1 August 2026 is the deadline for the first periodic CBAM report under the new, definitive period. The regime took effect on 1 January 2026 after the transitional phase (1 Oct 2023 – 31 Dec 2025). For European companies in steel, aluminium, cement, nitrogen fertilisers, hydrogen and electricity, this is the first moment when not having embedded-emissions data per tonne of product starts to cost money — reporting-wise now, payment-wise from 2027. Penalties for failing to report: EUR 10–50 per tonne of CO₂ not declared (Article 26 of CBAM Regulation 2023/956). For missing certificates from 2027: EUR 100 per tonne plus a market-access ban on further consignments.
A myth worth dispelling first: CBAM is not only about EU importers. A Polish steel producer exporting to the UK (where the UK CBAM begins on 1 January 2027), a German OEM asking for a PCF from a Polish aluminium-component supplier, a Dutch cement customer requiring embedded emissions for Battery Regulation DPP — all need the same numbers. Scale: in automotive, according to VDA's Sustainability Initiative, 70% of European OEMs already require PCF data from suppliers for 2027.
Below: who is in scope, what data MES + EMS must produce, how to compute it, what it costs and what to do in the six weeks remaining.
What CBAM is in short
CBAM (Carbon Border Adjustment Mechanism) is an equalising levy that the European Union imposes on embedded emissions in imports from carbon-intensive sectors. Its purpose: to prevent carbon leakage — production migrating outside the EU to avoid EU ETS costs. In practice CBAM closes that loophole by charging the importer a fee analogous to what an EU producer would pay under ETS.
Sectors covered by CBAM (Annex I of the Regulation):
- Cement (clinker, Portland cement, blended cements)
- Iron and steel (pig iron, crude steel, rolled products, tubes, wires)
- Aluminium (primary, castings, profiles)
- Fertilisers (urea, ammonium nitrate, NPK complex)
- Hydrogen (excluding low-carbon hydrogen under the RED III regime)
- Electricity (imported from outside the EU)
From 2027 likely additions: aluminium alloys, processed steel products, plastics (Commission decision by end of 2026).
Who this applies to in real life
Three paths — most companies in Annex I sectors sit on one or several:
1. European importer of Annex I materials. Classic case: a machinery manufacturer buying steel from Belarus or Ukraine. From 1.01.2026 you need CBAM declarant status in the national registry (in Poland: KOBiZE), report embedded emissions of imported tonnes quarterly, and — from 2027 — buy enough CBAM certificates at a price indexed to EU ETS.
2. EU exporter to carbon-aware markets (UK, US, Canada, Japan). The United Kingdom launches its own CBAM on 1 January 2027, with methodology close to the EU's. The US is working on CCA (Clean Competition Act). A Polish steel producer selling to the UK must already today provide embedded emissions per tonne — without it the customer will not accept orders past 2026.
3. European supplier to PCF-demanding OEMs. Volkswagen, Mercedes, Stellantis, Siemens, Bosch — all have "PCF or no contract" policies for new agreements from 2026. This is not CBAM, but the data is the same: kg CO₂-eq per tonne / per unit, methodology ISO 14067 or PEF Commission Recommendation 2021/2279.
If your company produces steel, aluminium or cement in the EU — check the customer list. At least half already have PCF requirements in tenders for 2027.
Embedded emissions — what they actually are
Embedded emissions are the total CO₂-eq emissions "embedded" in 1 tonne of finished product, measured from the plant gate (gate-to-gate) or from cradle to gate. CBAM requires direct + indirect emissions:
- Scope 1 (direct) — emissions from in-plant processes: gas, coke and dust combustion of chemical reactants (e.g. CaCO₃ decarbonation in a cement kiln)
- Scope 2 (indirect) — emissions from grid electricity: in Poland today around 650 kg CO₂/MWh per KOBiZE 2025, in Germany around 370, in Norway around 30 (hydro)
- Embedded emissions of raw materials (precursors) — emissions already accumulated in input materials before they enter the process (e.g. ferromanganese for steelmaking)
For a tonne of converter steel a typical range is 1.6–2.4 tCO₂/t. For a tonne of Portland cement: 0.8–1.1 tCO₂/t (mostly from decarbonation). For a tonne of primary aluminium from smelting: 8–18 tCO₂/t, depending on the energy mix — which is precisely why Norwegian aluminium has the edge over Polish on the EU market.
