The United Nations Economic and Social Commission for Western Asia (UN-ESCWA) has published "Trading under the Carbon Border Adjustment Mechanism: Risks and Policy Options for Arab Economies", coordinated and authored by Mohamed Chemingui and co-authored by Nancy Daccache and Francesco Martella, MATERIA CEO, with peer review by Nicola Gambaro, Associate Researcher at MATERIA.

The report studies CBAM exposure for Arab economies exporting aluminium, cement, fertilizers, iron and steel into the European Union. The legal obligation remains with the EU importer, but the calculation depends on information held by the producer outside the EU. The buyer may be the declarant, while the producer is often the only party able to provide installation-level emissions data.

If that evidence is missing or cannot be verified, the importer may have to rely on default values. For an exporter whose actual emissions are lower than the applicable default value, this can remove part of the commercial benefit of a more efficient plant, a cleaner power supply or better process control. The lower-emission route has value under CBAM only if the buyer can use the data in the declaration.

Default Values And Actual Emissions

The report shows why CBAM exposure cannot be read only at country or sector level. Aluminium is strongly exposed to electricity carbon intensity, while fertilizers depend on gas use, ammonia production and hydrogen feedstock. Cement is shaped by clinker content, kiln fuel and calcination emissions. Steel depends on the production route, scrap ratio, fuel use and electricity.

Those differences affect how exporters should prepare. A producer that expects to perform better than the default value needs monitoring, reporting and verification (MRV) capacity before the commercial negotiation, not after the shipment. Larger producers may be able to build that capacity internally through metering, engineering work and third-party verification. Smaller producers may need shared support through industrial zones, chambers of commerce, export-promotion agencies or sector associations.

For EU buyers, verified actual emissions reduce the uncertainty in the landed-cost calculation. Without them, the buyer has to treat plant performance and regulatory penalty together, which can affect pricing, supplier comparison and contract negotiation.

Carbon Pricing And Electricity

CBAM also allows the deduction of a carbon price effectively paid in the country of origin, subject to the CBAM rules and evidence requirements. This creates a policy choice for exporting economies. If the carbon cost is paid only through the EU system, the value is collected in the importing jurisdiction. If the exporting country introduces a credible domestic carbon-pricing system, part of that value can remain local and support measurement systems, energy efficiency, industrial decarbonization or lower-carbon electricity.

The deduction still depends on proof. Exporters need to show that the carbon price was effectively paid and linked to the emissions embedded in the exported goods. A domestic carbon price that is not properly documented may raise producer costs without reducing the buyer's CBAM exposure.

Electricity is one of the clearest examples. In aluminium, the electricity source can outweigh incremental efficiency gains at the smelter. In electric arc furnace steel, a coal-heavy grid can reduce the advantage normally associated with scrap-based production. For hydrogen and ammonia, electricity and gas feedstock determine how the emissions boundary is read by the buyer.

Renewable electricity claims therefore need attribution. The producer has to connect the electricity procurement to the production covered by the emissions report and avoid double counting. Without that link, the EU importer may not be able to use the claimed lower electricity emissions in the CBAM calculation.

What EU Buyers Will Need

The UN-ESCWA report distinguishes exporters that need capital investment in cleaner production from exporters that may gain value sooner by improving metering, calculation templates and verifier access, especially when their actual emissions are already below default values.

For Arab exporters, the first CBAM test is the ability to provide emissions data that can be traced from the installation to the product and used by the EU buyer before the CBAM declaration is prepared.

The UN-ESCWA publication can be found at this link:
https://www.unescwa.org/publications/trading-under-carbon-border-adjustment-mechanism-risks-policy-options-arab-economies