European Parliament backs wider CBAM coverage for steel products

The European Parliament has backed plans to extend the EU’s Carbon Border Adjustment Mechanism (CBAM) to a broader range of downstream products, including finished steel goods, while tightening rules designed to prevent circumvention.

MEPs adopted their negotiating position on the proposed CBAM changes by 464 votes to 50, with 159 abstentions. Parliament can now begin negotiations with EU member states on the final legislation.

The position supports the European Commission’s proposal to expand CBAM beyond basic materials and extends the proposed scope further. Steel products including fasteners, wire and springs, alongside a range of aluminium goods and household products, would be brought within the mechanism.

Parliament targets CBAM circumvention

MEPs also backed stronger anti-circumvention provisions. These include a lower threshold for determining when minor modifications to products constitute an attempt to avoid CBAM obligations. Where a pattern of circumvention is identified, the Commission could apply default emissions values corresponding to the goods’ actual country of origin.

At the same time, Parliament wants the rules to distinguish deliberate CBAM avoidance from ordinary commercial decisions intended to reduce costs.

MEPs rejected a Commission proposal that could have allowed products to be temporarily removed from CBAM during price shocks. Instead, Parliament proposes temporarily redirecting CBAM revenues generated by the affected goods to the sectors concerned.

Export support proposed for 2027–2029

In a separate vote, Parliament adopted its position on a temporary decarbonisation fund (TDF) by 433 votes to 97, with 146 abstentions. The fund is intended to support European producers competing in export markets where competitors do not face equivalent carbon costs.

Parliament wants the scheme to operate from 2027 to 2029, beginning a year earlier than proposed by the Commission. MEPs also want downstream manufacturers using CBAM-covered materials to be eligible for support.

CBAM is designed to align the carbon costs faced by certain imported products with those borne by EU producers under the Emissions Trading System. The latest proposals come as the EU continues to adjust the mechanism ahead of the gradual reduction of free ETS allowances for European industry.

Source: European Parliament and Photo: Fotolia