The MACF emissions calculation: what every importer needs to know

The Carbon Border Adjustment Mechanism (CBAM) imposes a new layer of complexity for importers, requiring a thorough understanding of the emissions associated with their imported products. This critical process is not just a formality: it directly influences import costs and regulatory compliance.

In this article, we will reveal the essential principles of calculating emissions for the MACF, exploring the accepted methodologies, the necessary data and the impacts of these calculations on your business. Intended for importers and suppliers, this practical guide aims to clarify the procedures and provide strategies for the effective management of emissions within the framework of this European regulation.

Basic principles of calculating emissions

The MACF is designed to prevent carbon leakage by imposing a carbon price on imports of certain carbon-intensive products. For importers, understanding how emissions are calculated is critical to estimating costs and planning for compliance.

1. Definition of the emissions concerned

The calculations for the MACF consider the direct and indirect emissions associated with the manufacture of imported products. Direct emissions come from processes controlled directly 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 produced directly by the company.

2. Use of verified data

It is imperative that the data used to calculate emissions be accurate and verifiable. Importers must ensure that the information provided by foreign producers complies with European standards or with standards considered 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. Businesses should apply these factors to raw material quantities.

used and the energy consumed to deduct the total emissions in tons of CO2 equivalent.

4. Conversion to CO2 equivalents

After determining the volumes of direct and indirect emissions, it is essential to convert them into carbon dioxide (CO2e) equivalents. This conversion uses specific conversion factors that translate the climate impact of various greenhouse gases (GHGs) into a CO2 equivalent, thus allowing for standardized comparison. This step is crucial to correctly assess the GHG emissions of imported products according to MACF standards.

Calculation methodologies

The calculation of CO2 emissions for the MACF is crucial because it determines the number of certificates that importers need to buy. The following is an explanation of the methods used to ensure accurate and consistent estimation of emissions associated with imported products.

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A- Use of default values

When actual data is 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 the default values is limited in time and is 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.

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B- Method based on real values

As noted above, during the transition period, default values can be used to estimate these emissions. However, for greater precision, regulations will evolve towards the use of real values based on concrete production data.

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Definition of real values

The real value 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 emissions specific to a given facility or business. This approach is therefore intrinsically more precise because it takes into account variations in performance and environmental practices specific to each production site.

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Why are the actual values more accurate?

The default values are based on industry averages or benchmarks that do not necessarily reflect the current practices or technological improvements of a particular company. By using real data, businesses can accurately demonstrate the effectiveness of their efforts to reduce emissions. This is particularly relevant for industries where abatement technologies and practices vary considerably from player to actor, such as in chemistry, metallurgy, or power generation.

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Data collection for the calculation of real values

To calculate emissions based on real values, businesses need to 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 requirements include the types and quantities of fuels burned, combustion efficiencies, and specific technologies used.

· Indirect emissions: They are linked to the consumption of electricity, heat or steam generated off-site. To measure them, information is needed on the quantity of energy consumed and the emission factor of the energy concerned, which may vary depending on the source (for example, wind turbine versus coal).

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Calculation of emissions from real values

The calculation is based on the application of specific emission factors to the quantities of fuels burned and energy consumed. These factors are generally provided by competent regulatory bodies within the EU, and should be updated regularly to reflect changes in energy production or technological advances.

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Challenges associated with calculating real values for the MACF

The process of calculating emissions is complex. The EU Excel file, with twelve technical tabs, requires accurate data, accessible only to production engineers. These data must be justified as they will be reviewed by the Auditor and by EU inspectors.

A big challenge for importers is to trace the supply chain back to the production plant, especially when several intermediaries are involved. From 2025, importers will need to have the status of “MACF Authorized Declarant” and include a report certified by an accredited company in their MACF annual declaration from 2026. This report is essential for importation, and its absence may prevent the process. Identifying suppliers who can comply with MACF requirements is therefore essential to avoid major interruptions and additional costs.

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Implications for importers and suppliers

As noted 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, knowing that their competitiveness on the European market could depend on it.

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C- Emission factors and recognized methods

The MACF also recognizes the use of standardized emission factors and other approved methodologies to calculate emissions when facility-specific data is not available. These methods are particularly useful for importers who deal with products from multiple suppliers or from regions where accurate data is difficult to obtain.

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D- Corrections and adjustments

It is essential to adjust emission calculations to reflect current production practices and changes in production processes. Corrections may be necessary to take into account new technologies, improvements in energy efficiency, or changes in the types of raw materials used.

These calculation methods require a thorough 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 makes it possible to meet the requirements of the MACF but also to highlight opportunities to reduce carbon emissions, thus improving environmental sustainability and operational efficiency.

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FAQ on calculating emissions

Q1: What are the main methods for calculating emissions under the MACF?

