The European Parliament has approved in a plenary vote by 464 to 50, with 159 abstentions, the extension of CBAM to cover downstream goods, including additional steel-containing goods proposed by the Industry, Research and Energy Committee (ITRE). It has also approved a fund to support the low-carbon transition.
Products such as fasteners, wire, springs and household articles are included in the proposed bill, a broader range than the Commission initially proposed.
MEPs also lowered the threshold by which small changes to a particular good would qualify as circumvention of the rules. They tightened the rule, so it targets only arrangements set up purely to avoid 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, a Parliament note explains.
The Commission’s proposed safeguard was rejected. This would have allowed goods to be removed from the scope of the mechanism in the event of price shocks. MEPs instead want to add a mechanism to temporarily redirect CBAM revenues from the goods concerned to the affected sectors.
Parliament 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.
All downstream operators – firms that use CBAM-covered goods as inputs in their production – should be eligible for support from the fund. Leftover revenue could instead be redirected to the EU’s international climate finance commitments under the Paris Agreement.
Parliament will now start negotiations with EU member states on the final shape of the bill.
Eurofer welcomed the Parliament vote, highlighting as most important the CBAM extension to more products made from steel, including the priority list proposed by ITRE. “Broader coverage makes it harder to avoid CBAM by manufacturing steel into finished products outside Europe and then importing them into the EU,” it says in a note sent to Kallanish.
Eurometal also welcomed the move to extend CBAM to downstream steel products, but warned large numbers of steel-containing goods remain outside the mechanism’s scope, thereby providing a potential circumvention route. “Global suppliers will naturally redirect production towards categories that remain exempt, moving additional processing steps outside Europe while continuing to access the EU market,” it notes.
European export competitiveness, “perhaps the most significant structural weakness”, remains unaddressed, with exporters unable to recover carbon costs embedded in steel procured in the EU, Eurometal adds. “Until a credible mechanism exists to neutralise carbon costs for exports while remaining compliant with international trade obligations, Europe will continue to expose its manufacturing sector to an uneven global competitive environment,” the association continues.
Also needed are measures to address the cumulative impact of trade defence measures and other regulatory cost burdens throughout the manufacturing value chain, it concludes.
