EU expands carbon border tax to more products, automotive industry warns of cost impact

The European Parliament’s Environment, Climate and Food Security Committee voted to broaden the Carbon Border Adjustment Mechanism (CBAM) to include downstream steel and aluminium products such as screws, wires and household items, and to close loopholes that allow minor processing to avoid the charge. A temporary decarbonisation fund was also approved to support companies facing higher costs.

The European Automobile Manufacturers Association (ACEA), representing major carmakers, warns that extending CBAM to finished automotive components would impose heavy administrative burdens and raise production costs. ACEA urges that passenger cars be excluded for now and recommends delaying further expansion until 2030. Industry groups in Italy have criticised a committee vote they say runs counter to their sector’s interests, while the broader EU emissions‑trading reform aims to give more free permits to energy‑intensive industries.