The European Steel Association (EUROFER) has stated that the European Commission’s latest proposals on the Carbon Border Adjustment Mechanism (CBAM) recognize several structural weaknesses that could undermine the instrument’s effectiveness. These include shortcomings related to EU exports, downstream sectors and circumvention practices.
Identification of shortcomings only a starting point
However, EUROFER has warned that the proposed measures do not yet amount to a comprehensive or durable solution capable of preventing carbon and jobs leakage. According to EUROFER director general Axel Eggert, recognizing CBAM’s shortcomings is only a starting point. He stressed that the remedies currently proposed by the Commission fall short of the level of protection required by the European steel industry. Eggert emphasized that, without robust and watertight solutions from the outset, CBAM will not be able to support steel sector decarbonisation while preserving global competitiveness.
Export-related carbon leakage remains unresolved
The association argues that the Commission’s approach remains fragmented and lacks a structural, long-term solution. The proposed export-related measures are time-limited, covering only a two-year period, and are narrow in scope, applying to less than one quarter of EU steel exports. In addition, the financing of the proposed Transitional Decarbonisation Fund remains uncertain. EUROFER warns that, without a comprehensive and predictable mechanism addressing export-related carbon leakage, EU steel producers will continue to face competitive disadvantages in international markets.
Circumvention risks not adequately addressed
EUROFER acknowledges that the Commission has correctly identified circumvention risks, including so-called resource shuffling. However, the association considers the proposed countermeasures insufficiently clear and weak in deterrence. Rather than establishing robust preventive safeguards, the current approach relies heavily on ex-post corrections to be defined later through implementing rules. EUROFER also cautioned that treating pre-consumer scrap as a CBAM precursor, initially prioritized for aluminum, could lead to unintended negative consequences for the steel sector.
Limited downstream coverage creates gaps
With regard to downstream sectors, the Commission proposes extending CBAM coverage to only a limited range of products. While EUROFER sees this as a step in the right direction, it argues that the narrow scope fails to address carbon leakage risks across the full steel value chain. According to the association, this limited extension leaves significant loopholes and may create new opportunities for circumvention.
In EUROFER’s view, without structural and comprehensive solutions, CBAM risks further penalizing European steelmakers and their customers at a time when the industry is already under pressure from global overcapacity, high energy costs and unfair trade practices.
