When the European Union’s Carbon Border Adjustment Mechanism (CBAM) entered its definitive phase at the start of 2026, it marked a watershed not simply in trade policy or climate regulation but in how the global steel industry understands and uses emissions data. For an industrial system historically defined by energy intensity and geographical complexity, CBAM’s demands for verified carbon accounting strike at the core of competitiveness — with implications that extend beyond EU borders to reshape global supply dynamics.

CBAM - from theory to operational reality

At its heart, CBAM is designed to level the playing field: imports of carbon-intensive products such as iron and steel must face the same carbon price as EU production, countering carbon leakage and reinforcing the EU Green Deal’s ambition to cut greenhouse gas emissions 55 % by 2030.

But policy ambition only becomes tangible through data. If the steel sector is to respond credibly to CBAM, Carbon Border Adjustment certificates — priced alongside emissions allowances under the EU Emissions Trading System — must be backed by verified, transparent emissions data that spans the full cradle-to-gate footprint of imported products.

Why Data Integrity Matters

CBAM creates a dual reporting pathway: importers can either provide verified actual emissions data from producers or lean on default values set by the European Commission when actual data are absent. While defaults are a necessary transitional bridge, they risk diluting CBAM’s core logic — rewarding truly lower-carbon steel and penalising higher emitters. When default values stand in for real measurements, price signals distort, commercial choices blur, and the instrument’s environmental integrity weakens.

The calculation tasks required are not trivial:

• Differentiating production pathways (blast furnace vs DRI-EAF vs emerging green hydrogen routes),
• Capturing energy inputs and grid emissions intensity across jurisdictions,
• Reconciling diverging methodologies between suppliers and EU-aligned verification frameworks.

These challenges are structural: they demand that firms rethink how they collect, govern and assure the data that underpins their international competitiveness.

Liability and legal risk

CBAM places responsibility for emissions declarations squarely on authorised importers, even where data is sourced from third-country producers. While the legislation does not establish a separate regime of retrospective liability, inaccurate reporting that leads to under-declared emissions or insufficient surrender of CBAM certificates can trigger enforcement action and financial penalties under EU and national frameworks.

As CBAM enters its definitive phase, authorities will increasingly scrutinise methodologies and supporting evidence. Errors may require corrective declarations and additional certificate surrender, with penalties for non-compliance. In parallel, weak or unverified data carries commercial and contractual risk, particularly where low-carbon claims influence procurement and pricing decisions.

Global divergence — and the MENA Opportunity

CBAM’s stringency also interplays with broader regional divergence in the green steel landscape. Europe’s regulatory drive, and other standards such as the Low Emissions Steel Standard are moving towards a definitional standard for low-carbon steel, forcing producers and importers to quantify emissions with a precision previously absent from global markets.

But this regulatory primacy exists alongside cost and technology pragmatism in other regions, creating a competitive dynamic in which some geographies are positioning themselves to capture emerging green-steel markets.

Notably, the Middle East and North Africa (MENA) region is emerging as a strategic contender to become a supplier of ultra-low-emissions steel. Several factors underlie this potential:

• Technology position: MENA’s steel production base is heavily concentrated in direct reduced iron (DRI) coupled with electric arc furnace (EAF) routes — already lower in carbon intensity than traditional blast furnaces and amenable to further decarbonisation through green hydrogen.
• Abundant renewable and hydrogen potential: With some of the world’s most favourable solar resources and growing hydrogen strategies, MENA producers are well-placed to integrate renewable-powered electrolysis into DRI processes — a transformation that can dramatically reduce Scope 1 emissions.
• Strategic investment momentum: Projects and policy frameworks across the UAE, Saudi Arabia, Oman, Algeria and beyond are accelerating plans for green-steel capacity and low-carbon feedstock production, aimed at both local demand and export markets such as Europe.

This convergence of technology and resource potential gives MENA a first-mover advantage in a post-CBAM environment: if producers can back their low-carbon claims with verified data that meets EU standards, they can compete on a level footing with EU and international suppliers.

Bridging Data and Market Opportunity

Yet the same data challenges that weigh on European importers apply with equal force for prospective MENA exporters. To realise their green-steel ambitions in CBAM-influenced markets, MENA producers must:

• Invest in robust carbon measurement and accounting systems aligned with EU reporting criteria,
• Ensure third-party verification of emissions data,
• Build supply chain transparency that satisfies both regulatory and buyer expectations.

The prize is significant: access to premium markets that value low-carbon intensity, coupled with enhanced competitiveness as global corporate supply chains shift towards measurable decarbonisation commitments.

Verified data as a component of strategic advantage

CBAM has sharpened the imperative for credible carbon accounting within steel. It is not merely a tariff or trade tool, but a catalyst for industrial data integrity — one that will shape competitive hierarchies across regions.

For European importers and global producers alike, verified emissions data is infrastructure: foundational to economic viability, regulatory compliance and future growth. For MENA, the opportunity lies in pairing inherent production advantages with data systems that can stand up to the scrutiny CBAM now demands.

In this emerging landscape, those who measure well, govern well and assure well will lead — whether they operate in Duisburg, Dammam or Dubai.

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About the author: Jon Woodhead is a LESS lead auditor and has decades of experience working with steel companies to calculate or verify carbon emissions intensity data.  He has worked with many global steel producers on the development of green steel schemes, and verified a wide range of site level carbon reduction projects.  Please get in touch if you would like to discuss how we can help: jon.woodhead@challengesustainability.com