PARTNER INSIGHT
This article was provided by Dr Nathan Wood, Senior Scientist & Carbon Co-lead at CMF sustainability services partner Tunley Environmental, and is published as industry insight for CMF members and the wider cast metals sector. The views expressed are those of the author and Tunley Environmental.
_________________________________________
The EU Carbon Border Adjustment Mechanism (CBAM) is becoming one of the most challenging regulatory developments affecting the global manufacturing and trade. For the UK cast metals industry, it represents a big change in how greenhouse gas (GHG) emissions are considered within supply chains, procurement decisions, and international competitiveness.
As the European Union enters the next phase of CBAM implementation following January 2026, foundries and metals manufacturers supplying EU customers are likely to face growing requests for emissions data, operational transparency, and evidence supporting carbon calculations.
While the regulation itself formally applies to EU importers, non-EU manufacturers (known officially as “non-EU installations”) play an important role because they provide the emissions information that underpins CBAM reporting.
What is EU CBAM?
EU CBAM was introduced by the European Union to address “carbon leakage”, where production shifts to countries with less demanding climate policies.
The mechanism aims to create a level playing field by applying a carbon cost to imported products equivalent to the one paid by EU manufacturers under the EU Emissions Trading System (EU ETS).
The regulation currently applies to several carbon-intensive sectors, including:
- Iron and steel
- Aluminium
- Cement
- Fertilisers
- Hydrogen
- Electricity
For the cast metals sector, the inclusion of iron, steel, and aluminium makes CBAM particularly important.
Why It Matters to the Cast Metals Industry
The cast metals sector supports industries including automotive, construction, aerospace, infrastructure, rail, and engineering. Many of these sectors are already under pressure to reduce supply chain emissions and improve environmental transparency.
CBAM accelerates this shift by linking carbon emissions directly to international trade.
As a result, EU customers are increasingly likely to request:
- Product embedded emissions data
- Information about manufacturing processes
- Evidence supporting GHG calculations
- Verification of emissions reporting
This means emissions reporting is becoming increasingly commercial rather than just regulatory.
Businesses able to provide credible and transparent carbon data may strengthen customer relationships and improve competitiveness, while organisations with poor emissions visibility may face increased pressure and miss out on potential business opportunities.
What Changes in 2026?
EU CBAM first entered a transitional phase in 2023 focused primarily on emissions reporting. From 1 January 2026, the regulation entered its definitive regime.
This highlights a significant change because EU CBAM begins moving beyond reporting and towards financial obligations linked to embedded emissions.
From 2026 onwards:
- EU importers of CBAM goods must become authorised CBAM declarants
- More detailed emissions methodologies are expected
- Supply chain investigation will increase
- Importers will begin preparing for CBAM certificate purchases
Although the first major annual declarations and certificate obligations will fully materialise in 2027, businesses should treat 2026 as the operational preparation year. This is the period during which organisations should establish reporting systems, improve operational data collection, engage suppliers, and ensure supporting evidence can withstand verification.
Why Accurate Emissions Data Matters
One of the most important aspects of EU CBAM is the distinction between actual emissions data and default values.
Where suppliers cannot provide reliable emissions information, importers may rely on county- and product-specific default values set by the European Commission. These values are intentionally conservative as they are based on worst case examples and become increasingly punitive over time.
The confirmed uplifts are:
- +10% in 2026
- +20% in 2027
- +30% from 2028 onwards
For efficient manufacturers, relying on default values could make products appear significantly more carbon intensive than they are. This creates a strong commercial incentive for businesses to improve emissions visibility and provide verified operational data.
The Link Between EU CBAM and the EU ETS
EU CBAM is directly connected to the EU Emissions Trading System. The EU ETS operates as a cap-and-trade carbon market where businesses within certain sectors must hold allowances covering their greenhouse gas emissions. CBAM extends this principle to imported goods by ensuring imported products face a carbon price equivalent to EU-produced goods.
For UK organisations, it is also important to recognise that the UK Government will introduce a UK CBAM from 01 January 2027, meaning many businesses may eventually face reporting expectations linked to both UK and EU systems.