How MES sources this data
Embedded emissions are not a single number — they are per batch (production batch), summed from three sources:
1. Batch genealogy (from MES). Each batch has its own raw materials set (BOM), machines, cycle times, operators. This is the basis for allocation — if batch A and batch B passed through the same furnace, but A ran 4 hours and B ran 6 hours, energy (and CO₂) must be allocated proportionally to furnace runtime.
2. Energy use per machine / per line (from EMS). An Energy Management System measures kWh of electricity and m³ of gas per machine at minute or second resolution. If batch A is in the furnace from 08:00 to 12:00, EMS gives the exact MWh of power and m³ of gas the machine consumed in that window.
3. Bill of Materials from ERP (raw materials, their emission factors). Ferromanganese from a specific mine has its own PCF (provided by the supplier or default value from a national database). MES knows how many kg of raw material entered batch A. Multiply: kg of input × kg CO₂/kg input = embedded emissions from precursors.
Together: embedded CO₂ per tonne of product = (scope 1 + scope 2 + precursors) / produced tonnes.
A natural OmniMES stack for this: MES (genealogy) + EMS (energy metering) + ERP (BOM + supplier data) + a PCF calculation layer (on a time-series database — in TimescaleDB we keep emission factors as time-series, because grid emission factors shift year to year and the regulator requires a contemporaneous multiplier).
Standards: ISO 14067, GHG Protocol, EU CBAM methodology
Three methodological frames that in practice overlap:
ISO 14067:2018 — Carbon footprint of products. International standard, broadest reach, well-understood. Defines system boundaries, allocation across co-products, third-party verification requirements.
GHG Protocol Product Standard — more flexible, widely used in the US. Accepted in some CBAM-like regimes (US Clean Competition Act).
EU CBAM Implementing Regulation 2023/1773 — the details of computing embedded emissions specifically for CBAM. Defines default values (used when verified data is missing from the supplier) — typically 20–40% higher than realistic numbers, to incentivise verified data submission.
In practice inside the EU ISO 14067 dominates. A CBAM declarant always maps an ISO 14067 PCF onto the CBAM format (minor differences in system boundary, but tools do that mapping automatically).
Tools: what actually works in 2026
Four realistic options:
SAP S/4HANA Sustainability Footprint Management. Commercial, expensive (EUR 50–150k per year for a mid-sized plant), but integrates natively with ERP. If you run SAP, this is the obvious pick. Plus full CBAM support and direct reporting to national registries.
Microsoft Cloud for Sustainability. Alternative to SAP, integrates with Microsoft Dynamics 365 and Azure. Better pricing for mid-market.
openLCA — open-source LCA tool. Free, but requires manual integration with MES/EMS. Good for startups and smaller plants, weaker for compliance audit (less mature audit trail).
Custom — directly inside MES. For plants that already have a solid stack (PostgreSQL + TimescaleDB + Grafana), an embedded-emissions calculator is roughly 200 lines of SQL/Python. Plus an emission-factors table (imported annually). That is a real path — we use it in OmniMES, because emission factors map 1:1 to continuous aggregates per shift × per line.
What to pick: for plants with EUR 100M+ revenue already on SAP — SFM. For mid-market EUR 10–100M with PostgreSQL plus custom MES — in-house calculation is cheaper and more flexible. For the smallest — openLCA plus Excel.
Default values: the trap for the unprepared
If a Polish aluminium importer from Belarus has no verified embedded-emissions data from the Belarusian supplier (because the supplier simply does not report), CBAM mandates default values. For primary aluminium the default is 16.5 tCO₂/t — the worst realistic range for coal-powered smelters.
Likely 2027 CBAM rate (indexed to ETS): around EUR 80/t CO₂. So the importer pays about EUR 1,320 extra per tonne of aluminium when using defaults. Verified supplier data can bring this to EUR 800–1,000/t — a difference of EUR 300–500 per tonne.
