The Council of the European Union has taken an important step towards strengthening the Carbon Border Adjustment Mechanism (CBAM) by adopting its negotiating position on a broader CBAM framework. The proposal aims to expand the scope of the mechanism and close loopholes that may enable carbon leakage.
Expansion to downstream products
Since becoming fully operational on 1 January 2026, CBAM has applied to carbon-intensive sectors including steel, aluminium, cement, fertilizers, electricity, and hydrogen. The mechanism is designed to prevent the relocation of production to countries with less stringent climate policies and to ensure a level playing field for European industry.
However, concerns have emerged that producers outside the EU could avoid CBAM obligations by exporting semi-finished or finished products instead of the raw materials currently covered by the regulation. As a result, carbon emissions could still be shifted abroad while EU manufacturers remain subject to stricter climate requirements.
To address this risk, the Council supports extending CBAM to a wider range of downstream products and has requested annual assessments by the European Commission to identify additional product categories that may need to be included in the future.
Negotiation documents indicate significant scope increase
The proposed list includes:
- Construction products and prefabricated building materials;
- Pipes and fittings;
- Fasteners;
- Metal reservoirs and tanks;
- Machinery parts and components;
- Vehicle parts;
- Electrical components;
- Various types of metal furniture.
The proposal demonstrates the intention of both the Presidency and the European Commission to significantly expand the number of products covered by CBAM.
Potential implementation from 2028
The current objective is to implement the expanded CBAM scope from 1 January 2028. However, the proposal is not yet final. It forms part of the ongoing legislative process and will still need to be negotiated with the European Parliament.
The final outcome will depend on discussions between the Council, the Parliament, and the European Commission during the upcoming trilogue negotiations.
Impact on trade and logistics
For importers, customs professionals, freight forwarders, and logistics service providers, the proposed expansion could have substantial implications. A broader CBAM framework may introduce additional reporting requirements, enhanced compliance obligations, and increased demand for emissions-related data throughout global supply chains.
Companies involved in steel, aluminium, machinery, construction, and related product categories should closely monitor these developments and assess the potential impact on their supply chains, sourcing strategies, and compliance processes well in advance of the proposed implementation date.
