Table of Contents
ToggleCarbon Accounting and EU Carbon Border Tax 2026
Carbon Accounting & EU Border Carbon Tax
2026
Analysis and implications for businesses
What is Carbon Accounting?
Carbon accounting (or greenhouse gas accounting) is the process of quantifying an organization's impact on the climate by calculating the greenhouse gases (GHG) it emits, i.e., its carbon footprint.
Physical Carbon Accounting
- Measures direct and indirect GHG emissions
- Includes Scopes 1, 2, and 3
- Identifies activities generating the most emissions
Financial Carbon Accounting
- Assigns financial value to carbon produced or absorbed
- Enables earning and trading carbon credits
- Facilitates participation in carbon markets
Benefits of Carbon Accounting
Economic Benefits
- Identify high-consumption operations
- Reduce energy waste
- Reduce costs through efficient energy management
Social Benefits
- Transparency in carbon reporting
- Attract investors, clients, and talent
- Facilitate access to green financing
Environmental Benefits
- Track and reduce GHG emissions
- Contribute to fighting climate change
- Support transition to a net-zero future
GHG Emissions Calculation Method
Fundamental formula
Activity Data
Represents the quantity of energy or resources consumed.
- Examples: kWh of electricity, liters of fuel, tons of coal
- Basis for emission calculations
Emission Factors (EF)
Quantify the rate of GHG emissions per unit of activity.
- Based on reliable international databases
- Examples: emissions per kWh of electricity, per liter of fuel
Emission factors (EF) are typically based on International Energy Agency (IEA) data
The Three Emission Scopes
The Greenhouse Gas Protocol (GHG Protocol) establishes a classification of emissions into three distinct scopes to facilitate measurement and management.
Scope 1
Direct emissions from sources owned or controlled by the organization.
- Fuel combustion in facilities
- Fleet vehicle emissions
- Other direct sources
Scope 2
Indirect emissions related to purchased energy consumption.
- Electricity used
- Heating and cooling
- Other purchased energy
Wattnow automatically tracks Scope 2 emissions by monitoring your energy consumption in real time, providing accurate data for carbon accounting.
Scope 3
Other indirect emissions throughout the value chain.
- Goods transportation
- Suppliers
- Use of sold products
- Business travel
Scope 3 is gaining importance with new European regulations
Scope 2 is the most accessible starting point for carbon tracking, because understanding your energy is the fastest way to reduce both emissions and costs.
Let Wattnow guide you in your first step toward carbon control.
Let's get in touch todayEU CBAM: Overview and Objectives
What is CBAM?
The Carbon Border Adjustment Mechanism (CBAM) is an essential component of the EU's "Fit for 55" climate package. It aims to counter "carbon leakage" by applying a carbon price to imported goods.
Main Objectives
Prevent carbon leakage
Prevent companies from relocating production to countries with less strict environmental regulations
Harmonize carbon costs
Equalize carbon costs between EU-made products and imported ones
Promote clean technologies
Encourage foreign producers to adopt cleaner technologies
Implementation
Full operational phase
CBAM will enter its full operational phase in 2026
Affected sectors
Initially covers steel, cement, aluminum, fertilizers, hydrogen, and electricity sectors
Future evolution
Expansion planned to other sectors by 2030, aligned with EU climate neutrality goals for 2050
CBAM is redefining sustainability and global trade strategies
How CBAM Works
Operating principle
CBAM applies a carbon price to goods imported into the EU, based on the greenhouse gas emissions intrinsic to their production. It aims to harmonize carbon costs between products manufactured within the EU and those imported.
Initially covered sectors
Planned evolution
CBAM will be extended to other sectors by 2030, strengthening the alignment of global trade with EU climate neutrality goals.
ETS vs Carbon Tax
Comparison of climate policy tools and their pricing mechanisms
Emissions Trading System (ETS)
Mechanism
Sets a total emissions cap and allows quota trading
Certainty
Ensures certainty on total reduced emissions quantity
Flexibility
Companies can buy or sell quotas, encouraging innovation
Carbon Tax
Mechanism
Sets a direct price per ton of CO₂ emitted
Certainty
Ensures certainty on carbon price
Flexibility
Companies can choose to pay the tax or reduce emissions
Impact on emissions
No total cap; emissions may increase if companies pay
ETS-CBAM Synergy
ETS
EU Emissions Trading System
Synergy
CBAM
Carbon Border Adjustment Mechanism
Carbon cost equivalence
CBAM ensures carbon costs are equivalent for EU-based producers and those outside the EU.
Prevention of "carbon leakage"
Prevents companies from relocating production to countries with less strict environmental regulations.
Encouragement of innovation
CBAM encourages exporters to the EU to adopt cleaner technologies and reduce emissions.
Global influence
Exerts positive influence on environmental practices of international trading partners.
Together, ETS and CBAM create an environment where sustainability is rewarded and pollution penalized, consolidating the EU's position as a global leader in carbon regulation.
Conclusions and Frequently Asked Questions
2026 Challenges Summary
Carbon accounting has become a crucial tool for businesses in 2026, enabling them to measure and reduce their greenhouse gas (GHG) emissions. With the implementation of CBAM (Carbon Border Adjustment Mechanism), this practice fits into a commercial landscape where environmental compliance and competitiveness are linked, pushing companies toward sustainable strategies.
Frequently Asked Questions
What is the EU Border Carbon Tax (CBAM)?
CBAM is a mechanism that taxes imported goods based on their carbon emissions, ensuring EU industries aren't disadvantaged against foreign competitors.
How does carbon accounting help businesses?
It enables companies to measure and manage their carbon footprint, comply with regulatory requirements, and attract committed investors.
Which industries are affected by the EU Border Carbon Tax?
Initially, CBAM applies to steel, cement, aluminum, fertilizers, hydrogen, and electricity, with expansion planned to other sectors by 2030.
Is carbon accounting mandatory in 2026?
While not legally mandatory for all companies, most large organizations must disclose their carbon emissions and climate risks under the CSRD Directive.
Scope 2 is the most accessible starting point for carbon tracking, because understanding your energy is the fastest way to reduce both emissions and costs.
Let Wattnow guide you in your first step toward carbon control.
Let's get in touch today