Methodology
Our Calculations Are Not a Black Box
Carbonaz's calculation engine fully complies with the EU Monitoring & Reporting Regulation (MRR). We explain every formula, every data source and every methodology step here. Our customers know what we do and why.
Core Framework
EU Monitoring & Reporting Regulation (MRR)
All of our CBAM calculations are based on Implementing Regulation (EU) 2018/2066 (commonly known as the MRR), published by the European Commission. This regulation defines in detail the methods for monitoring and reporting greenhouse gas emissions.
For CBAM specifically, Implementing Regulation (EU) 2023/1773 extends this methodology and defines the concept of embedded emissions. Our calculation engine meets the requirements of both regulations.
Core Calculation
SEE: Specific Embedded Emissions
A product's specific embedded emissions (SEE) under CBAM are calculated by dividing all emissions required to produce the product by the production quantity.
Formula
SEE = (E_direkt + E_dolaylı + E_prekürsör) × AF / Q
E_directFuel combustion, fugitive emissions and process emissions (Scope 1)E_indirectPurchased electricity and heat (Scope 2). Included or excluded depending on the sector ruleE_precursorPrecursor (input) emissions from suppliers, via the multi-tier supply chainAFAttribution Factor: the share of emissions allocated to each product when a facility produces more than one productQProduction quantity in the relevant period (tonnes)Our calculation engine applies this formula automatically for every product. Thanks to the multi-tier supply chain, your supplier's supplier's precursor emissions are also included correctly.
Data Quality
The 80/20 Actual Data Rule
The EU CBAM regulation requires that at least 80% of precursor emissions come from actual supplier data. Products that do not meet this threshold are subject to a mark-up penalty.
Carbonaz tracks this ratio automatically in every calculation. When you drop below 80%, it warns you, shows which suppliers are missing data and starts the invitation link flow.
Practical Example
Suppose you use 100 tonnes of scrap metal at an EAF facility. You obtained actual emission data from your supplier for 60 tonnes and used default values for 40 tonnes. Your actual data ratio is 60%. This means a mark-up penalty.
Carbonaz shows you: a list of which 40 tonnes are missing supplier data, offers a button to send invitation links to the relevant suppliers, and removes the warning once you raise the ratio above 80%.
You can review how the multi-tier data collection flow works on the Supply Chain page.
Penalty Mechanism
Mark-up Penalty
To discourage the use of default values, the EU regulation applies a year-based mark-up. This is an additional rate added on top of the default value.
| Year | Mark-up Rate | Fertilizer Sector Exception |
|---|---|---|
| 2026 | +%10 | +%1 |
| 2027 | +%20 | +%1 |
| 2028+ | +%30 | +%1 |
Carbonaz has coded all year-based rates correctly. The mark-up simulator, which shows your future penalty today, is part of the Calculation & Cost module.
Cost Calculation
CBAM Factor and Free Allocation (FAA)
The CBAM certificate cost is calculated by multiplying the gross carbon cost by the year-based CBAM factor. This factor starts at 0.025 in 2026 and reaches 1.000 (full 100%) in 2034.
Free Allocation Amount (FAA) deducts from the CBAM cost the free allocation granted to producers under the EU ETS. This is based on the principle that the advantage EU producers receive is also deducted from producers subject to CBAM.
Formula
CBAM Maliyeti = Brüt Maliyet × CBAM Faktörü Serbest Tahsisat = Benchmark × CBAM Faktörü × İthalat × ETS Fiyatı Net Maliyet = CBAM Maliyeti − Serbest Tahsisat − 3. Ülke İndirimi
Gross CostTotal emissions × ETS carbon price (EUR/tCO₂)CBAM FactorYear-based transition factor (0.025 → 1.000)BenchmarkCBAM 2026 sectoral benchmark value (e.g. EAF Carbon Steel: 0.072)ImportsQuantity of product imported into the EU (tonnes)ETS PriceThe EU ETS carbon price for the period (EUR/tCO₂)Third-Country RebateCarbon tax rebate already paid in the producing countrySector-Specific Rules
Calculations That Differ by Sector
CBAM governs its six sectors with different rules. Carbonaz applies each sector's own specific rules.
Iron & Steel
Annex II Scope 2 exemption applies. Scope 2 is calculated but not included in the CBAM certificate calculation. Separate process types for the BF-BOF, EAF, DRI and SR routes.
Iron & Steel sector detailsAluminium
Separate benchmarks for primary and secondary aluminium. PFC (perfluorocarbon) emissions are an additional calculation. Electrolysis anode consumption is supported as a process type.
Aluminium sector detailsCement
Separate benchmarks for grey and white clinker. The limestone calcination process (calcination CO₂) is calculated as a direct emission.
Cement sector detailsFertilizers
N₂O (nitrous oxide) emissions are calculated separately (GWP 273). The mark-up penalty is fixed at 1% (unlike other sectors). Separate benchmarks for ammonia and nitric acid.
Fertilizers sector detailsHydrogen
SMR (steam methane reforming) and electrolysis methods are calculated separately. Scope 2 exemption for green hydrogen (renewable electricity).
Hydrogen sector detailsElectricity
The grid emission factor is applied per country (Turkey 2025: 0.4500 tCO₂/MWh, IEA Projection). Special rules for cross-border electricity.
Electricity sector detailsHave More Questions About Our Methodology?
We are ready to answer every question about the regulation, the formulas or applications specific to your sector. Request a one-to-one meeting.
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