Carbon cost impact on EBITDA
Formula
Carbon cost impact on EBITDA
EBITDA impact (%) = (Chargeable emissions × Carbon price × (1 minus Pass-through rate)) ÷ EBITDA × 100
Variables
| Chargeable emissions | The tonnes of CO2e that actually cost money under the scheme: all emissions under a carbon tax, the shortfall against the target under India's CCTS, or embedded emissions in EU exports times the payable share under CBAM |
| Carbon price | The assumed price per tCO2e, in ₹ |
| Pass-through rate | The share of the carbon cost recovered from customers through higher prices, from 0% to 100% |
| EBITDA | The company's EBITDA for the same year, in ₹ crore (convert the cost to ₹ crore before dividing) |
Finding the inputs
Emissions are in the BRSR (Principle 6). Plant targets come from CCTS notifications, and actual intensity from company disclosures or BRSR data. CBAM exposure needs the EU share of sales from the annual report and verified embedded emissions. EBITDA is in the statement of profit and loss. The price and pass-through rate are the analyst's assumptions and should be shown as a range.
Reading the number
The result shows how much of today's EBITDA a carbon cost would take. As a rough guide, under 2% is usually minor and above 10% is a major valuation issue. The answer depends heavily on the scheme design: an intensity scheme such as CCTS charges only the shortfall, while a carbon tax charges every tonne. Pass-through depends on competition: if all producers face similar costs, more can be passed on. For a plant that beats its target, the same formula gives a gain instead of a cost.
Illustrative example
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