12 June 2026, the Council agreed its position on strengthening the carbon border adjustment mechanism (CBAM), the EU’s tool to fight carbon leakage and promote global decarbonisation, ahead of negotiations with the European Parliament. The new framework would extend the CBAM’s scope to new products and close loopholes that may be used to circumvent the system.
In operation since 1 January 2026, the CBAM puts a price on carbon emitted during production of imported goods in the most carbon-intensive sectors: iron and steel, cement, fertilisers, aluminium, electricity and hydrogen, and encourages cleaner industrial production in non-EU countries.
In its current form, CBAM targets almost only raw materials. This creates a risk that EU-made products using a significant proportion of CBAM goods in their manufacture, in particular iron, steel and aluminium, could contribute to an increase of emissions outside the EU and replace similar EU products that are subject to the emissions trading scheme.
To prevent this, the updated legislation extends CBAM’s scope to a selection of such downstream products. In its agreed position, the Council has refined the list of new products to which the CBAM would be applied and mandates the Commission to conduct an annual review on future downstream products that could be included.
In terms of anti-circumvention, the Council’ largely agrees with the Commission’s original proposal which introduces new measures bringing pre-consumer metal scrap into CBAM’s scope and empowering the Commission to act when deceptive practices are detected during reporting by high-risk companies.
To deal with serious and unforeseen circumstances causing severe harm to the internal market, the Commission’s proposal laid out a process to temporarily exempt goods from the CBAM framework.
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