4.1 Summary of key findings
How would the inclusion of indirect emissions in CBAM affect Finland, Sweden and Denmark and their industrial competitiveness?
Including indirect emissions in CBAM would raise the calculated embedded emissions of imported goods and thereby reinforce CBAM’s protective function for EU producers. For the Nordics, where decarbonisation and electrification mean electricity is an increasingly important cost component, the current exclusion of indirect emissions under CBAM creates a competitive disadvantage: Nordic producers pay higher costs for low-carbon electricity while competing with imports where electricity emissions are not fully priced. Including indirect emissions would better reflect the environmental performance of Nordic industries and could strengthen their competitiveness, but it would also increase reporting complexity and data demands along the value chain as well as raise import prices on electricity-intensive goods such as aluminium. On the other hand, a large share of Nordic electricity generation is already fossil-free, meaning that electricity prices in the Nordics generally reflect lower ETS-related cost pass-through compared to regions with more carbon-intensive power generation. This is, however, a complex matter, as power prices in at least Denmark and Southern Sweden are affected by German power prices and these price in the carbon cost.
What impact would including indirect emissions have on emission pricing incentives in third countries?
Because CBAM allows deduction of carbon prices already paid in the country of origin, including indirect emissions would broaden the share of emissions for which such credits may be claimed. This strengthens incentives for third countries to introduce or expand carbon pricing instruments that cover both direct and indirect emissions, in order to keep access to the EU market and avoid double charging. The report notes, however, that recognising third-country pricing schemes raises technical and administrative questions, including how to handle differences in sectoral coverage and sub-national systems.
Which industries would be particularly relevant to consider for an expansion of CBAM to new sectors?
The report highlights organic chemicals and polymers as key candidates for CBAM expansion, due to their high emissions intensity, strong trade exposure and leakage risk. It also emphasises downstream products that incorporate CBAM-covered inputs (e.g. machinery and components with high iron, steel or aluminium content), where extension of CBAM could close loopholes and reduce incentives to circumvent the mechanism. More broadly, several ETS-covered sectors – such as glass, ceramics, oil refineries, pulp and paper, lime and other metals – are identified as relevant in discussions about future alignment between ETS and CBAM.
How could CBAM influence the green transition in Finland, Sweden and Denmark in the long run?
CBAM strengthens the price signal for embedded emissions, shifting demand away high-emission imports towards EU production with lower average emission intensity, while total EU emissions remain capped under the EU ETS. For the Nordics, where CBAM-covered industries often have below-average emission intensity and ambitious climate targets, this can redirect investments into low-carbon technologies and support expansion of cleaner production. With the EU ETS cap, emissions are fixed at EU level and tend to move to installations with the highest “utility of pollution”; if Nordic heavy industries are relatively efficient, CBAM can accelerate a relocation of production – and associated emissions – towards the Nordics while overall EU emissions remain capped. Over time, this supports a green industrial transition, but it does not remove underlying structural challenges such as high energy and wage costs or export competitiveness outside the EU.
What potential positive effects could CBAM have from a Nordic perspective?
From a Nordic viewpoint, CBAM can:
Reduce carbon leakage and strengthen the competitive position of low-carbon producers in iron/steel, aluminium, cement and fertilisers;
Create an even playground so that clean production, from for instance the Nordics, can compete on equal terms with production abroad;
Improve welfare in the Nordics through terms-of-trade gains and reinforce incentives for clean technology investment; and
Provide more detailed emissions data that can enhance models of consumption-based emissions. In addition, greater harmonisation of methodologies and data standards across countries would improve comparability between models and strengthen the analytical basis for assessing consumption-based emissions.
Overall, modelling and literature reviewed in the report suggest modest macroeconomic impacts, but a gain in sectoral competitiveness for the Nordic scope countries, particularly in CBAM-exposed industries.
What conditions must be met for CBAM to function effectively?
Effective CBAM depends on several conditions identified in the report: a robust EU-level registry and pricing system; clear rules for recognising third-country carbon pricing and avoiding double counting; gradual phase-out of free allowances to maintain environmental integrity; and a scope that limits leakage opportunities (including possible expansion to indirect emissions and downstream products). At national level, functioning implementation requires well-defined competent authorities, adequate administrative capacity, strong guidance and support for companies, and IT systems that work reliably. Industry interviews in all three Nordic countries underline that unclear guidance, tight timelines and registry problems can significantly undermine the mechanism in practice. The CBAM Regulation largely fulfils the formal conditions required for effective functioning by establishing a harmonised EU-level system aligned with the EU ETS, but its effectiveness in practice depends critically on implementation quality, administrative capacity, clear guidance, and the timely resolution of operational challenges during the transition phase.
How will CBAM affect industries that are strongly represented in the Nordic countries in both the short and long term?
In the short term, CBAM produces modest macroeconomic impacts but more pronounced sectoral effects: increased production costs and lower output in many downstream industries, but gains in competitiveness for CBAM-covered sectors in the Nordics. Modelling results in this report show that Denmark, Finland and Sweden experience little adverse macro impact, while their covered sectors generally gain total competitiveness relative to more carbon-intensive producers. In the long run, expanding CBAM (e.g. to indirect emissions and additional sectors) would reinforce protection for low-emission Nordic industries but increase cost pressures on importers and on Nordic firms heavily integrated into global value chains, particularly export-oriented producers facing international competition without export adjustment mechanisms. The European Omnibus regulation is expected to keep 99% of emissions within scope while exempting about 90% of importing firms, reducing administrative burdens especially for SMEs while largely preserving incentives for large importers to switch to lower-emission suppliers.
