The European Commission has proposed a new package of measures aimed at eliminating loopholes, preventing circumvention and improving the effectiveness of the Carbon Boundary Regulation Mechanism (CBAM), directly responding to feedback from industry stakeholders. These proposals are intended to strengthen CBAM's core goal of preventing carbon leakage, while maintaining the competitiveness of EU producers as the bloc transitions to low-carbon production.
Extending CBAM to processed products from 2026
From January 1, 2026, the Commission proposes to extend the CBAM not only to basic materials such as steel, aluminum, cement and electricity, but also to processed products that require large amounts of steel and aluminum.
About 180 processed products, including machinery, household appliances and specialized industrial equipment, will be presented at CBAM. Approximately 94% of these products are manufactured goods with very high steel or aluminum content, with an average of about 79%, such as base metal fasteners, cylinders, industrial radiators, and foundry equipment. The remaining six percent are household goods. The Commission argued that this extension was necessary to prevent the redistribution of emissions along the value chain or their movement outside the EU.
Enhanced measures to prevent circumvention
Based on the lessons learned from the transition phase and the priorities outlined in the Steel and Metals Action Plan, the Commission proposes to strengthen anti-circumvention measures.
A key change is the inclusion in CBAM calculations of aluminum and steel scrap, which was used before consumption, in order to support the use of recycled materials and ensure consistent carbon prices between goods produced in the EU and imported goods. Additional measures include stricter reporting and traceability requirements, increased monitoring of reported emission rates, and expanded powers of the Commission to intervene in cases of alleged abuse. In cases where actual emission data is considered unreliable, the Commission will be able to request additional evidence or apply default values at the country level in specific cases.
International aspect and trade facilitation
The proposals also respond to concerns expressed by reliable international partners. To address these challenges, the Commission is introducing simplifications and flexibility, including the concept of carbon tax equivalence and carbon price deductions.
The new provision will allow for the conclusion of simplification agreements
