Green Value-Added Strategy: Leveraging EU Combined Nomenclature Codes - CBAM Compliance

By Yanuar Eka Saputra January 27, 2026

Green Value-Added Commodities and the EU Combined Nomenclature

The transition to a climate-neutral economy has transformed the Combined Nomenclature (CN) from a dry list of customs codes into a strategic map for sustainable business. By categorizing "Green Value-Added" commodities, the EU can provide a framework that rewards environmental innovation and tracks the progress of the circular economy.

Defining Green Value-Added

A "Green Value-Added" commodity is any product that has been modified, refined, or manufactured to provide a significantly lower environmental impact than its traditional counterpart. This value is added through:

Material Recovery: Transforming waste streams back into high-quality raw materials.
Energy Efficiency: Engineering components that reduce power consumption in industrial or domestic settings.
Carbon Reduction: Utilizing manufacturing processes that prioritize renewable energy or carbon capture.

The CN Code as a Regulatory Filter

The Combined Nomenclature serves as the "DNA" of a product entering or leaving the European Single Market. For green commodities, the 8-digit CN code acts as a filter for several key mechanisms:

Preferential Treatment: Certain environmentally friendly goods may benefit from lower duty rates or simplified customs procedures to encourage their adoption.
Tracking the Green Deal: By monitoring specific codes (such as those for heat pumps or recycled polymers), the EU can measure the real-world growth of sustainable industries.
Cross-Border Adjustments: The CN system is the foundation for the Carbon Border Adjustment Mechanism (CBAM), ensuring that imported "dirty" versions of commodities like steel or cement are taxed to match the carbon costs paid by EU producers.

Critical Categories in the CN System

Commodity Group	CN Focus	Environmental Impact
Sustainable Polymers	Chapter 39	Distinguishes virgin plastics from recycled resins (e.g., rPET).
Clean Transport	Chapter 87	Segregates Internal Combustion Engines (ICE) from Electric and Hydrogen propulsion.
Renewable Hardware	Chapter 85	Specific codes for solar modules, inverters, and wind turbine components.
Secondary Raw Materials	Chapters 72-81	Codes for scrap and waste of precious or base metals destined for recycling.

The Evolution of "Green" Identification

The main hurdle currently facing the CN system is that it traditionally classifies goods based on what they are, rather than how they were made.

To address the "Green Value-Added" aspect, the EU is moving toward more sophisticated documentation requirements that sit alongside the CN code. This includes certificates of origin that prove "green" production methods, even when the physical product (like a ton of aluminum) appears identical to its high-carbon counterpart.

Strategic Importance for Trade

For businesses, mastering the CN for green commodities is no longer optional. Accurate classification ensures:

Avoidance of "Carbon Penalties": Proper coding prevents being swept into high-tariff categories designed for non-sustainable goods.
Supply Chain Transparency: Companies can prove the recycled content or energy efficiency of their inputs to savvy consumers and regulators.
Access to Incentives: Eligibility for subsidies or green investment schemes often hinges on specific CN-coded product lines.

Sustainable Polymers within the EU Combined Nomenclature (CN)

In the architecture of European trade, Chapter 39 of the Combined Nomenclature (CN) is the primary battleground for the transition from linear to circular plastics. As the EU implements the Plastic Packaging Levy and stricter Ecodesign requirements, the ability to distinguish between virgin fossil-based polymers and sustainable alternatives is critical for both tax compliance and market access.

Classification of Sustainable Polymers

The CN system classifies polymers primarily by their chemical composition. However, "sustainability" in polymers generally follows three distinct pathways, each handled differently within the nomenclature:

1. Mechanically Recycled Polymers

These are plastics derived from post-consumer or post-industrial waste.

Identification: They often fall under subheadings for "Waste, parings and scrap, of plastics" (CN 3915).
The Challenge: Once the waste is processed back into pellets (resins), it often returns to the primary headings (e.g., 3901 for Polyethylene or 3907 for PET).
Value-Added: Importers must often provide "Certificates of Analysis" to prove the recycled content percentage to qualify for certain tax exemptions or to meet green procurement standards.

