CBAM and Ferroalloys: Eight Details That Decide Your Real Carbon Cost

2026-09-17 10:09:02

What this article is: CBAM (the EU Carbon Border Adjustment Mechanism) and its implementing rules keep being updated — the articles, the covered lists and the numerical bases all move. What follows is about mechanism and method, which do not change with an amendment. For figures, code lists and implementation phases, rely on the current official EU texts and have someone practised in EU customs review them. This is not legal or tax advice. (Verification date: 【insert date verified before publication】)

A purchasing manager in the EU asked one extra question before placing an order: “for this ferrosilicon, can you supply verified embodied-emissions data?”

Back came a product spec sheet and a test report — both thoroughly professional, and neither answering the question.

This is not unusual. Plenty of ferroalloy exporters still treat CBAM as “one more document the buyer wants,” when what it actually changes is how a quotation is built and how a supplier is chosen. The eight details below decide how much carbon cost you really carry.

1. Detail one: CBAM is not a tariff — the thing it is levied on is not what you think

The name misleads. CBAM is widely called a “carbon tariff,” but mechanically it is a different animal:

	A tariff	CBAM
Levied on	Customs value (a percentage of the transaction price)	Embodied emissions (tonnes of CO₂ per tonne of product)
What sets the amount	Price × rate	Emission intensity × carbon price
How to reduce it	Negotiate the price	Cut emission intensity, or supply real data

For ferroalloys this distinction is decisive. Ferroalloys are energy-intensive: embodied emissions per tonne run well above those of ordinary steel. At the same customs value, the carbon cost on ferroalloys can therefore be several times higher.

The consequence: under a tariff, your leverage is price. Under CBAM, your leverage is emissions data. A supplier who can reduce intensity — or at least produce verified data — may save the buyer more than two points off the unit price would.

2. Detail two: the declarant is the EU importer, not you

The first reaction at many Chinese exporters is “do we have to register and declare in the EU?” — usually, no.

The CBAM declarant is the importer established in the EU: your buyer, or an indirect customs representative appointed by him. He files the CBAM declaration with the competent authority of his member state and discharges the corresponding certificate obligation.

So what is the Chinese supplier’s role in all this? Source of the data.

EU importer (declarant)

↑ needs: embodied emissions data for the product

Chinese supplier (data provider)

↑ needs: installation-level, verified emissions data

The obligation is his; the size of the cost is in your hands. If you cannot supply data, he falls back on default values (next section). Default values normally sit above actual values, and he will look for the difference somewhere — either in your price or in a different supplier.

What this means in practice: when a buyer asks you for emissions data, he is not creating work for you — he is discharging a statutory duty of his own. How fast and how professionally you respond is itself part of supplier selection.

3. Detail three: no verified data means default values — and defaults are set conservatively

The most valuable point in this article.

CBAM’s logic runs: use verified actual emissions data where available; where it is not, fall back on default values. And default values are set conservatively by design — if they were generous, declaring without data would become a way around the mechanism.

Which produces a conclusion that matters on both sides:

Verified emissions data has a price. Its value = (default value − actual value) × carbon price × your export volume.

For the buyer: requiring verified data from your supplier may directly reduce your declared amount. That is visible money.

For the Chinese supplier: emissions data capability is becoming part of quotation competitiveness. Between two ferroalloy suppliers, the one who can produce verified data saves the buyer a certain, quantifiable sum. It will not appear on your quotation, but it will appear in the buyer’s comparison sheet.

Why so many Chinese suppliers cannot produce it: not because their emissions are high, but because they have not calculated at installation level or been through recognised verification. A good many producers actually perform better than the default, yet get declared at the default because they lack the data in an acceptable form — money lost for no reason at all.

4. Detail four: what is needed is installation-level verified data — not an industry average, not your own calculation

This follows directly from the last point, because many people assume “any data will do.”

What CBAM recognises is actual emissions data for a specific production installation, verified by a qualified verifier. That means the following three things are, in most cases, not acceptable:

What you have	Usable?
Industry-average emission intensity (published literature / association data)	❌ no substitute for installation-level data
Self-calculated, unverified figures	❌ verification step missing
A carbon footprint label for a product	⚠️ depends on scope; usually needs re-checking
Verified annual emissions for this installation + matching output	✅ this is what to prepare

Why the bar is set there: accept industry averages and high-emitting and low-emitting installations pay the same, and the mechanism stops rewarding the better performer — which defeats its purpose.

Practical note: if you have nothing at all today, the first step is not to calculate. It is to establish whether your production installation can produce an emission intensity per unit of product across a full year. That takes time — a complete production year — so the earlier you start, the stronger your position.

