The Border Carbon Adjustment Mechanism (BCAM ) imposes a new layer of complexity on importers, requiring a thorough understanding of the emissions associated with their imported products. This crucial process is not just a formality: it has a direct impact on import costs and regulatory compliance.
In this article, we unveil the essential principles of calculating emissions for the MACF, exploring the accepted methodologies, the data required and the impact of these calculations on your business. Aimed at importers and suppliers, this practical guide aims to clarify the process and provide strategies for effective emissions management under these European regulations.
MACF is designed to prevent carbon leakage by imposing carbon pricing on imports of certain carbon-intensive products. For importers, understanding how emissions are calculated is essential for estimating costs and planning compliance.
1. Definition of emissions concerned
Calculations for MACF consider both direct and indirect emissions linked to the manufacture of imported products. Direct emissions come from processes directly controlled by the company, such as the combustion of fossil fuels. Indirect emissions, on the other hand, result from the consumption of electricity, steam or heat, which are necessary for production but not directly produced by the company.
2. Use of verified data
It is imperative that the data used to calculate emissions is accurate and verifiable. Importers must ensure that the information supplied by foreign producers complies with European standards or standards deemed equivalent by the EU.
3. Calculation methodology
Emissions are often calculated using sector-specific emission factors and data on the energy intensity of production processes. Companies must apply these factors to the quantities of raw materials they use.
emissions in tonnes of CO2 equivalent.
4. Conversion into CO2 equivalents
Once the volumes of direct and indirect emissions have been determined, it is essential to convert them into carbon dioxide equivalents (CO2e). This conversion uses specific conversion factors that translate the climate impact of different greenhouse gases (GHGs) into a CO2 equivalent, enabling a standardized comparison. This step is crucial to correctly assess the GHG emissions of imported products according to MACF standards.
Calculating CO2 emissions for MACF is crucial, as it determines the number of certificates that importers must purchase. Here is an explanation of the methods used to ensure an accurate and compliant estimate of the emissions associated with imported products.
Where actual data are not available, MACF allows the use of default values. These values are based on sector averages and are used to estimate emissions. They offer a simplified but less accurate solution, which may result in the purchase of additional certificates if the default values overestimate actual emissions.
The use of default values is time-limited and subject to conditions:
- No quantitative limit from October 2023 to the end of June 2024, allowing full use of default values for emissions.
- Limit of 20% of emissions from July 2024 to the end of 2025 for complex goods, limiting the use of default values to a portion of total emissions.
As mentioned above, during the transition period, default values can be used to estimate these emissions. However, for greater accuracy, the regulations will evolve towards the use of actual values based on concrete production data.
Definition of real values
The actual values method is based on the use of data specific to each production process to calculate greenhouse gas emissions. Unlike default values, which are generic estimates that can be applied to similar industries or processes, actual values reflect the specific emissions of a given facility or company. This approach is therefore inherently more accurate, as it takes into account variations in performance and environmental practices specific to each production site.
Why are actual values more accurate?
Default values are based on industry averages or benchmarks, which do not necessarily reflect the current practices or technological improvements of a particular company. By using real data, companies can accurately demonstrate the effectiveness of their emissions reduction efforts. This is particularly relevant in industries where technologies and reduction practices vary considerably from one player to another, such as chemicals, metallurgy or energy production.
Data collection for calculating actual values
To calculate emissions based on actual values, companies must collect detailed data on :
- Direct emissions : These emissions come from sources that the company directly controls, such as the combustion of fuels in production processes. Data required includes types and quantities of fuels burned, combustion efficiencies, and specific technologies used.
- Indirect emissions : These are linked to the consumption of electricity, heat or steam generated off-site. To measure them, we need information on the quantity of energy consumed and the emission factor of the energy concerned, which can vary depending on the source (e.g. wind versus coal).
Calculating emissions from actual values
The calculation is based on the application of specific emission factors to the quantities of fuel burned and energy consumed. These factors are generally provided by competent regulatory bodies within the EU, and must be regularly updated to reflect changes in energy production or technological progress.
Challenges associated with calculating actual values for MACF
The process of calculating emissions is complex. The EU Excel file, with its twelve technical tabs, requires precise data, accessible only to production engineers. These data must be justified, as they will be examined by the Verifier and EU inspectors.
A major challenge for importers is to trace the supply chain back to the production plant, especially when several intermediaries are involved. From 2025, importers will be required to have "MACF Authorized Declarant" status, and to include a report certified by an accredited company in their annual MACF declaration from 2026. This report is essential for importing, and its absence may impede the process. Identifying suppliers who can comply with MACF requirements is therefore essential to avoid major interruptions and additional costs.
Implications for importers and suppliers
As mentioned above, importers will be required to provide evidence of the actual emissions associated with the products they bring into the EU, which will require close collaboration with suppliers to ensure that the necessary data is available and accurate.
This requirement could encourage suppliers to invest in cleaner technologies to reduce their emissions, since their competitiveness on the European market could depend on it.
MACF also recognizes the use of standardized emission factors and other approved methodologies to calculate emissions when facility-specific data are not available. These methods are particularly useful for importers dealing with products from multiple suppliers, or from regions where accurate data are difficult to obtain.
It is essential to adjust emission calculations to reflect current production practices and changes in production processes. Corrections may be necessary to take account of new technologies, improvements in energy efficiency, or changes in the types of raw materials used.
These calculation methods require an in-depth understanding of production processes and close collaboration with suppliers to ensure that the data collected is both accurate and complete. Good management of this information not only ensures compliance with MACF requirements, but also highlights opportunities to reduce carbon emissions, thereby improving environmental sustainability and operational efficiency.
Q1: What are the main methods used to calculate MACF emissions?