What administrative arrangements have Finland, Sweden and Denmark implemented for CBAM, and which authorities are responsible for its execution?
All three scope countries have established national administrative models that combine a national competent authority with customs administration:
Denmark has designated the Danish Energy Agency as national competent authority, supported by the Danish Business Authority and the Danish Customs Agency in a tripartite arrangement. The Energy Agency leads on reporting oversight and enforcement, Customs handles registry access and notifications, and the Business Authority processes applications to become authorised CBAM declarants. Denmark also finances administration via an annual fee for authorised importers.
In Finland, Finnish Customs (Tulli) has two roles, both as the customs authority (checking CBAM goods at the border) and as the national competent authority (NCA) for CBAM. In the role of NCA, Finnish Customs provides company guidance, manages access to the registry, grants authorised declarant status, checks CBAM compliance at import and carries out audits and sanctions under the national CBAM implementation act.
Sweden has designated the Swedish Environmental Protection Agency as national competent authority, working closely with Swedish Customs. The Environmental Protection Agency handles guidance, reporting, authorisation and enforcement, while Customs checks at the border whether goods fall under CBAM and whether the importer holds authorised declarant status. Both authorities provide extensive support and information tools for companies.
How might CBAM impact consumption-based emissions in Finland, Sweden and Denmark, and can current calculation systems account for these changes?
CBAM is expected to reduce Nordic consumption-based emissions over time by raising prices on carbon-intensive imports, promoting substitution towards lower-emission suppliers and EU production, and encouraging exporters to decarbonise to maintain EU market access. However, the immediate quantitative impact on national CBA figures is limited because CBAM currently covers only a narrow set of sectors. Existing Nordic CBA systems are based on hybrid EE-MRIO models using EXIOBase, which can capture broad shifts in trade and consumption but are not designed for the highly granular, installation-specific data generated by CBAM, and often rely on older statistics. CBAM has strong potential to improve data quality and granularity in these models, but this will require methodological adaptation, harmonisation of data systems and additional resources.
4.2 Policy recommendations for Nordic countries
Building on the findings of the report, the following directions for Nordic policy are suggested:
Prepare strategically for inclusion of indirect emissions
Nordic governments should assume that CBAM may be expanded to cover indirect emissions more broadly and support electricity-intensive industries in improving data systems and documenting low-carbon electricity use. This would allow Nordic producers to fully benefit from their cleaner power mix and mitigate the potential competitive disadvantages associated with high electricity costs.
Engage actively in the design of third-country crediting rules
Given the importance of deducting third-country carbon prices, Nordic countries should actively engage in EU processes that define methodologies for recognising external carbon pricing – including indirect emissions – to ensure robust, transparent and administratively feasible rules. Clear frameworks are needed to avoid both double charging and loopholes, and to maximise incentives for third countries to adopt effective carbon pricing schemes.
Prioritise key sectors for CBAM expansion
Nordic policy positions should emphasise expansion of CBAM to sectors where the environmental and competitiveness gains are likely to be greatest: organic chemicals, polymers, and selected downstream products with high embedded emissions, alongside continued coverage of iron/steel, aluminium, cement and fertilisers. Attention should also be paid to ETS-covered sectors that are important in Nordic value chains (e.g. glass, pulp and paper, lime), while acknowledging higher administrative and legal risks associated with a broader scope.
Use CBAM as a lever for the green industrial transition
Nordic governments can treat CBAM as part of a broader low-carbon industrial strategy: aligning it with support for low-carbon technologies, infrastructure and innovation in heavy industry, and using the strengthened price signal to justify investments in “fossil-free” production. At the same time, policies should address vulnerabilities in downstream and export-oriented sectors, including monitoring carbon leakage risks to non-EU markets and following EU debates on export rebates or similar mechanisms.
Consolidate and streamline national implementation
Finland, Sweden and Denmark should continue refining their administrative arrangements to reduce complexity for companies while maintaining robust enforcement. This includes:
Clarifying points of contact where responsibilities are split across agencies;
Ensuring sufficient resources for competent authorities and customs;
Maintaining and improving guidance, helpdesks and digital tools; and
Learning from cross-Nordic experiences to identify effective implementation models.
These steps respond directly to industry concerns about administrative burden and inconsistent communication.
Strengthen links between CBAM and consumption-based accounting
Nordic statistical and environmental agencies should explore how CBAM shipment-level emissions data can be integrated into existing hybrid EE-MRIO models to improve estimates of consumption-based emissions. This will likely require methodological work, data harmonisation and careful assessment of costs versus benefits, but offers a path towards more accurate, policy-relevant CBA indicators that better reflect trade policy instruments such as CBAM.
Safeguard Nordic competitiveness while pursuing higher ambition
Finally, CBAM should be seen as one element in a broader mix of climate and industrial policies. The report indicates that Nordic economies are comparatively well positioned but still constrained by high structural costs. To turn CBAM into a durable advantage, Nordic countries may need to combine the mechanism with stable long-term climate targets, targeted sectoral support, and efforts to build resilient, low-carbon value chains that are less vulnerable to volatile international trade dynamics.