MEPS adopt their positions on wider CBAM scope and tougher anti-circumvention rules

Strasbourg, 15 September 2026

Long list of downstream products added to carbon border adjustment mechanism (CBAM)
Tougher anti-circumvention rules to prevent abuse
A temporary decarbonisation fund to protect EU firms in export markets

The European Parliament has backed an extension of the EU’s carbon border adjustment mechanism to cover downstream goods and a fund to support the low-carbon transition.

Plenary adopted its position for negotiations with member states on proposed changes to the CBAM by 464 to 50, with 159 abstentions.

MEPs agree with the Commission’s proposal to extend the scope beyond basic materials to an extensive list of downstream products – finished steel and aluminium goods such as fasteners, wire, springs and household articles – and broadened it further than the Commission proposed. They also added an exemption for electricity flows from non-EU countries used by grid operators to maintain network stability.

Closing loopholes

To stop circumvention of the rules, MEPs are lowering the threshold by which small changes to a particular good would qualify as circumvention of the rules. They also tightened the rule, so it targets only arrangements set up purely to avoid the CBAM, and not normal business decisions to lower a company’s costs. MEPs also want to empower the Commission to apply the true country of origin’s default values where a pattern of circumvention is established.

They rejected the Commission’s proposed safeguard that would have allowed goods to be removed from the scope of the mechanism in the event of price shocks. In its place, MEPs want to add a mechanism to temporarily redirect CBAM revenues from the goods concerned to the affected sectors.

Finally, MEPs are proposing simplified reporting for least-developed countries and a technical assistance framework, but removed the Commission’s option to count Paris Agreement Article 6 carbon credits against CBAM obligations, since this issue is likely to be discussed in the context of the upcoming revision of the EU emissions trading system (ETS).

Temporary decarbonisation fund

Parliament also adopted its position on the related temporary decarbonisation fund (TDF) to protect EU producers on export markets, by 433 votes to 97, with 146 abstentions.

MEPs want financial support from the TDF to run from 2027 to 2029, rather than only from 2028 as proposed by the Commission. As fertilisers are a strategic input for food security, they also want to open the fund to fertiliser producers and downstream users facing higher carbon-related input costs, with products such as urea, ammonium nitrate and ammonium sulphate added to the list of eligible goods.

All downstream operators – firms that use CBAM-covered goods as inputs in their production – should be eligible for support from the fund, according to MEPs, while leftover revenue could be redirected to the EU’s international climate finance commitments under the Paris Agreement instead of being returned to member states, as the Commission proposed.

Quotes

CBAM rapporteur Mohammed Chahim (S&D, NL) said: “This compromise makes the CBAM stronger, fairer and more resilient. We have closed important loopholes, strengthened enforcement against circumvention, and expanded the mechanism’s scope where it matters most. It is a balanced package that protects European industry as it decarbonises while safeguarding the environmental integrity of the mechanism.”

Rapporteur for the temporary decarbonisation fund Pascal Canfin (Renew, FR) said: “Today we have taken a big step towards making Europe a safe place for investment in decarbonisation: we are broadening product coverage to enhance the level playing field and we are setting out stronger anti-circumvention rules, notably against resource shuffling from China. We are also offering a more robust solution for farmers hit by fertiliser costs, and an export scheme to protect European companies on export markets where their competitors do not pay a carbon price.”

Next steps

Parliament is now ready to start negotiations with EU member states on the final shape of the bill.

Background

The EU’s carbon border adjustment mechanism is the EU’s tool to equalise the price of carbon paid for EU products operating under the ETS with that of imported goods, to reduce the risk of carbon leakage and to encourage greater climate ambition in non-EU countries. In 2025, Parliament adopted simplification measures to exempt 90% of importers from CBAM rules while still maintaining climate ambition, as 99% of CO2 emissions are still covered.

Further information

Source – EU Parliament

Statement by MEPs Liese and Ehler (EPP/CDU) on proposed CBAM amendments

Strasbourg, 15 September 2026

The European Parliament adopted its position on a revision of the carbon border adjustment mechanism (CBAM) on Tuesday. Peter Liese (CDU), the EPP Group’s spokesperson on environment and climate policy, and Christian Ehler (CDU), the EPP Group’s spokesperson on industrial policy, issued the following statement:

The changes to the carbon border adjustment mechanism are urgently needed to protect our domestic companies from unfair competition from countries outside the EU. Currently, for example, pure steel products are protected by CBAM, whereas products consisting of ‘only’ 99% steel are not. Many companies rightly criticise this and have called for their products to be included in the CBAM list as well.”

“We successfully pushed for the European Parliament to seek to close these major loopholes. We can now also counter other creative attempts by third countries to circumvent the rules. It is unacceptable, for example, for third countries such as China to simply send their green steel to Europe to avoid paying carbon costs on the EU market, while using dirty steel domestically, without increasing the overall share of green steel at all. Today’s decision is enormously important for the steel industry.

The decision also contains positive elements for fertiliser producers. In its proposal, the European Commission had reserved the right to unilaterally exempt individual sectors from CBAM. This would have meant Parliament giving the Commission a blank cheque to suspend CBAM. There would have been no scrutiny whatsoever of such consequential decisions. This would have created considerable uncertainty and planning difficulties for our companies, particularly in the fertiliser sector. To address potential problems in agriculture, we instead succeeded in incorporating more support for farmers into the text.

But there is more to do. The European Parliament has been calling for years for a solution to the risk of carbon leakage in third-country markets. Exporting companies do not benefit from CBAM protection to the same extent as companies serving the European market. We will use the forthcoming reform of the EU emissions trading system to secure further improvements.”

Disclaimer: e-translated by ChatGPT, prompted by Insight EUThis English translation is provided for informational purposes only. In the event of any discrepancies or legal interpretations, the original German version shall prevail and is the only legally binding text.

S&D: Stronger carbon border rules are key to fair competition and a cleaner European industry

Strasbourg, 15 September 2026

The European Parliament today voted to strengthen the EU’s carbon border rules, delivering a strong outcome spearheaded by the S&D Group and its lead rapporteur, Mohammed Chahim. The new rules will make sure that companies cannot avoid CBAM by importing more processed goods or finding other ways around the system, helping to strengthen a level playing field for EU companies as they invest and compete in a cleaner economy.

Europe is asking its industry to cut emissions and invest in clean technologies. We cannot allow imports produced under weaker climate standards to gain an unfair advantage by escaping the same carbon costs. Closing these loopholes is essential to prevent carbon leakage while keeping Europe on track with its climate goals.

Mohammed Chahim, S&D co-vice-president for the Green Deal and European Parliament rapporteur on CBAM, said:

CBAM is about creating a level playing field: companies outside Europe should either decarbonise their products or pay for their carbon content, just as European companies already do. But this only works if the system is watertight. By extending CBAM downstream and strengthening anti-circumvention rules, we are closing loopholes and giving companies the certainty they need to invest in decarbonisation. In the end, CBAM will not only intensify clean production in Europe, but also globally.”

Notes

The EU’s Carbon Border Adjustment Mechanism (CBAM) puts a carbon price on imports in six carbon-intensive sectors: cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen. It aims to prevent carbon leakage and ensure fair competition between EU producers and imports.

The extension voted on by Parliament would cover 180 additional steel- and aluminium-intensive downstream products, such as certain steel structures, pipes and tubes, and aluminium products and components. It would prevent companies from avoiding CBAM simply by importing a more processed product. The proposal also strengthens anti-circumvention rules to tackle practices designed to avoid CBAM obligations, including through processing or routing via third countries.

Source – S&D Group