The EU is working on adjusting the CBAM rules. The proposed amendments would extend CBAM further down the value chain and strengthen measures against circumvention. From 2028, hundreds of steel- and aluminium-intensive downstream products are expected to fall under CBAM for the first time.
(Last update on 17/09/2026)
Strengthening CBAM
The EU Carbon Border Adjustment Mechanism (CBAM) places a carbon price on embedded emissions in imported goods through CBAM certificates. It is designed to reduce carbon leakage as carbon costs rise for European producers under the EU Emissions Trading System (EU ETS).
The current scope covers selected goods in six sectors: iron and steel, aluminium, cement, fertilisers, hydrogen and electricity. Yet many products made from iron, steel or aluminum are not in the original CBAM scope, such as machinery, vehicle parts, electrical equipment and other finished metal products.
This gap matters. If CBAM only covers basic materials, companies could move final processing steps outside the EU to avoid carbon costs. Finished goods could then enter the EU without the CBAM costs that would apply when the underlying steel or aluminium is imported directly.
The proposed changes seek to address this loophole in the CBAM rules and to strengthen the mechansim. They amend Regulation (EU) 2023/956 and its simplification through Regulation (EU) 2025/2083.
The European Commission (EC) presented its proposal on 17 December 2025. The Council adopted its position in June. Now, the European Parliament (EP) followed with its position backed by 464 votes (against 50 votes and 159 abstentions).
Trilogue negotiations can now start. The downstream scope expansion is proposed to apply from 1 January 2028.
Changes to the CBAM Regulation
The amendments are designed to extend CBAM to downstream goods and strengthen its protection against circumvention. The main policy direction is consistent across the legislative positions. The final product coverage and temporary exemptions remain subject to trilogue negotiations.
Extending CBAM scope
The CBAM scope expansion would cover products with significant steel or aluminium content and a risk of carbon leakage. The proposed product lists differ in detail, but they point to a broad extension across industrial equipment, construction products, transport equipment, electrical goods and selected consumer products.
The proposed additions include the following main product classes made out of steel or aluminum:
- Articles of iron and steel (chapter 73) not yet covered;
- Machinery, pumps and industrial equipment;
- Motors, generators, transformers and electrical equipment;
- Commercial vehicles, trailers and automotive components;
- Refrigeration equipment, heat pumps and household appliances;
- Furniture and selected household metal products.
The exact CN codes will be set in the coming negotiations. Companies can therefore use the current draft lists for screening potential candidates, while keeping their product assessment flexible until the final list is adopted.
For companies, this means two things: Importers already covered by CBAM may see a wider product exposure. Importers further downstream may need to build CBAM processes for the first time, including product screening, supplier data collection and certificate planning.
Temporary exemptions
The amendments also address how CBAM could respond to exceptional market disruptions. A temporary exemption could help limit severe effects on the EU internal market, including price or supply-chain impacts, especially for fertilizer.
However, the scope and design of such a mechanism remain subject to trilogue negotiations.
- A temporary exemption could apply where serious and unforeseen circumstances cause severe harm to the EU internal market;
- The safeguard may be limited by objective conditions, defined procedures and a fixed duration;
- Targeted derogations may also be available for specific regions or exceptional situations.
Whereas the Council proposes more concrete suspension criteria than the EC, the EP would remove the clause completely. The final text will settled in the trilogue negotiations. As such changes are mostly relevant for fertilizer, this leaves companies in this sector with little clarity for now.
Anti-circumvention and other changes
The reform also aims to strengthen implementation. Some changes look technical, but they could materially affect emissions data, evidence requirements and certificate planning for affected companies.
Key proposed amendments include among others:
- 50t threshold lowered to 5t for aluminum products (only in EP proposal);
- Compulsory operator registration in the CBAM-Registry where actual verified emissions are used;
- Additional evidence on the installation and production period of imported goods and more information on their material and chemical composition;
- Revised treatment of scrap used as a precursor, with the treatment of pre-consumer steel scrap still subject to the final negotiations;
- Clarifications on guarantees, repurchase and quarterly certificate holdings, including possible transitional flexibility for 2027;
- Stronger measures against abusive practices, including resource shuffling, with conditions for using actual emissions and possible use of default values for high-risk goods and origins;
- A possible legal basis for recognising carbon credits under Article 6 of the Paris Agreement, which remains an open point.
For companies, some of these seemingly small changes can come with big implications for emissions data and CBAM costs. They could also affect whether actual or default values apply and how many CBAM certificates must be purchased, with potential consequences for compliance processes and cashflow planning.
Review import portfolios
The direction of the reform is clear. CBAM is expected to extend further downstream, and anti-circumvention controls are expected to become stricter. Companies can already assess their likely exposure, while the final product list, the exemption clause and selected procedures remain subject to trilogue negotiations.
Implementation will be challenging. Downstream products often contain several materials and pass through longer supply chains. Obtaining verified emissions data for all relevant precursors can therefore be difficult. The administrative effort may be high even where the finishing process only adds a small share to emissions.
Industrial companies should now:
- Track the legislative process and confirm the final requirements once the amendments are adopted;
- Review the import portfolio against the proposed downstream product coverage and prepare implementation measures ahead of 2028;
- Identify suppliers and products for which emissions and material-composition data requirements are changing;
- Assess possible impacts on certificate costs and cashflow effects align purchasing strategies with these new requirements.
CBAM continues to evolve. Companies should monitor the final rules and keep their implementation plans flexible.
Sources and further information:
- EU: Regulation Establishing CBAM (EU 2023/956)
- EC: Proposal for Amending CBAM (COM (2025( 989)
- EU Council: Draft Regulation for Amending CBAM (General Approach)
- EP: Amendments adopted on the EC proposal (Adopted texts)
Photo by Andres Canavesi on Unsplash
