The European Parliament has announced that it has adopted its position on proposed changes to the EU Carbon Border Adjustment Mechanism (CBAM), backing an extension of the mechanism to additional downstream steel and aluminum products and stricter measures against circumvention. The position was adopted by 464 votes to 50, with 159 abstentions, and will form Parliament's mandate for negotiations with EU member states. The European Parliament is now ready to begin negotiations with the Council of the EU on the final legislation.
MEPs supported the European Commission's proposal to extend the CBAM beyond basic materials to downstream products with a high steel or aluminum content, including fasteners, wire, springs and household articles, while proposing to broaden the scope further than initially envisaged by the Commission. The Commission's original proposal covered 180 additional downstream products. They also added an exemption for electricity flows from non-EU countries used by grid operators to maintain network stability.
Tougher CBAM anti-circumvention measures supported
Parliament also backed stricter anti-circumvention provisions, including a lower threshold for determining when minor changes to goods may constitute circumvention. At the same time, MEPs want the rules to target arrangements established specifically to avoid CBAM obligations rather than ordinary business decisions aimed at reducing costs. In addition, Parliament wants the European Commission to be able to apply default emissions values from the actual country of origin where a pattern of circumvention has been identified.
MEPs rejected a proposed safeguard allowing products to be temporarily removed from the CBAM scope during price shocks. Instead, they supported a mechanism under which CBAM revenues from the affected products could temporarily be redirected to the sectors concerned.
Meanwhile, Parliament proposed simplified reporting requirements for least-developed countries and a technical assistance framework. However, it removed the Commission's proposal to allow carbon credits under Article 6 of the Paris Agreement to be deducted from CBAM obligations, leaving the issue to be considered in the upcoming revision of the EU Emissions Trading System.
Parliament backs changes to Temporary Decarbonisation Fund
Separately, Parliament adopted its position on the proposed Temporary Decarbonisation Fund (TDF) by 433 votes to 97, with 146 abstentions. MEPs want support under the fund to run from 2027 to 2029, rather than starting in 2028 as proposed by the Commission. Parliament also wants the fund to cover downstream users facing higher carbon-related input costs and to make all downstream operators using CBAM-covered goods as production inputs eligible for support.
