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Glossary

The terms of EU sustainability law in plain words, each with its legal source.

A

  • Actual emissions – CBAM

    Under the EU's Carbon Border Adjustment Mechanism (CBAM), emissions calculated from primary data from the production processes of goods and from producing the electricity those processes consume. They are the alternative to default values.

  • Authorised CBAM declarant

    Under the EU's Carbon Border Adjustment Mechanism (CBAM), a person authorised to import the goods CBAM covers. The competent authority of the EU country where the person is established grants the status, and every EU country recognises it.

B

  • Benchmark – EU ETS

    Under the EU Emissions Trading System (EU ETS), an EU-wide value setting how many free allowances an installation gets per unit of output, such as a tonne of product or a terajoule of heat. It starts from the 10% most efficient installations.

C

  • CBAM 50-tonne threshold

    The small-importer exemption under the EU's Carbon Border Adjustment Mechanism (CBAM): an importer whose CBAM goods total no more than 50 tonnes of net mass in a calendar year is exempt from CBAM's obligations that year. Electricity and hydrogen never qualify.

  • CBAM certificate

    An electronic certificate under the EU's Carbon Border Adjustment Mechanism (CBAM), standing for one tonne of CO₂ equivalent (CO₂e) of emissions embedded in imported goods. Authorised CBAM declarants buy them and surrender them each year.

  • CBAM operator

    Under the EU's Carbon Border Adjustment Mechanism (CBAM), a person that operates or controls an installation outside the EU, including a parent company that controls one. It can register in the CBAM registry and share verified emissions data with declarants.

  • CN code

    The EU's code for a product in its Combined Nomenclature (CN), the goods nomenclature used for customs tariffs and trade statistics. The Carbon Border Adjustment Mechanism (CBAM) uses CN codes to list the goods it covers.

  • Carbon leakage

    In the EU Emissions Trading System (EU ETS), the move of production, and its CO₂ emissions, to countries with weaker climate rules, as the Commission describes it. Sectors the law deems at risk of carbon leakage get more free allowances.

  • Cross-sectoral correction factor

    Under the EU Emissions Trading System (EU ETS), a uniform cut to free allocation, used when installations' free allocation would exceed the maximum amount available. For each year from 2026 to 2030, it is 100%, so it cuts nothing.

D

  • Default value

    Under the EU's Carbon Border Adjustment Mechanism (CBAM), a value for the embedded emissions in a good, calculated or drawn from secondary data, not the producer's figures. Implementing Regulation (EU) 2025/2621 sets them by good and exporting country.

E

  • EORI number

    The Economic Operators Registration and Identification (EORI) number, which customs assigns when a company registers for customs purposes in the EU. Under the EU's Carbon Border Adjustment Mechanism (CBAM), an authorised declarant must have one.

  • EU allowance (EUA)

    Under the EU Emissions Trading System (EU ETS), an allowance to emit one tonne of CO₂ equivalent (CO₂e). Installations, aircraft operators and shipping companies surrender one for each tonne of their verified emissions of the year before.

  • Embedded emissions

    Under the EU's Carbon Border Adjustment Mechanism (CBAM), the greenhouse gases released in making a good: direct emissions from production, plus indirect emissions from the electricity used. They are the basis for the number of CBAM certificates due.

F

  • Free allocation

    Under the EU Emissions Trading System (EU ETS), allowances given to installations free of charge under harmonised EU rules, rather than auctioned. EU-wide benchmarks set the amount, and sectors deemed at risk of carbon leakage get more.

I

  • Indirect customs representative

    Under EU customs law, a person appointed to deal with customs for someone else, acting in its own name on that person's behalf. Under the Carbon Border Adjustment Mechanism (CBAM), it can hold authorised declarant status and carry the importer's obligations.

  • Installation – CBAM

    Under the EU's Carbon Border Adjustment Mechanism (CBAM), a stationary technical unit where a production process for goods covered by CBAM is carried out. Operators outside the EU can register their installations in the CBAM registry.

  • Installation – EU ETS

    Under the EU Emissions Trading System (EU ETS), a stationary technical unit where one or more activities listed in Annex I of the ETS Directive are carried out, together with directly associated activities on that site that could affect emissions.

M

  • Market stability reserve (MSR)

    Under the EU Emissions Trading System (EU ETS), a reserve that takes allowances out of EU countries' auctions when too many are in circulation and releases them when too few are. Allowances have been placed in it since 2019.

  • Monitoring plan – EU ETS

    Under the EU Emissions Trading System (EU ETS), the document setting out how an installation, aircraft operator or ship monitors and reports its emissions. An installation's plan needs approval and is part of its greenhouse gas emissions permit.

P

  • Port of call – EU ETS

    Under the EU Emissions Trading System (EU ETS), a port where a ship stops to load or unload cargo or to let passengers on or off; stops only to refuel or for repairs don't count. Ports of call decide which share of a voyage's emissions counts.

S

  • Sub-installation – EU ETS

    Under the EU Emissions Trading System (EU ETS), a share of an installation's inputs, outputs and emissions that gets its own free allocation calculation. Operators divide each installation eligible for free allocation into them.

  • Surrender of allowances

    Under the EU Emissions Trading System (EU ETS), handing in allowances equal to the previous calendar year's verified emissions, by 30 September each year. The surrendered allowances are then cancelled.

V

  • Verifier – CBAM

    Under the EU's Carbon Border Adjustment Mechanism (CBAM), a legal person accredited by an EU country's national accreditation body to verify embedded emissions based on actual emissions, rather than default values, for producers and declarants.

  • Verifier – EU ETS

    Under the EU Emissions Trading System (EU ETS), the accredited legal person, or otherwise authorised natural person, that checks yearly emissions reports and free allocation data. A yearly emissions report must be verified as satisfactory by 31 March.