The Council Agrees on CBAM Extension: Downstream Steel and Aluminum Products Will Be Included in the Scope in 2028

The Council sets its negotiating position

On 12 June 2026, the Council of the EU reached a general approach in its ECOFIN configuration on the extension of the CBAM. The draft legislation extends the scope of Regulation (EU) 2023/956 to downstream steel and aluminium goods and introduces dedicated anti-circumvention measures for the first time. For many companies that were not previously affected by the CBAM, this fundamentally changes the starting position.

From raw steel to screws, engines and vehicle parts

The basis is the European Steel and Metals Action Plan (COM/2025/125). Annex I is extended in two steps. The existing "Iron and steel" table grows well beyond raw materials and now covers finished and semi-finished goods, including steel structures (7308), tanks and containers, tubes, wire, screws, bolts and nuts (7318), and household articles of steel.

A wholly new table for "Combined metal goods" is added. It ranges from nails and fittings through combustion engines (8408), pumps, refrigerators and washing machines to cranes, conveyors, industrial robots, motor vehicles (8704) and a long list of vehicle parts (8708) such as gearboxes, wheels, brakes and steering. Metal furniture, prefabricated buildings, boilers and turbines are also included. While only carbon dioxide is relevant for the iron and steel goods, the combined metal goods are additionally covered for perfluorocarbons, the process emissions of aluminium production.

What "containing steel or aluminium" means

Many of the new entries are so-called ex-codes. They do not capture the whole good, only its steel or aluminium content. Accordingly, the embedded emissions of downstream goods are calculated solely from the precursors they contain, whose system boundaries follow those of the EU ETS. It is also new that the material composition of each downstream good must be reported going forward. Importers therefore need to know how much steel or aluminium a product contains and where it comes from.

Application from 2028, preparation now

The extension of Annex I and of the precursors under the new Annex VIII applies from 1 January 2028. This significantly shifts the circle of affected companies. Machinery manufacturers, automotive suppliers, and importers of household appliances, furniture and construction products come into scope without having built CBAM processes so far. The first step is to match your own commodity codes against the new lists. In addition, the draft provides an emergency mechanism in Article 27a, allowing the Commission to exempt goods temporarily where their inclusion severely harms the internal market, for instance in the event of a sustained price increase of more than 50 percent.

A new hurdle: harmful resource shuffling

For the first time, the CBAM explicitly addresses harmful resource shuffling. This refers to the practice in which a producer with several sites deliberately exports only its cleanest output to the EU without decarbonising the rest of its production. For affected combinations of good and origin, the Commission is to set evidence requirements by implementing act. Where a declarant cannot demonstrate that no harmful resource shuffling has occurred, the CBAM declaration must rely on default values. This ties the use of actual emissions for importers from certain countries to additional conditions.

Pre-consumer scrap will count

The new Annex VIII brings pre-consumer scrap of steel (ex 7204) and aluminium (ex 7602) into scope as a precursor with emissions. Until now, such scrap was assigned zero emissions, which favoured imported goods over EU production. Going forward, the emissions of pre-consumer scrap count as soon as it serves as a precursor for Annex I goods. Anyone claiming that material is post-consumer scrap must substantiate this with robust evidence of origin. Without that evidence, the material is treated as pre-consumer scrap.

Standard values, global values and the mark-up

The draft now distinguishes between country-specific standard default values with an appropriate mark-up and global default values. Which category applies to a good depends on the risk of carbon leakage and the complexity of the supply chain. For many downstream goods with long, multi-stage value chains, the mark-up on the default values is to be waived in order to contain the administrative burden. That lowers the hurdle to working with default values, but the underlying reporting obligation remains.

Outlook

The general approach is the Council's negotiating position. The next step is the trilogue with the European Parliament, whose position is based on the draft Chahim report (see Issue 90). There is time before the extension takes effect on 1 January 2028, but anyone who wants to check whether their own commodity codes appear on the new lists should not wait for the trilogue to conclude.

Support

If you would like to understand whether your imported steel and aluminium products fall under the extended Annex I lists and which reporting and evidence obligations will apply to you from 2028, for instance in distinguishing pre-consumer from post-consumer scrap or in demonstrating the absence of harmful resource shuffling, please get in touch at helge@kolum.earth.