5. Detail five: establish first whether your code is on the list at all

This is the precondition for everything else, and the step most often skipped.

CBAM does not cover all imports. It lists covered goods by CN code (the EU’s goods nomenclature, identical to HS at six digits). Whether a consignment is in scope turns on the code — not the product name, and not the intuition that “it’s a steel product.”

Three things to check one by one:

Your product’s exact CN code(note: CN goes beyond the HS six digits — the first six are not enough)
Whether that code is currently on the CBAM coverage list(the list moves with amendments)
Whether the product itself is covered, or only as an input to downstream goods(a different scope means different obligations)

⚠️ Specifically: the treatment of ferroalloys (normally falling under CN heading 7202) must be checked subheading by subheading. Do not infer from “steel is on the list, therefore ferroalloys are.” This article does not make that determination for you — rely on the current official EU text, or have your customs broker confirm it in writing.

Why this care is worth it: getting it wrong costs in both directions. Preparing for coverage that does not apply is wasted effort. Assuming no coverage where there is coverage creates a problem in the buyer’s declaration, and that cost comes back around.

6. Detail six: direct or indirect emissions — where ferroalloys are most exposed

For ferroalloys this is the largest and most complicated item.

Two definitions first:

Direct emissions: released within the installation during production (reductant consumption, fuel combustion and similar)
Indirect emissions: released in generating the purchased electricity or steamthe installation consumes

For most manufacturing, indirect emissions are a small share. But ferroalloys are electric-furnace products, and power is a large share of total cost — so indirect emissions from purchased electricity may account for a substantial part of the total (the proportion varies widely with process and power mix; no figure is given here).

Why this is complicated: whether indirect emissions are included, and on what basis (the actual supplier’s emission factor, or a grid average), differs by product category and implementation phase, and the rules have been moving.

Why it matters for ferroalloys: if indirect emissions are in scope, then the kind of power you use determines your carbon cost directly. Same submerged-arc furnace, but capacity running on a high share of renewable power and capacity dependent on thermal power will diverge sharply on this line.

What this means in practice: it turns “green power” from an environmental talking point into a cost variable. For suppliers, the renewable share is no longer a line in an ESG report — it enters the buyer’s comparison sheet. For buyers, asking about a supplier’s power mix is far more useful than asking “are you environmentally responsible?”

7. Detail seven: data has a scope, and mixing scopes gets declarations rejected

Even with verified data in hand, there is a common technical trap: inconsistent scope.

For data to match a declaration, at least three things have to line up:

Scope item	The usual error
Installation	Which installation does this data describe? With several sites, they cannot be blended
Period	Which year? Multi-year averages are not acceptable in most cases
Product	What product is the per-unit intensity calculated for? Different grades and processes cannot be substituted for one another

A note for Chinese suppliers in particular: if you produce several grades at one installation (FeSi75 and FeSi72, say), their emission intensities can differ, and one number cannot cover every product. What the buyer needs is the emissions for this consignment, not for this plant.

One more: where carbon has already been paid for the same emissions in the country of origin (national carbon market coverage, or carbon cost embedded in the electricity price), a deduction may be available, subject to the rules, to avoid double counting. Whether a deduction applies and for how much depends on that market’s coverage of the product and on recognition of the corresponding carbon price — check case by case.

8. Detail eight: put carbon cost into the quotation basis — not into a conversation afterwards

The first seven are preparation. This one is execution.

Carbon cost has one awkward property: it moves, and neither party controls it (it depends on the EU carbon market price and on the reporting rules). Leave it out of the quotation and a problem becomes an argument.

Three things worth stating on the quotation:

Who bears it: does the importer carry the CBAM certificate cost, or is it inside the goods price and carried by the seller? The obligation usually sits with the importer, but how it is shared commercially is negotiable— leave it unstated and it becomes a dispute.
On what basis: is settlement on verified actual emissions, or on default values? This line is what gives all the preparation above its value— if your data beats the default but you settle on the default, the preparation bought nothing.
How the price adjusts: if the carbon price or emission intensity moves, does the contract price change, and by what mechanism?

Suggested wording: add an “emissions data clause” to the order or technical agreement — who supplies the data, in what form (verified, installation-level), by when, and what happens if it is not supplied.

Henan Longchuang Metallurgical Materials Co., Ltd. supplies ferrosilicon, manganese and chromium alloys, rare-earth magnesium ferrosilicon (nodularisers), inoculants, cored wire and more than 20 other metallurgical products.

Send us your product CN code, annual volume and destination port — we reply within 【12 hours】 with the emissions data we can currently supply and how it is scoped. Contact: 【company email】.

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