Strengthening Mediterranean value chains: Understanding CBAM and carbon footprint calculation for exporters

Ce second webinaire, organisé par Euromed Clusters Forward, financé par l’Union européenne et soutenu par le ministère français de l’Europe et des Affaires étrangères dans le cadre du programme DIMED, s’inscrit dans une série de rencontres visant à préparer les entreprises aux défis et opportunités du Mécanisme d’Ajustement Carbone aux Frontières (CBAM) de l’Union Européenne. Après une première session en juillet présentant le cadre général du CBAM, cette deuxième réunion a permis d’approfondir la perspective des exportateurs, en se concentrant sur la méthodologie de calcul de l’empreinte carbone des produits. 

This second webinar, organized by Euromed Clusters Forward, supported by the European Union and the French Ministry for Europe and Foreign Affairs as part of the DIMED program, is part of a series of meetings aimed at preparing companies for the challenges and opportunities of the European Union’s Carbon Border Adjustment Mechanism (CBAM). Following an initial session in July presenting the general framework of the CBAM, this second meeting provided an opportunity to explore the perspective of exporters in greater depth, focusing on the methodology for calculating the carbon footprint of products. 

Context and objectives: Using the CBAM as a lever for economic integration 

The webinar opened with the observation that the CBAM mechanism poses a major challenge for exporters from the southern Mediterranean to the EU. The objective of this series of meetings is to inform and help companies prepare for it, in particular by providing a roadmap and a detailed methodology. 

Understanding the regulatory framework: from ETS to CBAM 

A significant part of the session was devoted to a detailed review of the key concepts and regulatory framework of the CBAM. 

• Key terminology: It is essential to distinguish between: 
• Carbon offsetting: Voluntary, available to all, aimed at offsetting CO2 emissions through the purchase of credits. 
• Carbon Credits: Linked to mandatory or regulated markets (such as ETS) for businesses and governments. 
• Carbon Tax: Tax applied to goods or services, such as fuel tax. 
• The ETS System: The ETS (Emissions Trading System) allows companies to trade, buy, and sell CO2 emission rights. The idea is to provide a financial incentive for companies to reduce their carbon footprint. The European Commission plans to reduce the total amount of allowances available in Europe each year. The ETS is not unique to Europe; other countries and regions use it, although the value of credits may vary. 
• The CBAM Principle: The CBAM (Carbon Border Adjustment Mechanism) aims to prevent carbon leakage. It ensures that goods imported into the EU are subject to the same rules as if they had been produced in Europe. 
• If an exporting country implements a similar system recognized by the EU (such as the one being prepared in Morocco), the value of the CBAM certificate will be the difference between the cost of carbon credits in Europe and that in the exporting country. 
• Timeline and Threshold: The final phase of CBAM will begin in January 2026, requiring the use of specific CO2 values, as opposed to default values. The obligation to purchase CBAM certificates is expected to be postponed until 2027 (based on 2026 data). The reporting threshold has changed, now focusing on imports above 50 tons of weight per year, instead of the €150 value. 
• Products and Emissions: Goods subject to CBAM include iron and steel, aluminum, hydrogen, electricity, cement, and fertilizers. For some goods (iron, aluminum, hydrogen), only direct emissions (Scope 1) are taken into account; for others (cement, fertilizers), both direct and indirect emissions (electricity consumed, Scope 2) are considered. 

Product Footprint Calculation Methodology 

Carbon footprint calculation is central to CBAM requirements. 

• The basic equation: Carbon footprint is estimated using a simple formula: Quantity multiplied by an Emission Factor. 
• Default Values vs. Specific Values: Companies can use default values (generic, provided by the European Commission), but from January 2026, only 20% of the report can be based on default values; the rest will require specific values provided by the manufacturer or supplier. 
• Carbon Accounting: The process involves estimating greenhouse gas (GHG) emissions across the entire value chain, including the purchase of raw materials, transportation, energy used (Scope 1 and 2), waste, employee mobility, product use, and end of life. 
• Precursor Inclusion: For complex goods (as opposed to basic goods), it is necessary to include the embedded emissions of precursors or inputs. Exporters should refer to European Commission documentation to identify the list of relevant precursors for which Scope 1 and 2 emissions must be measured. 
• Cost of the CBAM Certificate: The cost is the difference between the cost of the ETS in Europe and the cost of the ETS (or carbon tax) in the country of origin of the goods. 

Testimonial: Challenges facing Egyptian exporters (ECO) 

Noha Elbalky, from the Environmental Compliance Office of the Federation of Egyptian Industries (FEI), shared valuable feedback on the state of preparedness of companies. 

The FEI, which provides sustainability and decarbonization services to Egyptian companies, has already helped companies in the chemical and steel industries define their CBAM scope, determine emissions (Scope 1, 2, and Scope 3 for precursors), and finalize their CBAM communication report. 

Sector Overview for Egypt: Egyptian exports of CBAM products to the EU account for 6.94% of the country’s total exports 32. The most affected sectors are fertilizers (46% of the total value of Egyptian fertilizer exports go to the EU), iron and steel (45%), cement (13%), and aluminum (13%). 

Challenges faced: Companies face significant uncertainties: 

• Lack of implementation rules: The absence of definitive rules makes it difficult to accurately calculate costs and award long-term contracts (e.g., rules for verification and accreditation of verifiers). 

• Cost uncertainty: The cost of CBAM certificates and the extent of default values have not yet been fully defined. 

• Decarbonization and costs: Companies face high costs for early decarbonization, which is a competitive advantage but requires changes to supplier contracts (e.g., requiring guaranteed emission levels). 

• Administrative burden: Tracking and reporting emissions represents an administrative and compliance burden. 

Practical Exercise (Group Workshops) 

The session ended with a practical exercise for the 50 participants, divided into five rooms. The case study focused on a fictional company, located in a fictional country, which produces 10,000 tons of aluminum automotive supports (steel products) for export to Europe. The objective was to identify the emissions to be included (raw materials, components, Scope 1 and 2 energy) in the calculation of the product’s CBAM carbon footprint. 

The main message to exporters is that it is crucial to start measuring Scope 1 and Scope 2 of their carbon footprint quickly, even if regulatory uncertainties remain, as European customers need this data to anticipate their future CBAM costs. The calculation is not particularly complex, but it can be time-consuming because it requires gathering data on Scope 1 and 2 emissions.