EU Taxonomy for Manufacturing
Manufacturing is one of the most complex sectors for EU Taxonomy alignment — some activities have clear Technical Screening Criteria (steel, cement, aluminium, chemicals) while others have no coverage at all. Understanding which manufacturing activities are listed and what TSC they must meet is the starting point for any manufacturing company's taxonomy assessment.
Manufacturing is one of the most complex sectors for EU Taxonomy alignment — some activities have clear Technical Screening Criteria (steel, cement, aluminium, chemicals) while others have no coverage at all. The EU Taxonomy covers the following manufacturing activities for Climate Change Mitigation (Objective 1):.
Manufacturing activities listed in the Taxonomy
The EU Taxonomy covers the following manufacturing activities for Climate Change Mitigation (Objective 1):
Iron and steel manufacturing: TSC requires GHG intensity below 0.325t CO2e/t steel for primary production (EAF route) or below the BAT-AEL (Best Available Technique Associated Emission Level) for existing blast furnace routes during transition.
Cement manufacturing: TSC requires clinker-to-cement ratio below specified thresholds and thermal energy intensity below 3.3 GJ/t clinker, with a pathway to net-zero clinker production.
Aluminium manufacturing: TSC based on GHG intensity of primary aluminium production, with preference for hydropower-based smelting.
Chemical manufacturing: Selected chemicals including low-carbon hydrogen, ammonia, and specific basic chemicals where TSC are defined.
Battery manufacturing: TSC based on carbon footprint of battery cell production (kg CO2e/kWh).
Activities not listed: general machinery, food processing, textiles, electronics assembly, plastics processing, and most light manufacturing have no applicable TSC. These activities are taxonomy-ineligible — contributing zero to aligned KPIs regardless of environmental performance.
The GHG intensity approach for manufacturing TSC
Most manufacturing Taxonomy TSC are expressed as GHG intensity thresholds — emissions per tonne of product. This approach aligns with how industrial decarbonisation is measured and enables sector benchmarking.
For steel: The TSC distinguishes between primary steel (iron ore-based, blast furnace) and secondary steel (scrap-based, electric arc furnace). Secondary steel production is much closer to taxonomy alignment — typical EAF intensities of 0.3–0.5t CO2e/t steel compare favourably against the 0.325t threshold.
Primary steel producers face a harder challenge — current blast furnace intensities of 1.8–2.2t CO2e/t steel are far above the TSC threshold. The CapEx plan provision is critical for primary steel producers investing in DRI (Direct Reduced Iron) and green hydrogen pathways.
For cement: The typical clinker-to-cement ratio is 0.73–0.78 in Europe. The TSC incentivises reducing this ratio through supplementary cementitious materials (fly ash, slag, calcined clays) — a well-established decarbonisation pathway with existing technology.
CBAM and Taxonomy alignment — the emerging connection
The Carbon Border Adjustment Mechanism (CBAM) covers the same high-emission manufacturing sectors as the EU Taxonomy — steel, cement, aluminium, chemicals, fertilisers, and electricity. From 2026, CBAM requires importers to pay for the carbon content of these products entering the EU.
The connection to Taxonomy: companies investing in decarbonisation of CBAM-covered activities (to reduce their CBAM liability) are simultaneously progressing toward Taxonomy alignment. A steel manufacturer reducing GHG intensity to avoid CBAM costs is also closing the gap to the Taxonomy TSC threshold.
For manufacturing companies subject to CBAM: frame your decarbonisation investment as both a CBAM compliance strategy and a Taxonomy alignment pathway. The same capital investment, the same operational data, and the same GHG intensity improvements serve both regulatory purposes.
Frequently asked questions
Our manufacturing sector is not listed in the Taxonomy — what do we disclose?
Disclose zero taxonomy-eligible revenue and CapEx from your unlisted manufacturing activities. This is correct and expected — the Taxonomy acknowledges coverage gaps. You can include eligible CapEx if you invest in listed activities (e.g. on-site renewable energy generation, building renovation) even if your core manufacturing activity is unlisted.
How do we calculate GHG intensity for Taxonomy TSC purposes?
Use GHG Protocol methodology — Scope 1 and Scope 2 (market-based) emissions per tonne of product. For Scope 2, use the market-based figure (reflecting renewable energy procurement). Include only emissions directly attributable to the manufacturing activity — do not include corporate overhead or logistics.
What is the BAT-AEL and how does it apply to our manufacturing TSC?
Best Available Technique Associated Emission Level (BAT-AEL) is the emission performance range associated with using best available techniques in industrial manufacturing. BAT conclusions are published in BREF (BAT Reference) documents for each major industrial sector. Where Taxonomy TSC reference BAT-AEL compliance, check the applicable BREF for your sector and compare your permit conditions to the BAT-AEL range.