The conclusion: investment in getting verified data from non-EU suppliers pays back immediately. Polish importers of steel from Ukraine or Turkey should be signing contract addenda today requiring CBAM-ready PCF. Same for aluminium from the UAE, India, Bahrain.
Six-week roadmap to 1 August 2026
For companies that do not yet have a CBAM workflow:
Week 1–2 (22 June – 5 July): registration as a CBAM declarant in the national registry. Inventory of exactly what is imported/exported (CN codes from Annex I). List of TIER-1 non-EU suppliers and contacts.
Week 3–4 (6 July – 19 July): raw data collection. From MES — Q2 2026 quarterly summary of production batches. From EMS — electricity + gas per line. From ERP — BOM + raw-material invoices. From non-EU suppliers — verified PCF or acceptance of defaults.
Week 5–6 (20 July – 1 August): embedded-emissions calculation per CN code, validation through internal audit or an external verifier (TÜV, DEKRA, SGS for high-stakes filings). Submission to the CBAM portal. Q3 action plan.
Realistic cost of the first report for a mid-sized plant (50–500 tonnes of Annex I imports per month): EUR 15–40k (consultant + external verifier + tooling setup). Plus 0.2 FTE for ongoing work.
The longest item is non-EU suppliers — typically 4–6 weeks from the first email to a PCF, if the supplier is seeing the request for the first time. Hence the time pressure.
Penalties — what is actually at stake
Article 26 of CBAM Regulation 2023/956 and Article 16 of Implementing Regulation 2023/1773 set:
- Failure to report: EUR 10–50/t of CO₂ not reported, plus the obligation to backfill with retroactive payment
- Inaccurate reporting: EUR 30–50/t plus report correction within 30 days
- Missing certificates (from 2027): EUR 100/t plus a ban on bringing further product batches to the EU market
- Repeat offences: Commission proposal from March 2026 — fines of up to 4% of global turnover
National regulators have powers to mandate public disclosure of the breach. For B2B companies (most European industrial exports) this is worse than the fine itself — they lose the first major contract after disclosure and do not catch up.
Takeaways for the production director and CFO
Three things to remember:
First, CBAM realistically applies to thousands of mid-market European plants (Annex I plus import/export linkages). If your company is in steel, aluminium, cement, fertilisers or electronics with metal components — check status this week. The 1.08.2026 deadline is hard.
Second, MES + EMS are the foundation of CBAM data (60–70% of the needed information). Batch genealogy from MES, energy metering from EMS, BOM from ERP — you already have all of this. Add a calculation layer and a reporting interface. Cost EUR 15–40k plus two months of consultant time. Not a stack replacement, just data exposure.
Third, CBAM closes the EU 2026 regulatory cluster: AI Act (August), DPP / Battery Regulation (February 2027), NIS2 / KSC2 (H2 2026), CBAM (August 2026). Four pillars, one common denominator: MES as the source of compliance evidence. Companies that treat this as one data platform instead of four separate projects will save 40–60% on implementation.
CBAM is not going away. If the European industry wants to compete in carbon-aware markets (EU, UK, US from 2027), embedded emissions per tonne will become a standard product specification — alongside dimensions, chemical composition and mechanical strength. The best time to start measuring was a year ago. The second-best is today.
Sources
- CBAM Regulation 2023/956 — regulation text, Annex I (sectors), Article 26 (penalties)
- CBAM Implementing Regulation 2023/1773 — methodology details
- ISO 14067:2018 — Carbon footprint of products
- GHG Protocol Product Standard — alternative methodology
- PEF Recommendation 2021/2279 — Product Environmental Footprint
- KOBiZE — Polish emissions registry — Polish national emissions regulator, emission-factors database
- UK CBAM consultation — launch 1.01.2027
- VDA Sustainability Initiative — automotive PCF requirements
- openLCA — open-source LCA tool
- DPP enters the factory — our earlier piece on the product passport, naturally linked
- TimescaleDB in OmniMES — storing emission factors as time-series
- OmniMES — cybersecurity and CRA compliance — product documentation