The European Parliament has adopted its negotiating position on a proposed expansion of the EU Carbon Border Adjustment Mechanism (CBAM). The proposal would extend the mechanism to a wider range of steel- and aluminium-intensive downstream products and introduce additional measures to prevent circumvention.
The Parliament’s position follows the Council’s negotiating position, adopted in June 2026. Both institutions support expanding CBAM, although their proposed product lists and certain details differ. The final rules will depend on negotiations between the European Parliament and the Council.
What is CBAM?
The Carbon Border Adjustment Mechanism (CBAM) is an EU instrument designed to address carbon leakage by applying a carbon cost to certain goods imported from outside the EU. It aims to ensure that imported products face a carbon cost comparable to that borne by European producers under the EU’s climate policies.
The current mechanism covers imports in sectors including iron and steel, aluminium, cement, fertilisers, electricity and hydrogen.
What changes are being proposed?
The European Commission proposed extending CBAM beyond basic materials to selected downstream products containing significant amounts of steel or aluminium. The aim is to reduce the risk that production moves outside the EU to avoid carbon costs, or that imports of finished goods undermine the competitiveness of European manufacturers.
The Commission’s original proposal covered 180 additional downstream products. The European Parliament has proposed a broader scope, covering 457 products. Examples of products that could be included are:
- Fasteners, including bolts, nuts and screws
- Steel wire and springs
- Certain finished steel and aluminium products
- Metal household articles and other manufactured goods containing significant amounts of steel or aluminium
These products are proposed additions and should not automatically be treated as being subject to the expanded CBAM rules at this stage.
Stronger measures to prevent circumvention
The proposed reform also aims to prevent companies from avoiding CBAM obligations through misleading reporting or other practices that undermine the mechanism.
The measures include provisions to better identify the composition and embedded emissions of imported goods, as well as additional requirements in certain higher-risk cases. The proposal also addresses practices that could shift emissions or production processes along the supply chain without achieving genuine emissions reductions.
For importers, these developments could mean greater scrutiny of product composition, origin-related information and emissions data, depending on the final legislation and the goods concerned.
Proposed implementation from 1 January 2028
The proposed expansion is intended to apply from 1 January 2028. However, the legislation is not yet final. The European Parliament adopted its negotiating position on 15 September 2026, following the Council’s position in June. The institutions must now negotiate the final legislation, and the product scope and implementation details may change.
Until the final rules are adopted, businesses should distinguish between existing CBAM obligations and the proposed additional requirements. The proposed expansion does not, by itself, change the current scope of goods covered by CBAM.
What does this mean for businesses?
Businesses importing steel, aluminium or products made from these materials should monitor the legislative process and assess whether their product portfolio could fall within the proposed expanded scope.
Importers and supply chain partners should consider:
- Product classification: Review relevant customs codes to identify products that could be affected by the proposed expansion.
- Supplier information: Assess whether suppliers can provide reliable information about material composition and embedded emissions.
- Data and documentation: Review existing processes for collecting and maintaining product and emissions data.
- Compliance planning: Follow developments in the negotiations and prepare to adapt internal procedures if the final rules introduce additional obligations.
- Cost and supply chain impact: Consider how potential CBAM costs and reporting requirements could affect sourcing decisions, landed costs and supplier relationships.
Freight forwarders and customs representatives should also monitor the developments, as clients may require support with product classification, documentation and the assessment of future compliance obligations.
How to prepare
Although the proposed expansion is not yet final, businesses can start preparing by reviewing their import flows, identifying potentially affected products and discussing data availability with suppliers. Early preparation can help reduce the risk of unexpected costs or compliance issues once the final rules are agreed.
SGS e-Customs will continue to monitor developments and keep businesses informed of the changes that may affect their customs procedures and import activities.
