European Union considers expanding Carbon Border Adjustment Mechanism

The European Parliament has adopted a position to expand the scope of the Carbon Border Adjustment Mechanism (CBAM) to include a wider range of downstream steel and aluminum products. This move aims to prevent companies from circumventing the policy by reorganizing supply chains to move carbon-intensive processing outside the EU.

Industry representatives, including EUROMETAL and EUROFER, have issued a joint statement calling for the broadest possible extension of the mechanism. They argue that expanding CBAM is essential to protect European industrial value chains, investments, and employment from carbon leakage. As free emissions allowances under the EU Emissions Trading System (ETS) are phased out, manufacturers face rising costs that imported finished and semi-finished products may avoid if they are not subject to equivalent carbon costs.

The proposed expansion is not yet law and must still undergo negotiations with the Council of the European Union.