Are the Direct and Indirect Emissions submitted in CBAM based on Installation or Process emissions?

The Carbon Border Adjustment Mechanism (CBAM), a key policy instrument of the European Union aimed at preventing carbon leakage and promoting cleaner industries, requires importers to buy carbon certificates matching the carbon price that would have been paid had the goods been produced under the EU's carbon pricing rules. The question of whether the direct and indirect emissions reported under CBAM are based on installation or process emissions is pivotal for understanding its operational framework. Direct emissions refer to those released from sources that are controlled by the operator, such as the combustion of fuels in boilers or furnaces within an installation. Indirect emissions, on the other hand, are associated with the consumption of purchased electricity, heat, or steam that is produced off-site but used by the installation. The CBAM focuses on the carbon content of goods at the point of production, thus it encompasses both direct and indirect emissions. These emissions are calculated based on actual production processes, meaning the emissions are process-based but aggregated at the level of the installation that produces the goods. This approach ensures that the CBAM captures the comprehensive carbon footprint of imported goods, promoting a level playing field between EU producers and their global counterparts.