2. Bio-based and Biodegradable Polymers

These are plastics derived from renewable biomass (like corn starch or sugarcane) rather than petroleum.

Key Codes: * 3913: Natural polymers (like alginic acid) and modified natural polymers.
- 3907 99: Often used for Polylactic Acid (PLA), a common biodegradable plastic.
The Nuance: The CN does not always have a standalone code for "bio-based" versions of conventional plastics (like Bio-PE). These are typically classified under the same code as their fossil-based twins, requiring secondary documentation to prove their origin.

3. Chemically Recycled (Mass Balance) Polymers

This is the most complex category. Plastic waste is broken down into molecular building blocks and fed back into the refinery.

CN Logic: Because the resulting polymer is molecularly identical to virgin plastic, it is classified under standard headings.
Strategic Handling: The "Green Value" here is tracked through Chain of Custody models (like ISCC+ certification) rather than a unique 8-digit code.

The Impact of the EU Plastic Levy

Since 2021, the EU has applied a uniform call rate of €0.80 per kilogram on non-recycled plastic packaging waste. This has made the distinction within the CN system financially vital:

Polymer Type	Typical CN Base	Regulatory Impact
Virgin PET	3907 61	Subject to national plastic taxes and higher EPR fees.
Recycled PET (rPET)	3907 61 / 3915	Exempt from plastic levies in many member states; high market premium.
PLA (Biodegradable)	3907 99	Growing preference in "single-use" applications where recycling is difficult.

Strategic Challenges for Traders

Coding Granularity: The CN is updated annually (published every October). There is a constant push from the industry to introduce more specific codes that separate recycled resins from virgin resins to simplify the application of "Green" tax breaks.
Proof of Content: Simply using the correct CN code is rarely enough. To claim the "Green Value-Added" status, businesses must maintain a robust audit trail linking the CN code to environmental certifications.
Dual-Use Goods: Some sustainable polymers serve both industrial and consumer packaging roles. Misclassification can lead to significant overpayment of environmental levies.

The EU Green Trade Map: 2026 Combined Nomenclature and Sustainable Commodities

As of January 1, 2026, the European Union has implemented a major update to its trade classification system. Under Commission Implementing Regulation (EU) 2025/1926, the Combined Nomenclature (CN) has been modernized to specifically identify and monitor "Green Value-Added" goods. This update is a cornerstone of the EU’s strategy to facilitate the energy transition and enforce the definitive phase of the Carbon Border Adjustment Mechanism (CBAM).

Core Pillars of the 2026 CN Strategy

The 2026 nomenclature moves beyond simple product identification. It now serves as a high-precision tool for three critical "green" sectors:

Circular Economy (Sustainable Polymers): Enhanced Chapter 39 coding to better differentiate recycled resins from virgin materials, supporting the EU's plastic waste reduction targets.
Clean Transport: Refined subheadings in Chapter 87 for electric, hydrogen, and hybrid propulsion systems, ensuring trade measures are applied accurately to the evolving automotive market.
Renewable Energy Infrastructure: Dedicated codes for advanced battery chemistries (LFP/NMC), wind turbine components, and hydrogen generators, providing clear visibility into the "Green Tech" supply chain.

Strategic Impact on Global Trade

Feature	Function in the 2026 CN
Precision Monitoring	New subheadings for critical raw materials like lithium compounds and photovoltaic wafers.
CBAM Integration	Direct alignment between 8-digit CN codes and carbon reporting requirements for high-emission imports.
Incentive Alignment	Facilitates "green" duty reliefs and streamlined customs clearance for verified sustainable commodities.

Summary: The 2026 Combined Nomenclature is the primary technical framework for any business operating within the EU's sustainable trade ecosystem. Proper classification is now the prerequisite for both regulatory compliance and the claiming of "Green Value" premiums.

