Introduction
From 2026, the definitive period of the CBAM will apply. That means from 1 January 2026 onwards, importers will have to bear a “CBAM obligation” in the form of certificates, which they purchase at the average price of EU ETS allowances, for every CBAM good imported into the EU. Monitoring should be performed throughout the reporting period. Therefore, you must be prepared to provide your CBAM data and develop a monitoring methodology at your installation as soon as possible, as described in this guidance article.
You will want to create a methodology that is as simple as possible using the best and most reliable data sources as defined in section 6.4.4. of the Installation Monitoring Methodology. The methodology should contain written procedures with clear instructions including the locations of data and the various set roles/responsibilities.
Figure 1 shows the how the reporting boundary of CBAM compares to the typical Product Carbon Footprint (PCF). All parameters and procedures within CBAM's reporting boundary are to be monitored.
Figure 1. CBAM reporting and monitoring boundary
Guidance
What is a monitoring methodology?
What is a monitoring methodology?
A monitoring methodology provides all necessary information in regards to your CBAM data collection. A monitoring methodology document (MMD) ensures that all the monitoring activities are carried out consistently from one year to the next. In this regard, the MMD serves as a “rule book” for all your installation staff, as well as for training of new staff involved in the monitoring.
You will need to record methods involving data collection, maintenance and calibration of meters, descriptions of various calculations and formulae used, documentation of standard values used (sources), and any quality assurance methods (e.g. four eyes principle).
Written procedures should accompany the methodology and include the following:
Managing responsibilities and competency of personnel – description of roles and assignation of responsibilities to key members of staff
Data flow and control procedures
Quality assurance measures
Estimation method(s) for substituting data where data gaps are identified
Regular review of the monitoring methodology for its appropriateness
Procedure for regular review and update of the list of products and precursors produced and/or imported by an installation
How do I create a monitoring methodology?
How do I create a monitoring methodology?
Step 1. Define your installation's boundaries
Step 1. Define your installation's boundaries
This includes production processes and production routes that attribute to emissions of specific goods produced. A production route is a specific technology used in a production process to produce goods as defined in the Implementing Regulation and in Table 1.
Begin by listing names and quantities of all goods, stationary physical units (used in the production processes), inputs (raw materials, fuel, heat, electricity), outputs (produced goods, by-products, waste, heat, electricity, waste gases, and emissions), and emissions for your installation. This data may be collected via metering data, invoices, production protocols, or stock determination.
Use Table 1 of Section 2 of Annex 2 in the Implementing Regulation (or Table 1 in this article) to identify which goods produced at your installation are covered by CBAM and which aggregated goods category the goods belong in. Each aggregated good will required one production process to be defined.
Next, identify relevant production processes and routes producing your CBAM goods. List the relevant process units, inputs, outputs, and emissions. It may be helpful to draw a schematic of your installation. The emissions of such units must be monitored separately, and attributed to the production processes according to the amount of heat consumed in the different production processes.
The system boundaries may differ depending on the installation:
If your installation makes a single category of good, the installation boundary and production process system boundary for monitoring and reporting embedded emissions are the same.
If your installation makes several different unrelated categories of good, separate production process system boundaries must be defined within the single installation.
If your installation makes the same category of good by different production routes (e.g. ammonia via Haber Bosch with steam reforming and Haber Bosch with gasification) you, as an operator, may define either a single production process system boundary, or separate production process system boundaries of the different production routes. If you assign separate processes, the embedded emissions of the goods are calculated separately for each production route.
If your installation makes a category of complex good and its precursor and where this precursor is wholly used to make the complex good (e.g. ammonia and urea), a joint production process system boundary may be defined within the installation.
If your installation also produces non-CBAM goods alongside CBAM goods, only production process system boundaries needs to be defined for the processes relating to CBAM goods within the installation. However, a recommended improvement from the basic requirements would be to also define an additional production process system boundary for the non-CBAM good, in order to confirm all relevant emissions have been covered.
