PARLIAMENT BACKS EXTENSION OF CBAM TO DOWNSTREAM PRODUCTS
The European Parliament has adopted its position for negotiations with Member States on changes proposed to the EU's carbon border adjustment mechanism (CBAM).
MEPs agreed with the Commission's proposal to extend CBAM's scope beyond basic materials to a broad range of downstream products, including finished steel and aluminium goods such as fasteners, wire, springs and household articles, and broadened the list further than the Commission had proposed. An exemption was added for electricity flows from non-EU countries used by grid operators to maintain network stability.
The Commission's original proposal covered 180 downstream products with a high carbon leakage risk and a high share of steel and/or aluminium content. The Council, in its general approach, expanded the Commission's list to cover 200 additional metal-intensive industrial, construction, and electrical products. Parliament went further, backing coverage of over 400 downstream products in total, substantially broadening the scope beyond both the Commission and Council positions.
To close loopholes, MEPs lowered the threshold at which small product modifications qualify as circumvention, while tightening the rule so it targets only arrangements set up purely to avoid CBAM rather than ordinary business decisions. The Commission would also be empowered to apply the true country of origin's default values where a pattern of circumvention is established. MEPs rejected the Commission's proposed price-shock safeguard, replacing it with a mechanism to temporarily redirect CBAM revenues to affected sectors.
Parliament also adopted its position on the temporary decarbonisation fund (TDF), extending its duration to run from 2027 to 2029 and opening it to fertiliser producers and downstream users, with products such as urea, ammonium nitrate and ammonium sulphate added to the eligible list.
Parliament is now ready to begin negotiations with Member States on the final shape of the legislation.