CBAM and Logistics Emissions — What the Carbon Border Adjustment Means for Freight

What Is CBAM?

The Carbon Border Adjustment Mechanism (CBAM) is an EU policy tool that places a carbon price on certain carbon-intensive goods imported into the European Union. Its goal is to prevent carbon leakage — the risk that EU companies would move production to countries with weaker climate rules, or that non-EU producers would gain an unfair cost advantage by not paying for their emissions.

In plain terms: if a factory outside the EU produces steel, cement, or aluminium without paying for the CO₂ it emits, CBAM ensures the EU importer pays the equivalent carbon price when bringing those goods into Europe.

Which Products Are Covered?

CBAM currently applies to six sectors at high risk of carbon leakage:

The scope is expected to expand to cover more than 50% of EU ETS sectors over time.

How It Works: Certificates and Declarations

CBAM uses a digital certificate system linked to the EU Emissions Trading System (ETS):

1. Measure — Calculate the GHG emissions embedded in the production of the imported goods
2. Declare — Submit an annual CBAM declaration reporting those embedded emissions
3. Purchase — Buy CBAM certificates equal to the declared emissions
4. Surrender — Hand in the certificates to cover the carbon price owed

The certificate price is calculated as a weekly average of EU ETS allowance auction prices (in €/tonne CO₂). If the exporting country has already charged a carbon price on production, that amount is deducted — so companies don't pay twice.

Timeline: Who Must Comply and When

Who must comply: EU importers (or their indirect customs representatives) importing more than 50 tonnes of CBAM goods per year must register as an authorised CBAM declarant.

The transitional phase served as a pilot to refine the methodology and give companies time to build data collection systems. From 2026, the financial obligation is real.

The Critical Question: Are Freight Emissions Included in CBAM?

No — freight and logistics emissions are not part of CBAM embedded carbon.

CBAM measures the carbon embedded in the production of the goods: the emissions generated while manufacturing steel in a blast furnace, processing cement in a kiln, or producing fertiliser from natural gas. The transport emissions incurred in moving those goods from the factory to the EU border are not included in the CBAM certificate calculation.

This distinction is important: a company could reduce its CBAM liability by switching to a greener manufacturer — but choosing a more efficient shipping route does not reduce CBAM certificates owed.

So Why Do ISO 14083 and GLEC Still Matter for CBAM Companies?

Even though freight emissions don't affect the CBAM certificate cost directly, ISO 14083-compliant logistics data is still highly relevant for any company importing CBAM goods. There are three reasons.

1. CSRD runs in parallel with CBAM

Large EU importers subject to CBAM are almost certainly also subject to CSRD (Corporate Sustainability Reporting Directive). Under CSRD and ESRS E1, these companies must separately disclose their Scope 3 logistics emissions — including freight from their suppliers to their facilities (Category 4: upstream transportation and distribution).

The same shipments generating CBAM obligations are generating Scope 3 Category 4 emissions that need to be measured, reported, and assured under CSRD. ISO 14083 and the GLEC Framework are the credible methodology path for that disclosure.

In practice: A company importing steel from India faces CBAM for the production carbon and CSRD for the freight carbon. Two separate regulatory obligations — but both demand structured emissions data from the same supply chain.

2. Product Carbon Footprints require transport data

CBAM measures production emissions. But customers, retailers, and regulators are increasingly asking for the product's total carbon footprint — which includes both production and transport.

Under frameworks like the WBCSD PACT initiative (used for product carbon footprint data exchange) and the Digital Product Passport (DPP), the transport chain contribution must be calculated to ISO 14083 standards and expressed in a standardised format. The iLEAP initiative specifically standardises how logistics emissions data flows into product carbon footprint tools.

A company that can only report production emissions under CBAM but cannot account for freight in product-level calculations will face a growing gap as PCF requirements expand.

3. Supply chain hotspot identification

The GLEC Framework enables companies to identify high-emission legs in their logistics network — the routes, modes, or carriers driving the most CO₂. This informs decisions about modal shift (sea instead of air), carrier selection, and route optimisation.

These improvements don't reduce CBAM obligations, but they directly reduce CSRD Scope 3 Category 4 exposure and improve a company's overall sustainability footprint — which increasingly affects procurement relationships, investor ratings, and customer requirements.

The Connection Between CBAM, ISO 14083, and the EU Carbon Architecture

CBAM sits inside a broader EU regulatory framework where each layer requires progressively more granular carbon data:

CBAM
└── Production emissions only (manufacturer's Scope 1/2)

CSRD / ESRS E1
└── Full value chain including freight (Scope 3 Cat. 4 & 9)
    └── Requires ISO 14083 / GLEC methodology

Product Carbon Footprint (PCF / PACT)
└── Production + transport combined
    └── ISO 14083 provides the transport component
        └── iLEAP standardises the data exchange format

Digital Product Passport (DPP)
└── Product-level carbon traceability across the supply chain
    └── Requires transport data to ISO 14083 standard

ISO 14083 and the GLEC Framework are the methodological backbone running through all layers except CBAM's production-only scope. As regulations tighten, the overlap will grow — and companies without ISO 14083-compliant freight data will face compounding gaps.

Key Takeaways

The Practical Implication for CO2Path Users

Companies importing CBAM goods that also use CO2Path for their inbound freight emissions are well-positioned for CSRD Scope 3 Category 4 compliance. The ISO 14083-compliant, blockchain-secured records CO2Path generates for each inbound shipment provide exactly the auditable, methodology-consistent data that CSRD assurance reviewers expect — even though those records don't feed directly into CBAM certificate calculations.

The value of structured freight emissions data is not CBAM-specific. It is becoming infrastructure for the entire EU carbon reporting landscape.