CBAM methodology for the determination of indirect embedded emissions

FEAD, representing the European private waste and resource management industry, supports an ambitious CBAM as a crucial tool to reinforce the competitiveness of EU industry, and contribute to achieving the Union’s climate and circular economy objectives.

Recycling in the EU, in particular plastics recycling, is currently under significant economic pressure. The cost of recycled materials produced in the EU is often higher than that of materials originating from third countries, partly due to higher energy costs resulting from CO₂ pricing under the EU ETS. CBAM has the potential to mitigate this distortion by addressing the competitive imbalance with third countries where energy prices remain lower and are not subject to comparable climate levies.

In this regard, FEAD emphasises that indirect embedded emissions should be included in the CBAM for a wider range of products, including recycled plastics. When assessing the embedded emissions of recycled goods imported into the EU, the emissions associated with the production of energy used in recycling processes must be adequately taken into account. This would prevent carbon leakage in the recycling sector and ensure that EU operators are not at a structural disadvantage.

At the same time, it is imperative that the CBAM inclusion of indirect embedded emissions for recyclates does not result in the inclusion of EU recycling activities under the EU ETS. Such an additional regulatory burden would further worsen the already fragile economic situation of recyclers and aggravate competition distortions. This distinction is important: while the indirect emissions from recycling in the EU are already covered by the EU ETS through the pricing of electricity and energy inputs, indirect emissions from recycling outside the EU are not subject to equivalent carbon constraints. CBAM should therefore focus on closing this asymmetry without duplicating obligations for EU recyclers.

In conclusion, FEAD calls on the Commission to assess whether CBAM could be an appropriate and meaningful measure to eliminate distortions of competition in the field of recycling between the EU and third countries. By addressing indirect emissions in this balanced way, the CBAM will be better equipped to prevent carbon leakage, support climate-neutral industrial value chains, and foster a resilient European recycling sector.

FEAD is the European Waste Management Association, representing the private waste and resource management industry across Europe, including 20 national waste management federations and 3,000 waste management companies. Private waste management companies operate in 60% of municipal waste markets in Europe and in 75% of industrial and commercial waste. This means more than 500,000 local jobs, fuelling €5 billion of investments into the economy every year. https://fead.be