The European Parliament has backed a proposed expansion of the Carbon Border Adjustment Mechanism (CBAM) to additional downstream products, potentially extending carbon-border exposure further into European and international manufacturing supply chains.
Parliament adopted its negotiating position on 15 September, with 464 votes in favour, 50 against and 159 abstentions. The position also supports establishing a fund for the low-carbon transition.
The proposed changes are intended to address situations in which carbon costs applied to basic materials could be avoided through imports of manufactured goods containing those materials. Steel and aluminium supply chains are central to the proposed expansion.
Parliament and Council positions enter negotiations
The Parliament’s position follows the Council’s negotiating approach agreed in June. The Council position includes 200 additional metal-intensive goods covering industrial, construction and electrical-equipment products.
Both positions represent stages in the legislative process rather than final legislation. They do not establish the definitive list of products that would be covered, and the proposed downstream categories are not currently subject to CBAM solely because of the Parliament’s position.
The next stage involves negotiations between the EU institutions over the eventual legislation and its product coverage.
Material sourcing could become more important for manufacturers
A wider CBAM scope would increase the importance of information on purchased materials and their production origins for suppliers and manufacturers.
Companies assessing potential future exposure would need to identify the relevant product codes and determine what emissions evidence is available from suppliers of their production inputs.
For manufacturers and overseas suppliers, the current legislative stage creates a planning requirement: preparations may need to account for potential wider coverage while the proposed product scope remains subject to negotiations and has not become a final CBAM compliance obligation.
