European lawmakers just voted to pull finished steel and aluminium products under the carbon border levy, a move that pushes CBAM far beyond raw materials and straight into the heart of industrial manufacturing.
The Parliament adopted its negotiating position with a crushing 464 votes in favour, 50 against, and 159 abstentions. This clears the path for talks with EU member states on the final shape of the legislation.
The Carbon Border Adjustment Mechanism expansion now covers downstream goods including fasteners, wire, springs, and household articles. Importers of these products would face carbon costs tied to emissions generated during production.
Parliament also moved to close loopholes. Lawmakers want a lower threshold for what counts as circumvention, while narrowing the rule so it only targets arrangements created specifically to dodge CBAM obligations. Legitimate commercial changes designed to cut costs would not automatically trigger enforcement.
Where authorities confirm a circumvention pattern, the European Commission would apply default emissions values based on the product’s actual country of origin. MEPs also carved out an exemption for electricity flows from outside the EU when grid operators need those imports to maintain network stability.
Rapporteur Mohammed Chahim framed the deal as a strengthening of the mechanism. He cited closed loopholes, tougher enforcement, and expanded scope as key wins that protect European industry during decarbonisation.
Meanwhile, Parliament rejected a Commission proposal allowing temporary CBAM suspension during price shocks. Instead, lawmakers want revenues from affected goods redirected toward exposed sectors during such periods.
Least-developed countries would receive simplified reporting requirements under the new position, along with a proposed technical assistance framework. Parliament also stripped out the option to use Paris Agreement Article 6 carbon credits against CBAM obligations, deferring that question to the broader emissions trading system revision.
A separate Temporary Decarbonisation Fund position passed with 433 votes to 97. Financial support would run from 2027 through 2029, starting one year earlier than the Commission planned. Fertiliser producers and downstream users facing higher carbon-related input costs would qualify.
Eligible products include urea, ammonium nitrate, and ammonium sulphate. Surplus revenue could flow toward EU international climate finance commitments rather than returning to member state budgets.
Negotiations with member states begin next. The outcome will determine how far European carbon pricing extends through global supply chains.
