European steelmakers push Brussels to extend CBAM coverage to downstream goods
Steel producers argue the carbon border levy misses finished products, leaving EU mills at a cost disadvantage as imports shift up the value chain.
The European Commission set the first quarterly CBAM certificate price at EUR 75.36/t for Q1 2026, applying to imports of steel, aluminium and other covered materials entering the bloc.1 European steelmakers say that price signal is easily sidestepped: importers can avoid the carbon levy by shipping finished goods — cars, machinery, construction components — rather than the raw or semi-finished inputs the current rules actually cover.
That gap is the core complaint. CBAM covers upstream products; it does not reach the fabricated goods that embed them. A foreign producer can absorb the charge on steel billets or simply switch to exporting finished parts, arriving in European markets without a carbon cost while competing against mills that carry EU carbon prices in full.1
EU member states agreed in June (2026-06-12) to extend CBAM to downstream sectors from 2028, a step designed to close part of that exposure. The timeline and scope remain contested, and producers want broader coverage than the current draft provides.6
The downstream fight runs alongside a separate dispute over the mechanism's resilience. Members of the European Parliament voted in May (2026-05-19) to delete a draft clause that would have allowed CBAM certificate requirements to be suspended for specific goods in emergencies, Montel reported — a potential exit route for importers during supply disruptions. Removing that clause raises the floor.2
Other sectors are pushing in the opposite direction. Entso-E urged the Commission on Wednesday (2026-06-03) to clarify how balancing and emergency actions by transmission system operators should be treated under current CBAM rules, warning that ambiguity could generate unnecessary compliance burdens.3 Chemical producers have taken a more openly hostile position: industry chiefs met Commission President Ursula von der Leyen in Antwerp on Wednesday (2026-02-04) to press for a weaker version of the mechanism.5
The trade numbers give steelmakers' case some urgency. Beginning in July 2026, the EU cut tariff-free steel quotas by 47 percent, from roughly 33 million tonnes to 18.3 million, and doubled out-of-quota duties from 25 to 50 percent through 2031, according to Atlantic Council data.4 European Commission estimates put global steel overcapacity at 721 million tonnes by 2027, nearly five times total EU consumption.4 Quotas address volume; CBAM addresses embedded carbon. Neither substitutes for the other.
Steelmakers say a foreign producer can pay elevated out-of-quota duties and still undercut a European mill if the finished product escapes the carbon levy entirely.4,1 The preferred fix is to align the carbon charge with the trade barrier so that goods carry the full cost of their embedded emissions regardless of the form they take on arrival.
Measurement is the hard part. Calculating embedded carbon in steel billets is tractable; doing the same for a gearbox or a household appliance requires supplier-level data most importers do not currently provide. CBAM's administrative burden already draws complaints, and extending coverage to complex manufactured goods raises compliance costs substantially for smaller traders.1
Chinese car exports to Europe rose 26 percent between 2024 and 2025 to almost 1.2 million vehicles, Atlantic Council data show, despite tariffs introduced only a year earlier — evidence of how quickly import flows adapt around trade defences.4 Steel producers see an analogous shift forming in their market.
The Commission has yet to publish implementing rules for the 2028 downstream extension. Which sectors enter first, what thresholds apply and how embedded carbon gets calculated in complex manufactured goods will each shape the effective protection producers receive. For traders covering ICE EUA Dec-rolling, the downstream text matters too: a broader CBAM shifts political momentum behind the EU ETS, and any dilution in the draft rules would ease pressure on European carbon prices heading into the extension's first compliance year.6,7