CBAM and Scope 3 Supply Chains: Understanding Indirect Emissions in CBAM Calculations

How Scope 3 indirect emissions interact with CBAM embedded emissions calculations, and what African exporters need to know about supply chain carbon accounting.

Published April 2026·Last updated April 2026·carbonborderadjustment.co.za

Scope 3 and CBAM: What's In and What's Out

CBAM covers embedded emissions — primarily Scope 1 and Scope 2 — but Scope 3 upstream emissions play an important role for precursor goods in complex supply chains.

The Three Scopes in Context

| Scope | Definition | CBAM Inclusion | |---|---|---| | Scope 1 | Direct emissions from owned sources | Always included | | Scope 2 | Indirect emissions from purchased electricity | Always included | | Scope 3 | All other indirect emissions | Partially included for precursor goods |

When Scope 3 Matters for CBAM

For complex goods (steel, aluminium, fertilisers), embedded emissions include the emissions from precursor goods — raw materials and intermediate products. For steel: blast furnace emissions (Scope 1) + electricity (Scope 2) + iron ore reduction, coking coal, scrap steel (precursor embedded emissions).

Practical Guidance

▸Map your Tier 1 suppliers and identify CBAM-scope precursors
▸Request emissions data from suppliers (embedded emissions certificates or ISO 14064 reports)
▸Apply EU default values where actual data is unavailable
▸Prioritise verification effort on the highest-emissions inputs

Frequently Asked Questions

Does CBAM include Scope 3 emissions?

CBAM primarily covers Scope 1 and Scope 2 emissions. However, for complex goods like steel and aluminium, the embedded emissions of precursor goods (upstream inputs) are included — these are treated as direct embedded emissions of the precursor, not as Scope 3.

What are precursor goods in CBAM?

Precursor goods are the raw materials and intermediate products used to produce a CBAM-covered good. For steel, precursors include iron ore, coking coal, and scrap steel. The embedded emissions of these precursors are included in the finished good's CBAM calculation.

How do I calculate embedded emissions for complex supply chains?

You must trace emissions through each tier of your supply chain. Request ISO 14064 reports or embedded emissions certificates from Tier 1 suppliers. Where actual data is unavailable, apply EU default values for precursor goods.

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