If your installation produces mixed fertilizers, during the transitional period, you may simplify the monitoring of the respective production process by determining one uniform value of embedded emissions per tonne of nitrogen contained in the mixed fertilizers, irrespective of the chemical form of nitrogen (ammonium, nitrate or urea forms).
The Implementing Regulation (section 3 Annex II) defines the system boundaries for direct emissions from different processes as listed below:
Direct emissions monitoring for the Haber-Bosch process with steam reforming production route, as encompassing:
All fuels directly or indirectly linked to ammonia production, and materials used for flue gas cleaning.
All fuels shall be monitored, irrespective of whether used as energetic or nonenergetic input.
Where biogas is used, the provisions of Section B.3.3 of Annex III shall be applied.
Where hydrogen from other production routes is added to the process, it shall be treated as a precursor with its own embedded emissions.
Direct emissions monitoring for the Haber-Bosch process with gasification production route, as encompassing:
All fuels directly or indirectly linked to ammonia production, and materials used for flue gas cleaning.
Each fuel input shall be monitored as one fuel stream, irrespective of whether it is used as energetic or non-energetic input.
Where hydrogen from other production routes is added to the process, it shall be treated as a precursor with its own embedded emissions.
Direct emissions monitoring for the nitric acid production route, as encompassing:
CO2 from all fuels directly or indirectly linked to nitric acid production, and materials used for flue gas cleaning.
N2O emissions from all sources emitting N2O from the production process, including unabated and abated emissions. Any N2O emissions from the combustion of fuels are excluded from monitoring.
Direct emissions monitoring for the urea production route, as encompassing:
CO2 from all fuels directly or indirectly linked to urea production, and materials used for flue gas cleaning.
Where CO2 is received from another installation as process input, the CO2 received and not bound in urea shall be considered an emission, if not already counted as emission of the installation where the CO2 was produced, under an eligible monitoring, reporting and verification system.
Direct emissions monitoring for the mixed fertilizer production route, as encompassing:
CO2 from all fuels directly or indirectly linked to fertilizer production, such as fuels used in driers and for heating input materials, and materials used for flue gas cleaning.
Step 2. Define your reporting period
Step 2. Define your reporting period
The reporting period is during which your parameters will be monitored. In most cases, the reporting period will be equivalent to one (European) calendar year, however, the minimum period is 3 months.
Step 3. Identify the parameters that need to be monitored
Step 3. Identify the parameters that need to be monitored
Parameters include data relating to direct and indirect emissions as well as precursors.
Direct emissions may include emissions from:
Direct CO2 emissions from fuel combustion
Direct CO2 emissions from stationary plant
Direct CO2 process emissions, including, under certain conditions:
CO2 transferred from the ammonia production process to other installations
Direct N2O process emissions, including:
N2O emissions from the catalytic oxidation of ammonia
N2O emissions from the N2O/NOx abatement units
Direct CO2 emissions from measurable heating, such as steam, and cooling production consumed within the system boundaries, regardless of production location
Direct CO2 emissions from emissions control (e.g. carbonate materials, such as soda ash, used for acidic flue gas cleaning)
Direct emissions may be monitored via 2 approaches. Both methods should reference specific sources of information and the responsible party at the installation.
Calculation-based approach
For this approach, you will need to determine the quantities of fuels and relevant materials consumed and the corresponding emission factors.
Measurement-based approach
For this approach, you will need to measure the concentration of greenhouse gases and flow of flue gases for each emission source. The measurement-based approach is required for N2O emissions during nitric acid production.
Direct emissions related to heat flows are also to be monitored. These emissions may be monitored by quantifying heat consumption (produced at the installation or received from another installation) and attributing the heat to each process.
Indirect emissions from electricity consumed during production processes (irrespective of where electricity is produced) are to be monitored. This can be done by quantifying the amount of electricity consumed in each production process. Electricity produced on site should be monitored as other direct emissions on site.