EU Combined Nomenclature: Renewable Hardware (2026 Update)

As of January 1, 2026, the Combined Nomenclature (CN) has been significantly expanded to provide "high-definition" visibility into the renewable energy supply chain. These changes, enacted via Regulation (EU) 2025/1926, move critical renewable components out of generic "catch-all" categories and into specific subheadings.

This shift allows the EU to monitor strategic dependencies on critical raw materials and apply targeted trade policies (such as CBAM) with surgical precision.

1. Solar Energy: From Cells to Wafers

The 2026 update addresses the upstream supply chain of photovoltaic (PV) technology. Previously, raw materials and intermediate components were often buried in general chemical or electronic chapters.

Photovoltaic Wafers (Chapter 38): For the first time, PV wafers (the building blocks of cells) have been assigned specific subheadings (3818 00 11 and 3818 00 19). This allows the EU to track the import of semi-finished solar components separately from general semiconductor silicon.
MPPT Inverters (Chapter 85): While inverters were always under 8504, the 2026 CN introduces specific mentions for inverters with Maximum Power Point Tracking (MPPT) functionality—a key feature of modern solar systems that optimizes energy harvest.
Solar Modules/Panels (8541 43 00): This code remains the primary identifier for assembled solar panels, now more strictly monitored for origin to ensure compliance with EU sustainability and labor standards.

2. Wind Energy: Structural & Mechanical Precision

Wind energy components are notoriously difficult to classify because they span metals (towers), machinery (blades), and electronics (generators). The 2026 CN clarifies this:

Component	New/Specific 2026 CN Code	Regulatory Significance
Wind Turbine Towers	7308 20 10	Distinguishes tubular steel wind towers from lattice masts used in telecom.
Rotor Blades	8412 90 60	Moves blades from a generic "engine parts" code to a dedicated renewable energy category.
Utility-Scale Turbines	8502 31 00 (11/19)	New splits for turbines $\geq$ 1.00 MW to differentiate industrial offshore/onshore units from small-scale kits.

3. Green Hydrogen & Energy Storage

Perhaps the most significant 2026 addition is the dedicated coding for the "Hydrogen Economy" and advanced battery chemistry.

Hydrogen Fuel Cell Generators (8501 33 10/90): These now have a distinct home, separating them from traditional combustion-based generating sets.
Electrolysis Stack Assemblies (8543 90 10): Specific subheadings have been created for "assemblies of stacked galvanic cells" used in water electrolysis plants—the heart of green hydrogen production.
Battery Chemistry (Chapter 28): In a major move for the EV and storage sectors, Lithium Iron Phosphate (LFP) and Lithium Nickel Manganese Cobalt (NMC) oxides now have unique codes (under 2841 and 2842).

Strategic Impact for Renewable Energy Firms

CBAM Compliance: Many of the goods now specifically coded (like steel wind towers and certain chemicals) are subject to the Carbon Border Adjustment Mechanism. Using the wrong code could result in massive miscalculations of carbon liabilities.
Anti-Dumping Vigilance: The EU uses these new, granular codes to monitor for "dumping" (selling below market value). If your product is under a newly specific code, it is under a higher level of statistical scrutiny by the European Commission.
Grant & Subsidy Eligibility: Many EU "Green Grants" or "RepowerEU" incentives require companies to prove their equipment falls under specific renewable CN codes.

EU Combined Nomenclature: Secondary Raw Materials (2026 Update)

In the 2026 iteration of the Combined Nomenclature (CN), "Secondary Raw Materials" (SRMs) have shifted from being classified as mere "waste" to being recognized as strategic assets. Under Implementing Regulation (EU) 2025/1926, the EU has introduced granular coding to track the flow of recycled materials, a move designed to support the Circular Economy Act and reduce reliance on virgin imports.

1. The "Waste vs. Resource" Distinction

The fundamental shift in the 2026 CN is the attempt to distinguish between waste intended for disposal and secondary materials intended for recovery.

