EU Member States Agree to Extend CBAM to Downstream Products From 2028
The bloc's carbon border levy will reach more than 400 finished goods, dragging importers of screws, fasteners and fabricated metal into the EU ETS reporting perimeter.
EU member states agreed on Friday (2026-06-12) to extend the carbon border adjustment mechanism to downstream sectors from 2028, moving the levy beyond raw materials and into more than 400 finished and semi-finished products.5
That matters for anyone importing steel or aluminium-bearing goods into the bloc. Until now, CBAM has applied at the primary-material stage: cement, steel, aluminium, fertiliser, electricity and hydrogen. Extending it downstream pulls fabricated metal products, fasteners and similar goods into scope, which means importers who previously sat outside the mechanism now face an emissions-reporting obligation on the carbon embedded in their supply chains.
The agreement among member states follows a European Parliament committee debate in which MEPs backed deleting a draft clause that would have allowed CBAM to be suspended for specific goods as needed. During the environment committee debate late on Tuesday (2026-05-19), members said they wanted the emergency suspension option struck from the text.2 The Parliament is pushing in the opposite direction from flexibility, tightening rather than loosening the mechanism's reach.
Industry has already drawn a line on what should and should not be inside the perimeter. International carbon offsets should stay outside proposals to expand CBAM, at least until the market clarifies their potential inclusion in the EU ETS, according to Sarah Hay, climate policy lead at Norsk Hydro.1 "There shouldn't be anything new coming in under CBAM that you don't have under the EU ETS now," Hay said.1 That is a direct argument against letting offset credits — particularly Article 6 international credits — count toward CBAM obligations before the EU's own emissions trading system settles the question of their role.
A European Parliament draft report on the mechanism exists, and the detail of how it handles credits is where the lobbying fight sits. The draft recognises domestically generated credits without additional qualitative or quantitative constraints, but for international Article 6 credits it only recognises internationally transferred mitigation outcomes that carry authorisation, and only where the third-country mechanism permits such credits.7 The distinction between domestic and international credits is not cosmetic. It determines which offsets can be used to reduce a CBAM bill and which cannot.
The western Balkans have flagged the export risk directly. Energy ministers from the region urged the European Parliament to further refine proposed CBAM changes in a joint letter seen by Montel, led by Montenegro.3 Balkan power exports to the EU face the mechanism at the electricity stage already, and the downstream extension widens the perimeter for their industrial exporters too.
How prices paid abroad feed into the CBAM carbon price remains a live drafting question. The EU has been setting out pricing frameworks for the mechanism, which applies a carbon price to imports of key materials including cement, steel, aluminium, electricity and hydrogen.6 The design question — how a carbon price paid in a third country is credited against the EU obligation — is what determines the effective levy on any given shipment.
Traders watching the carbon complex should note the sequencing risk. The downstream extension does not begin until 2028, but the rules being drafted now determine reporting obligations and credit eligibility well before that. International offsets are the contested line: keep them out until the ETS review clarifies their status, industry argues, while the Parliament's draft already carves out a role for authorised ITMOs.1,7
The European Parliament's trade committee has separately approved a compromise with EU governments and the Commission on legislation to implement a trade deal with the United States, voting 31 to six with three abstentions.4 That is a different file, but it signals the Parliament is moving multiple trade instruments at once, and the political bandwidth for CBAM refinement competes with it.
For importers of downstream metal products, the practical question is timing and scope: which of the more than 400 products land in the first wave, and what evidence of embedded emissions will be required. For carbon markets, the question is whether international credits find a route into CBAM compliance before the ETS review decides their fate. The member-state agreement moves the mechanism closer to finished goods; the fight over credits is unresolved.5,17