What Manufacturers Will Need to Provide
Although EU importers hold the formal reporting obligations, manufacturers supplying into EU markets will often need to provide detailed emissions information.
This may include:
- Direct production emissions
- Electricity consumption
- Production output volumes
- Raw material information
- Supporting evidence linked to emissions calculations
Where actual emissions are reported, calculations must follow EU CBAM methodologies and be supported by structured evidence.
Non-EU manufacturers will also need to prepare a Monitoring Methodology Document (MMD), outlining calculation methods, data sources, operational boundaries, and assumptions.
Non-EU manufacturers are additionally expected to maintain an evidence pack ready for verification containing records such as utility invoices, fuel data, meter readings, and production logs.
Verification Requirements
From 2027 onwards (using data from 2026), actual emissions data used under EU CBAM will require independent third-party verification. Verification bodies must generally hold accreditation aligned with ISO/IEC 17029 and ISO 14065. The purpose of verification is to ensure emissions reporting is accurate, traceable, and supported by evidence. The verification must be completed to a “reasonable assurance” level.
For foundries unfamiliar with greenhouse gas verification processes, preparation should begin well before formal reporting deadlines.
One of the most common challenges organisations experience is incomplete or inconsistent operational evidence. This is why businesses should begin developing clearer data management and reporting processes early.
How CBAM Could Influence Supply Chains
CBAM is already influencing procurement behaviour across Europe. Customers are increasingly considering carbon transparency alongside traditional procurement criteria such as cost, quality, and delivery performance. As a result, suppliers capable of demonstrating credible emissions performance may gain a competitive advantage.
For the cast metals industry, this may accelerate investment in:
- Lower carbon precursor materials
- Energy efficiency
- Process optimisation
- Electrification
- Renewable electricity procurement
- Lower carbon production methods
Many foundries are already making progress in these areas, but CBAM increases the importance of evidencing those improvements.
Practical Steps Businesses Should Be Taking
For organisations still in the early stages of preparation, the most important step is to begin improving operational emissions visibility.
Businesses should first identify whether products fall within CBAM scope by analysing the Combined Nomenclature (CN) codes of their products and understand which customers or export flows may be affected. From there, organisations should focus on improving data collection around electricity use, fuel consumption, and production outputs.
Early engagement with EU customers is also important, particularly around reporting expectations and emissions methodologies. Finally, businesses should assess whether existing internal systems, resources, and reporting processes are capable of supporting future CBAM requirements.
Looking Ahead
CBAM is unlikely to be an isolated regulatory development. Instead, it forms part of a wider movement towards environmental transparency across global manufacturing and industrial supply chains.
For the cast metals sector, carbon data is becoming increasingly commercial. Customers, investors, and procurement teams are all placing greater emphasis on measurable sustainability performance.
Businesses that begin improving emissions visibility, strengthening reporting systems, and engaging supply chains early are likely to be in a far stronger position as CBAM requirements continue to evolve.
While the regulation undoubtedly introduces additional complexity, it also creates an opportunity for manufacturers to better understand their operations, improve efficiency, and demonstrate leadership within a lower-carbon industrial economy.
_________________________________________
The author, Dr Nathan Wood, is a Senior Scientist and Carbon Service Co-Lead at Tunley Environmental, where he specialises in carbon footprinting, life cycle assessment, and regulatory carbon accounting. He works with organisations across a range of industries to quantify greenhouse gas emissions, develop decarbonisation strategies, and navigate complex climate regulations. He supports the transition toward Net Zero through services including product carbon footprints, corporate emissions inventories, and Environmental Product Declarations. Nathan also leads Tunley’s CBAM service, helping manufacturers and importers calculate embedded emissions and develop compliant reporting methodologies. His background is in chemistry and computational modelling, having completed a PhD in materials chemistry.
This article was developed using insights from Tunley Environmental’s A Practical Guide to the Carbon Border Adjustment Mechanism (CBAM). CMF members can download the guide from the Member Area.
The information in this article is intended as general guidance only and should not be considered legal or regulatory advice. Businesses should seek appropriate professional advice regarding their specific circumstances.
