM sectors. Aluminium window frames must include the emissions from producing the aluminium extrusions. Steel beams must include the emissions from producing the steel itself (which may involve iron ore, coke, and other precursors). Cement must include the emissions from producing clinker.

The emissions calculation for a finished product is the sum of the precursor emissions plus the processing emissions. For a fastener, the formula is: Embedded emissions = (Emissions from steel precursor production) + (Emissions from fastener manufacturing process). Both components must be separately identified or, if the supplier provides a single combined figure, you must confirm it includes both.

In practice, most suppliers who provide emissions data naturally include precursor emissions because they measure the full cradle-to-gate footprint of their product. The risk arises when a supplier quotes only the "final stage" emissions (the screw-forming process) and omits the precursor steel emissions. This would significantly understate the actual embedded emissions.

Oremly's data request templates explicitly ask suppliers to confirm whether precursor material emissions are included. If the supplier cannot confirm this, Oremly flags the data as potentially incomplete and applies default values for the precursor component.

In the iron and steel sector, common precursor relationships include: steel rod or wire used to make fasteners, screws, bolts, nuts, and wire products; flat-rolled steel used to make tubes, pipes, and structural sections; and pig iron or direct reduced iron used to make steel in an electric arc furnace. Each stage of processing adds emissions to the final product.

In the aluminium sector, precursor aluminium (unwrought, 7601) is used to produce extrusions, sheet, foil, and castings. The emissions from producing the primary aluminium must be included in the CBAM calculation for the downstream product. In the cement sector, clinker (2523.10) is the precursor for all finished cement products. The calcination emissions from clinker production dominate the total.

In the fertiliser sector, ammonia is the key precursor for nitrogen-based fertilisers. The emissions from ammonia production (steam methane reformation or coal gasification) must be included. In the hydrogen sector, there is no precursor distinction because hydrogen is itself the final product, but the production method (electrolysis vs SMR) determines the precursor energy input emissions.

The precursor concept means that importers of downstream products cannot assume their CBAM burden is small. A fastener weighs a few grams, but its embedded emissions include the steel production emissions, which may be orders of magnitude larger than the fastener-forming emissions. Importers who overlook precursor emissions will under-report their liability and face penalties for inaccurate returns.

The counter-intuitive effect is that a lightweight but highly processed product may carry a higher CBAM burden per unit value than a heavy, minimally processed one. A tonne of steel fasteners may have higher embedded emissions than a tonne of steel billet, because the fasteners carry both the billet emissions and the processing emissions.