The EU Carbon Border Adjustment Mechanism (CBAM) puts a price on the carbon embedded in imported goods, so that products entering the European Union carry a carbon cost comparable to goods produced inside it. For Indonesian exporters, it converts a sustainability topic into a commercial one.
Which products are covered
CBAM currently applies to iron and steel, aluminium, cement, fertilisers, electricity, and hydrogen, including a range of downstream products made from them. A component supplier who does not export to Europe directly can still be affected, because the customer who does export will need embedded emissions data for the inputs they buy.
How it works in practice
During the transitional phase, EU importers report the embedded emissions of the goods they bring in. In the definitive phase, they must surrender CBAM certificates priced against the EU ETS, with an adjustment for any carbon price already paid in the country of production.
The obligation sits with the EU importer, but the data can only come from the producer. That is the crux of it: your buyer will ask you for verified, installation-level emissions data, and the quality of your answer affects your competitiveness.
Why default values are expensive
Where actual emissions data is not available, default values are applied, and they are deliberately conservative. A producer with efficient operations but weak documentation can end up carrying a higher carbon cost than a less efficient competitor with a well-prepared monitoring system. Data quality becomes a price advantage.
What exporters should do now
- Assess exposure. Map which of your products, and which customers, fall within CBAM scope, directly or through the value chain.
- Define your installations and the production processes within them, as CBAM requires emissions at installation and product level, not company level.
- Build the monitoring system. Meter fuel and electricity by process, capture precursor materials, and separate direct and indirect emissions.
- Calculate embedded emissions per tonne of product, using the CBAM methodology rather than a general corporate inventory.
- Prepare for verification, with the evidence trail an accredited verifier will ask for.
- Document any carbon price already paid in Indonesia, since it can be deducted.
- Brief your commercial team, so CBAM data requests are answered consistently rather than improvised per customer.
Beyond compliance
CBAM is the first of a broader movement. Supply chain due diligence rules, deforestation regulation, and buyer-led decarbonization targets all point the same way: market access increasingly depends on being able to prove environmental performance, not just assert it. The monitoring system you build for CBAM serves those requirements too.
Who needs to be involved
CBAM is often handed to a sustainability officer alone, and that is where preparation stalls. The data sits across several functions:
- Production and process engineering hold the fuel, electricity, and process data at installation level, and understand where meters would need to be added.
- Procurement holds the precursor material data, including what suppliers can and cannot document.
- Finance tracks any carbon price already paid, which is deductible.
- Sales and commercial receive the customer requests and need a consistent answer rather than an improvised one.
- Management decides how much the company is willing to invest to move from default values to verified actual data.
Treating CBAM as a cross-functional programme rather than a reporting task is the difference between meeting a buyer deadline and losing a tender to a competitor who prepared earlier.
How Aruni Sustainability can help
We deliver CBAM exposure assessments, set up the monitoring and calculation of embedded emissions, prepare CBAM reporting, and get your installations ready for verification, alongside wider GHG accounting, ISO 14064 implementation, and trade compliance support.
See our CBAM and trade compliance services or request an exposure assessment.
