A report on the CBAM transition period has been published, and the issue of expanding the scope of application beyond 2026 is being considered
The European Commission has proposed comprehensive measures to improve the effectiveness of the EU Carbon Boundary Regulation Mechanism (CBAM) and prevent potential circumvention. From January 1, 2028, the scope of the Carbon Dioxide Emissions Control Mechanism (CBAM) will be expanded to include the processing of products requiring large amounts of steel and aluminum. This step is aimed at protecting producers in the EU who are vulnerable to carbon dioxide leakage, encouraging cleaner companies globally, and creating a fair and competitive business environment. The new measures take into account the concerns expressed by reliable international partners and introduce the concept of equivalence in relation to carbon taxation and price discounts. The Commission also promotes trade facilitation through a new provision providing for mutual recognition of reliable accreditation bodies. The current CBAM system in the EU focuses on basic materials such as aluminum, cement, electricity and steel. Starting in 2028, importers will be required to pay a carbon price for the emissions associated with these goods, which will ensure a level playing field for materials produced in the EU, in accordance with the Emissions Trading System (ETS). However, rising prices for steel and aluminum used in end products such as household appliances may lead to a shift in production to countries with weaker climate policies or to the replacement of EU goods with imports with higher carbon content. To reduce this risk, the Commission plans to extend the CBAM to about 180 types of steel and aluminum products, including machinery and household appliances. The majority of these products (94%) consist of heavy machinery and specialized equipment with high levels of steel and aluminum used in industrial supply chains, while a smaller proportion (6%) are household goods. This expansion is aimed at reducing emissions, not just displacing them. The Commission also encourages the use of scrap to reduce emissions in energy-intensive products, including pre-consumption aluminum and steel scrap in CBAM calculations. Stricter reporting requirements and measures aimed at eliminating distortions in emission intensity reporting are expected to enhance CBAM's effectiveness in combating abuses exceeding its financial obligations. A temporary decarbonization fund has also been established to support producers in the EU and reduce the risks of carbon leakage. The fund will cover part of the cost of carbon emissions under the EU ETS and provide support related to manufacturers' decarbonization efforts. Financing