Emissions can be calculated using real production data or default values provided by European authorities. Businesses can also use standardized emission factors if specific data is not available.

Q2: How are the default values used in calculating emissions?

Default values are used when actual data is not available. They are based on sector averages and are designed to simplify calculation in the absence of accurate data. The use of these values is subject to time and quantity restrictions.

Q3: Is there a need to correct or adjust the emission data used in the calculations?

Yes, adjustments may be required to reflect changes in production technologies, improvements in efficiency, or the use of different materials. These adjustments help to ensure that calculations remain accurate and relevant.

Q4: What documentation is required to support emissions calculations?

Importers must provide documented evidence of direct and indirect emissions, including emissions reports, energy certificates, and other relevant documentation that validates the numbers used in the calculations.

Q5: What checks are required to ensure the accuracy of emissions calculations?

Program data should be checked by accredited auditors to ensure accuracy. This often includes site audits and verifications of the measurement and reporting processes used by suppliers.

Data requirements and information sources

The precision in calculating emissions for the MACF is based on the quality and comprehensiveness of the data used. Understanding what data is needed, how to collect it effectively from suppliers, and the importance of verifying and validating it, is crucial for successful compliance.

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Data required for the calculation

To calculate emissions in accordance with MACF requirements, businesses need to gather detailed data on direct and indirect emissions associated with the production of imported goods. This includes information about:

- energy consumption,

- the 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 emissions calculations.

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Data collection from suppliers

Collecting reliable data starts with close collaboration with suppliers. It is necessary to establish clear protocols for transmitting the necessary data and to ensure that providers understand the requirements of the MACF. This may require the establishment of specific training for suppliers or the adoption of integrated data management systems to facilitate the secure and effective sharing of information.

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Data verification and validation

Once the data has been collected, its verification and validation are imperative to ensure its accuracy. Businesses should implement quality control procedures to review data received from suppliers. This may include regular audits, the use of data verification software, or the help of environmental data experts. Data validation is essential to avoid errors that could result in 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 management of emissions under the MACF, minimizing the risks of non-compliance and optimizing the company's overall environmental strategy.

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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.),

- Intensity of production (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 ton of cement produced.

Chemical sector:

- Types of chemical processes used and their energy consumption,

- Direct emissions from chemical reactions,

- Quantity and type of intermediate chemical products purchased.

Aluminum sector:

- Production process (electrolysis vs. recycling),

- Specific energy consumption per ton of aluminum,

- Use of low-emission technologies, such as inert anodes.

Practical application and use cases

This chapter provides case studies and practical tips for integrating these calculations effectively into importer operations.

Case studies: successful adaptation to MACF

Case 1: Steel Fabrication Company - A European steel manufacturing company has revised its emission calculation methods to comply with the MACF. By adopting cleaner production technology and renegotiating supplier agreements to include carbon performance clauses, it has successfully reduced its emissions by 30%. These adjustments allowed it to significantly reduce the number of MACF certificates required, leading to a reduction in operational costs.

Case 2: Fertilizer importer - A major fertilizer importer has implemented a system to monitor the emissions associated with each batch of imported products in real time. Thanks to this system, the company was able to optimize the quantity of certificates required and avoid the additional costs associated with inaccurate estimates.

Tips for integrating calculations into business operations

1. Establishing Strategic Partnerships : Encourage partnerships with suppliers committed to reducing their carbon footprint. This may 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 to accurately calculate CO2 emissions in an automated way. These tools can also help simulate different scenarios to find the most cost-effective approaches to buying MACF certificates.

3. Continuing Education : Ensure that the teams responsible for managing MACF compliance are regularly trained on the latest emission calculation methodologies and regulatory developments. Continuing education helps maintain a keen understanding of requirements and best practices.

Impact of calculations on emissions management and compliance

Accurate management of emissions calculations is essential for MACF compliance and can significantly reduce costs for importers. Here's how good control of calculations impacts emissions management and compliance.

Compliance and reputation: Accurately calculating emissions ensures compliance with EU standards, strengthening reputation in international markets. Compliant importers are seen as more reliable and responsible, which can set them apart from the competition.

Optimizing discounts: 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 the costs of MACF certificates and promote long-term sustainability.

Adaptation to regulations: Understanding and applying emissions calculations correctly prepares businesses for regulatory changes, allowing them to adjust supply policies and avoid disruptions.

Strategic planning: Good calculation management helps to plan future investments, in technologies and infrastructures, for optimal emissions management.

In conclusion

Calculating emissions accurately is critical to meeting MACF requirements, reducing costs, and avoiding penalties. This requires a thorough understanding of the data required, valid calculation methods, and practical implications for business operations.

Chez Keewe, we offer solutions that facilitate this process, helping you collect and verify the data needed for an accurate calculation. Our tools and services ensure simplified and compliant MACF management, allowing you to focus on your core business while optimizing your compliance.