Emissions can be calculated using actual production data or default values supplied by European authorities. Companies can also use standardized emission factors if specific data is not available.
Q2: How are default values used in emissions calculations?
Default values are used when actual data are not available. They are based on sector averages and are designed to simplify calculation in the absence of precise data. Use of these values is subject to time and quantity restrictions.
Q3: Is it necessary to correct or adjust the emission data used in the calculations?
Yes, adjustments may be necessary to reflect changes in production technologies, efficiency improvements, or the use of different materials. These adjustments help to ensure that calculations remain accurate and relevant.
Q4: What documentation is needed to support emissions calculations?
Importers must provide documented proof of direct and indirect emissions, including emissions reports, energy certificates, and any other relevant documentation that validates the figures used in the calculations.
Q5: What checks are required to ensure the accuracy of emissions calculations?
Emissions data must be verified by accredited auditors to ensure accuracy. This often includes site audits and checks on the measurement and reporting processes used by suppliers.
Accuracy in calculating emissions for MACF relies on the quality and completeness of the data used. Understanding what data is required, how to collect it effectively from suppliers, and the importance of verification and validation, is crucial to successful compliance.
Data required for calculation
To calculate emissions in line with MACF requirements, companies need to gather detailed data on direct and indirect emissions linked to the production of imported goods. This includes information on :
- energy consumption ;
- types of fuel used ;
- specific industrial processes ;
- the intrinsic emissions of the materials used.
Accurate data on each stage of the production process is essential to ensure the integrity of the emissions calculation.
Data collection from suppliers
Reliable data collection begins with close collaboration with suppliers. It is necessary to establish clear protocols for transmitting the necessary data, and to ensure that suppliers understand MACF requirements. This may require specific training for suppliers, or the adoption of integrated data management systems to facilitate the secure and efficient sharing of information.
Data verification and validation
Once data has been collected, it must be verified and validated to guarantee its accuracy. Companies must implement quality control procedures to review data received from suppliers. This may include regular audits, the use of data verification software, or the assistance of environmental data experts. Data validation is essential to avoid errors that could lead to penalties for non-compliance or incorrect calculations of MACF certificates to be purchased.
These steps ensure that companies have reliable data for accurate and compliant emissions management within the MACF framework, minimizing the risk of non-compliance and optimizing the company's overall environmental strategy.
Data by sector for calculating emissions
When calculating emissions for MACF, different sectors require specific types of data due to their unique production processes. Here are some examples of data collected by sector:
Steel sector :
- Energy consumption by type (electricity, gas, etc.)
- Production intensity (tons of steel produced per unit of energy consumed)
- Types and quantities of raw materials used (iron ore, coal, etc.)
Cement sector :
- Clinkerization rate (proportion of clinker in cement, indicative of carbon intensity)
- Types and proportions of clinker substitutes (fly ash, slag, etc.)
- Thermal and electrical energy consumption per tonne of cement produced
Chemicals sector :
- Types of chemical processes used and their energy consumption
- Direct emissions from chemical reactions
- Quantity and type of chemical intermediates purchased
Aluminium sector :
- Production process (electrolysis vs. recycling)
- Specific energy consumption per tonne of aluminum
- Use of low-emission technologies such as inert anodes
This chapter provides case studies and practical advice on how to integrate these calculations effectively into importers' operations.
Case 1: Steel Manufacturing Company - A European steel manufacturing company revised its emissions calculation methods to comply with the MACF. By adopting cleaner production technology and renegotiating supplier agreements to include carbon performance clauses, it succeeded in reducing its emissions by 30%. These adjustments enabled it to significantly reduce the number of MACF certificates required, resulting in lower operating costs.
Case 2: Fertilizer importer - A major fertilizer importer has set up a system to track in real time the emissions associated with each batch of imported products. Thanks to this system, the company has been able to optimize the quantity of certificates required and avoid the extra costs associated with inaccurate estimates.
1. Establish Strategic Partnerships: Encourage partnerships with suppliers committed to reducing their carbon footprint. This can include agreements for regular audits and updates of production practices to improve energy efficiency.
2. Use of specialized software: Invest in specialized software that can help calculate CO2 emissions accurately and automatically. These tools can also help simulate different scenarios to find the most cost-effective approaches to purchasing MACF certificates.
3. Ongoing training: Ensure that the teams responsible for managing MACF compliance are regularly trained in the latest emissions calculation methodologies and regulatory developments. Ongoing training helps maintain an acute understanding of requirements and best practices.
Accurate management of emissions calculations is essential for MACF compliance and can significantly reduce: costs for importers. Here's how accurate calculations impact emissions management and compliance
Compliance and reputation: Accurately calculating emissions ensures compliance with EU standards, enhancing reputation in international markets. Compliant importers are perceived as more reliable and responsible, which can set them apart from the competition.
Optimizing reductions: Precise calculations make it possible to :
- Identify the main contributors to emissions in processes or at suppliers.
- Target interventions to improve energy efficiency or use less polluting materials.
- Reduce MACF certificate costs and promote long-term sustainability.
Adapting to regulations: Understanding and correctly applying emissions calculations prepares companies for regulatory changes, enabling them to adjust procurement policies and avoid disruption.
Strategic planning: Good calculation management helps to plan future investments in technology and infrastructure, for optimum emissions management.
Accurate emissions calculations are essential to meet MACF requirements, reduce costs and avoid penalties. This requires a thorough understanding of the data required, valid calculation methods, and the practical implications for business operations.
At Keewe, we offer solutions that facilitate this process, helping you to collect and verify the data required for an accurate calculation. Our tools and services ensure simplified, compliant MACF management, allowing you to concentrate on your core business while optimizing your compliance.