Chapter 39 (Plastics): A major update in 2026 includes new subheadings that finally begin to differentiate virgin polymers from recycled resins. This is vital for companies seeking to avoid the EU Plastic Levy on non-recycled packaging.
Chapter 47 (Recovered Paper): Codes have been refined to better categorize high-grade "de-inked" pulp versus mixed paper waste, reflecting the higher "Green Value" of processed secondary fibers.

2. Strategic Metals & Critical Raw Materials (CRMs)

With the Critical Raw Materials Act now in full effect for 2026, the CN has been updated to monitor "urban mining"—the recovery of metals from end-of-life products.

Secondary Material	CN Chapter	2026 Focus
Ferrous Scrap	Chapter 72	Distinguishes between "clean" industrial scrap and "obsolete" post-consumer scrap.
Copper & Aluminum	Chapters 74 & 76	New monitoring for "secondary" alloys used in green tech (wind/solar).
Lithium & Rare Earths	Chapter 28	New codes for recovered lithium compounds (LFP/NMC) from battery recycling.

3. The 2026 "Mass Balance" Challenge

A significant hurdle in the 2026 classification remains Chemical Recycling. When plastic waste is broken down into molecular oil (pyrolysis oil) and fed back into a refinery, the resulting polymer is chemically identical to virgin plastic.

Current Solution: Since these SRMs share the same 8-digit CN code as virgin materials, the "Green Value" is currently verified via Digital Product Passports (DPPs) or ISCC+ certifications rather than a unique code alone.
Future Shift: The Commission is piloting "Y-codes" (TARIC document codes) that must be entered alongside the CN code to declare the percentage of recycled content.

4. Regulatory Implications for Traders

CBAM Exemptions: Secondary raw materials (like scrap steel) are generally exempt from Carbon Border Adjustment Mechanism (CBAM) fees because their "embedded emissions" are significantly lower than virgin production. However, incorrect classification under a "virgin" CN code can lead to accidental (and expensive) carbon tax liabilities.
Export Restrictions: As of November 2026, the Waste Shipment Regulation heavily restricts the export of plastic waste to non-OECD countries. Correctly identifying your material as a "secondary product" rather than "waste" is the difference between a legal shipment and a criminal offense.

Note for 2026 Compliance: If you are importing processed secondary materials, ensure your supplier provides a Certificate of Circularity. The 2026 CN codes are now linked to "Market Surveillance" audits to prevent "Greenwashing" (claiming virgin material is recycled to avoid levies).

Conclusion: Mastering the EU Green Trade Map for Value-Added Growth

The 2026 update to the EU Combined Nomenclature (CN), established under Implementing Regulation (EU) 2025/1926, marks a fundamental shift in how global trade intersects with environmental policy. By moving beyond generic descriptions to high-precision coding for Sustainable Polymers, Clean Transport, Renewable Hardware, and Secondary Raw Materials, the EU has provided a technical language for "Green Value."

The Strategic Edge of Accurate Classification

For forward-thinking businesses, these granular codes are not just administrative hurdles; they are instruments of competitive advantage:

Risk Mitigation: Precise coding is the first line of defense against the financial impact of the Carbon Border Adjustment Mechanism (CBAM). It ensures that low-carbon products are not incorrectly categorized with high-emission "virgin" alternatives.
Market Transparency: New subheadings for technologies like LFP/NMC batteries and MPPT inverters allow companies to substantiate their "Green Value-Added" claims with officially recognized customs data, simplifying the path to EU subsidies and green procurement.
Circular Economy Leadership: As the Circular Economy Act doubles the target for material reuse by 2030, the ability to distinguish secondary raw materials from waste via the CN will be the primary factor in bypassing export restrictions and plastic levies.

Moving Forward: From Compliance to Strategy

In the 2026 trade landscape, the "Green" label must be earned through technical accuracy. The burden of proof now rests on the Digital Product Passport and the correct 8-digit CN code. Businesses that align their master data with these new environmental classifications will not only ensure compliance but also secure their position in the world's most sophisticated lead market for sustainable goods.