Can embedded emissions of precursor materials be included or required in Installation-based carbon emissions for CBAM?

The Carbon Border Adjustment Mechanism (CBAM) aims to prevent carbon leakage by imposing a carbon price on the import of certain goods into the European Union, equivalent to what would have been paid if they were produced under the EU's carbon pricing rules. Embedded emissions of precursor materials pose a significant question for CBAM's scope and effectiveness. These are the emissions released during the production of materials that are then used to manufacture final products. Including embedded emissions of precursor materials in installation-based carbon emissions assessments for CBAM purposes could enhance the accuracy of carbon pricing, ensuring it reflects the true carbon footprint of imported goods. Such inclusion would require robust tracking and verification mechanisms to account for the emissions throughout the supply chain, from raw material extraction to final product manufacture. This approach could potentially level the playing field for EU producers who are subject to stringent carbon pricing and encourage cleaner production practices worldwide. However, it also poses challenges related to data availability, methodological consistency, and international trade relations.