Embodied emissions of chemicals within the EU Carbon Border Adjustment Mechanism

Abstract The European Union’s Carbon Border Adjustment Mechanism (CBAM) aims to avoid carbon leakage by pricing the production emissions of imported goods. Currently, the CBAM applies to iron and steel, cement, aluminium, fertilizers, electricity and hydrogen. As the European Union considers extending the CBAM to chemicals by 2030, its effectiveness in this complex industry remains uncertain. Here we assess how well the CBAM would capture emissions in the chemical industry by using the life-cycle assessment data of 4,470 global chemical production facilities, focusing on the key products ethylene and polyethylene. We find that the current CBAM framework would cover 50–60% of production emissions for these products, leaving substantial upstream emissions unpriced. This limited emission coverage risks compromising the policy’s climate ambition and distorts market incentives. To improve effectiveness, the CBAM would need to expand to include fossil feedstocks and refinery products, and implement high fallback default values for embodied emissions to incentivize data reporting. Our findings highlight the need for detailed supply chain tracking and early engagement with chemical industry stakeholders to ensure that the CBAM supports a fair and effective net-zero transition.