# When do a precursor's electricity emissions count in a CBAM figure?

Canonical: https://senseible.earth/answers/cbam-precursor-indirect-emissions-annex-ii-rule

It depends on the finished good. If the good is in Annex II (steel, aluminium, hydrogen), a precursor outside Annex II still brings its indirect emissions. If the good is outside Annex II (cement, fertilisers), a precursor that is in Annex II, such as hydrogen, does not bring its indirect emissions.

## Annex II goods

Annex II of the CBAM Regulation lists goods for which only direct emissions count: aluminium, hydrogen, electricity, and iron and steel.

## Case 1: finished good in Annex II

If its production uses a precursor not listed in Annex II, that precursor's indirect emissions are still included. Example from the guidance: agglomerated iron ore (CN 26011200) feeding pig iron. Iron ore is in Annex I but not Annex II, so its indirect emissions travel up the chain.

## Case 2: finished good not in Annex II

If its production uses a precursor that is listed in Annex II, the precursor's indirect emissions are left out. Example: hydrogen made separately, for instance by electrolysis on the ammonia site, then used to make ammonia.

## The integrated plant exception

In a generic Haber-Bosch plant, hydrogen is only an intermediate step and its indirect emissions cannot be separated. Then the indirect emissions of the whole process are included.

## Why it matters

Ammonia and fertilisers carry electricity emissions; steel does not, except through precursors such as ore. Check which case you are in before asking suppliers for electricity data.

## What Senseible does here

Senseible reads electricity bills and purchase invoices into dated records. Which precursor rule applies to your goods depends on the CN codes, which you or your verifier confirm.

- [Ammonia plant buying hydrogen](https://senseible.earth/answers/cbam-ammonia-plant-buying-hydrogen-precursor)
- [Fertiliser indirect emissions](https://senseible.earth/answers/cbam-fertiliser-indirect-emissions-electricity)
- [Hydrogen from electrolysis as a precursor](https://senseible.earth/answers/cbam-hydrogen-from-electrolysis-as-precursor)

Sources: [European Commission, CBAM Guidance No. 2, Quick guide for non-EU operators (14 August 2026), step 3, precursors](https://taxation-customs.ec.europa.eu/document/download/91e1056c-4524-4705-aaa7-e25c1439a87a_en?filename=Guidance%20No.%202%20-%20Quick%20guide%20for%20non-EU%20operators%20on%20CBAM%20implementation.pdf), [European Commission, CBAM Guidance No. 3, methods for calculating embedded emissions (14 August 2026), section 4.9.2](https://taxation-customs.ec.europa.eu/document/download/29b9eec7-1a4b-4eb6-ab85-96a0c9e35fd0_en?filename=Guidance%20No.%203%20-%20CBAM%20methods%20for%20the%20calculation%20of%20emissions%20embedded%20in%20goods.pdf)

Last reviewed 2026-10-25.