The European Union’s Carbon Border Adjustment Mechanism (CBAM) will not calculate liabilities for downstream products as a percentage of their customs value, meaning that a product sold for €10,000 will not automatically face a CBAM charge based on the full transaction value. Under the proposed methodology for downstream goods, the calculation will primarily depend on the embedded emissions of qualifying steel and aluminium inputs or precursors used in manufacturing. Emissions generated during later finishing processes and final downstream production stages are generally excluded from the proposed calculation framework.
Embedded emissions determine carbon exposure
The distinction between export value and carbon liability is expected to be significant for Serbian manufacturers supplying the EU market. Two companies producing and selling identical machines at the same price could face different CBAM-related costs depending on the emissions profile and documentation available for their raw materials.
A manufacturer using verified low-carbon steel or aluminium from suppliers with traceable production data could demonstrate lower embedded emissions. By contrast, a producer relying on materials without available emissions documentation could expose EU importers to higher calculated liabilities because they may need to apply default emission values.
The Serbian Ministry of Finance has previously warned that default values may exceed the actual emissions levels of domestic producers. While verification can reduce the calculated CBAM liability, it also creates additional requirements related to documentation, operational processes and assurance procedures. EU customers may transfer these costs and risks back to Serbian suppliers through lower purchase prices, carbon-adjustment clauses, reimbursement arrangements or supplier-selection requirements.
Manufacturers need product-level emissions records
For downstream exporters, CBAM preparation will require more detailed evidence than a general corporate carbon-footprint assessment. Companies will need systems capable of linking product-level information across their supply chains. Required data may include bills of materials, purchase orders, quantities of steel and aluminium used, supplier declarations, origin details, precursor emission factors, production batches, customs classifications and records connecting exported goods with their specific material inputs. This approach requires manufacturers to establish a verifiable chain of information from raw material suppliers to the final products delivered to EU buyers.
Electricity data plays a limited immediate role
The proposed first-stage downstream methodology also affects how companies should assess the importance of electricity sourcing. Renewable electricity used in assembling a machine or vehicle component may reduce a company’s wider product carbon footprint, but it will not by itself remove CBAM exposure created by carbon-intensive steel or aluminium inputs.
Electricity sourcing becomes directly relevant when a Serbian facility produces the covered metal or precursor material itself. It could also become more important if future CBAM revisions expand the treatment of indirect emissions. For most downstream exporters, the immediate commercial priority will be securing control over the carbon characteristics of purchased metals and obtaining supplier information that can be independently audited.
International groups and local manufacturers face different challenges
Serbian subsidiaries of international industrial groups may have advantages because they can connect local operations with established corporate procurement, environmental reporting and product-data systems. They will still need emissions evidence specific to the Serbian production site and individual exported products. Corporate emissions targets, ISO certifications or sustainability reports will not replace the precursor-level information required for EU importers when preparing CBAM declarations.
Independent Serbian manufacturers face a more demanding adjustment process. Their competitiveness will increasingly depend on their ability to obtain verified emissions data from steel and aluminium suppliers, distinguish covered materials from non-covered inputs, allocate materials to exported products and provide information in formats requested by EU customers. Companies that cannot provide the required data may continue exporting legally, but EU buyers are expected to factor carbon-related uncertainty and compliance risks into commercial negotiations.
