Downstream manufacturers could enter the carbon-border framework
European Union institutions are working towards an agreement by the end of November 2026 on expanding the Carbon Border Adjustment Mechanism to selected downstream products, potentially extending carbon-border requirements further into manufacturing supply chains.
The negotiating objective was reported by Carbon Pulse on 21 September. The European Commission initially proposed coverage for 180 downstream products, but that number should not be treated as the final scope. Member states have already modified the proposed coverage in the negotiating position adopted by the Council.
The outcome could be particularly relevant for manufacturers and importers dealing with products containing significant quantities of steel and aluminium.
Council position focuses on value-chain leakage
The Council agreed its negotiating position in June, arguing that applying carbon-border costs to basic materials without addressing certain goods manufactured from those materials could encourage production to move further down the value chain outside the EU.
The concern is therefore broader than the treatment of imported raw materials alone. If basic steel or aluminium faces a carbon adjustment while selected products manufactured using those materials remain outside the system, differences in carbon-related costs could influence where subsequent processing takes place.
For companies purchasing or importing metal-intensive manufactured goods, the eventual scope could consequently affect sourcing decisions and the competitive position of different suppliers.
Anti-circumvention measures form part of the package
The negotiations also include measures intended to address potential circumvention of the mechanism. The Council has backed provisions concerning pre-consumer metal scrap as well as practices involving misleading or deceptive emissions reporting.
These elements indicate that the proposed expansion is not limited to adding product categories. The package also addresses how covered goods and their emissions information are treated within the system.
November is a negotiating target, not a start date
The end-November 2026 objective represents a target for concluding negotiations rather than a deadline for the new requirements to begin applying.
The definitive list of downstream products, the obligations imposed on companies and the dates from which any new provisions would apply will depend on the legislation ultimately agreed by the EU institutions and formally adopted.
For purchasers of machinery, components and other metal-intensive manufactured goods, the negotiations therefore have a direct commercial significance. The key question is first which products will fall inside the carbon-compliance framework at all—not simply what carbon price will apply to imports already covered by today’s rules.