Precursors relevant to each production process should monitored. Monitoring parameters depends on where precursors are produced. See Table 1 for your installation's relevant precursors.
If a precursor is produced within your installation, all relevant monitoring is completed via monitoring the direct and indirect emissions above.
If a precursor is purchased, you need to request relevant data from the installation that produced it. The relevant data to be requested includes:
Identifying information of the installation where the precursor was produced
Specific direct and indirect embedded emissions of the precursor
The production route
The reporting period
information regarding carbon prices, if applicable
In both cases, the quantities of precursors consumed should be monitored. The rules for monitoring precursor-related data are found in section E of Annex III to the Implementing Regulation.
Additional parameters for fertilizers include those in the Table 2.
Step 4. Determine the methodology to monitor each parameter
Step 4. Determine the methodology to monitor each parameter
For quantities of fuels and materials (including precursors) used, you may either have measurement instruments available which tell you how much has been consumed during the reporting period (e.g. weighing belts, flow meters, heat meters, etc.) or you may determine the used amounts from purchase records and stock measurements at the end of each period.
For emission factors, you can either choose a “standard value” from applicable literature or from Annex VIII to the Implementing Regulation, or you can determine them based on laboratory analyses, for which the Implementing Regulation provides further rules in section B.5 of Annex III.
For continuous emission measurements, heat flow and electricity measurements you also need to define the instruments to use, and applicable calibration and maintenance measures. This will be important for measuring N2O emissions from nitric acid production.
As the very last resort, if you have no other methods available for monitoring your goods’ embedded emissions, and in particular if the producer of your precursors used does not provide the required data, you may use the default values for embedded emissions of CBAM goods (which include all relevant precursors) which the European Commission makes available for the purpose. A list of the goods for which default values are available can be found on the European Commission’s dedicated website.
Step 5. Compile your information
Step 5. Compile your information
Congratulations! You have completed the creation of your installation's monitoring methodology. You should now compile the information that was collected into one written documentation. It should be documented so that it follows the Monitoring Principles listed below. You should also include a diagram of your installation with the locations of all necessary instruments and sampling points. Record the names and contact information of the parties responsible for data collection and monitoring.
CarbonChain has provided a monitoring methodology template in this Knowledgebase. In this template you may record all necessary data and procedures.
Principles of monitoring methodologies
Principles of monitoring methodologies
Completeness
The methodology covers all necessary parameters to determine the emissions of CBAM goods.
Consistency and comparability
The methodology shall be consistent and comparable over time.
Transparency
The methodology allows data to be obtained, recorded, compiled, analysed and documented, including assumptions, references, activity data, emission factors, calculation factors, data on embedded emissions of purchased precursors, measurable heat and electricity, default values of embedded emissions, information on a carbon price due, and any other data relevant in a transparent manner that enables the reproduction of data.
Accuracy
The methodology is neither systematically nor knowingly inaccurate.
Integrity of methodology
The methodology enables reasonable assurance of reported data.
Cost-effectiveness
The methodology is both accurate and economically feasible.
Continuous improvement
The methodology is regularly updated and checked for improvements.
Monitoring Methodology Template
The above Excel file contains a Monitoring Methodology Document (MMD) template that may be downloaded and used to complete your installation's monitoring requirements. The template contains directions and information for where more guidance may be found. Examples are provided.
Helpful information:
Table 1. Aggregated goods and relevant precursors
Aggregated Goods Category | Relevant precursors |
Ammonia
| Hydrogen, if separately produced for use in the process |
Nitric Acid | Ammonia (as 100% ammonia) |
Urea | Ammonia (as 100% ammonia) |
Mixed fertilizer | If used in the process: ammonia (as 100% |
Table 2. Other specific monitoring requirements
Aggregated good | Monitoring requirement |
Ammonia | Concentration, if hydrous solution |
Nitric acid | Concentration (mass %) |
Urea | Purity (mass % urea contained, % N contained) |
Mixed fertilizers | Nitrogen contents: |