Closing the Loopholes: What the Inclusion of Metal Scrap Means for Importers

The Council agrees its negotiating position

On 12 June 2026, the Council, meeting in its ECOFIN format, agreed its general approach on strengthening the CBAM. This sets the member states' negotiating position for the upcoming trilogues with the Parliament. Two strands are at stake, the extension to downstream products and a package of anti-circumvention measures. At the centre of the second strand is the inclusion of metal scrap, which reaches well beyond a technical adjustment.

Metal scrap enters the scope

So far, the CBAM has targeted almost exclusively raw materials. Pre-consumer metal scrap, meaning production scrap from manufacturing, remained outside its reach. The Council largely follows the Commission proposal here and brings this scrap into scope as an input material, so that its emissions will feed into the calculation of embedded emissions. At first glance this looks contradictory, because using scrap lowers the embedded emissions of a good, and lower-emission material is exactly what the CBAM wants to encourage.

Why using scrap can become circumvention

The CBAM determines embedded emissions not per shipment but per functional unit, meaning a single value per tonne of a given CN code. Under Article 4 of Implementing Regulation (EU) 2025/2547, different production routes within an installation are merged into one production process, and splitting an installation solely to circumvent the rules is expressly prohibited. A single batch deliberately enriched with scrap therefore cannot be singled out.

The lever lies in how scrap is valued. Under the monitoring rules of Annex II, scrap arising in one process and entering another is assigned zero embedded emissions. If a producer raises the scrap share, the single per-tonne value falls for its entire output. With pre-consumer scrap this is the weak point, because such scrap is the residue of emission-intensive primary production. Counted as zero, that real carbon share drops out of the calculation entirely. This is exactly the gap that the inclusion of pre-consumer scrap as an input material with attributed emissions closes, while genuine post-consumer scrap from the recycling loop continues to count as zero.

Installations already have to record the pre-consumer scrap share as a parameter. In future it will help determine how high a good's embedded emissions are, which is why companies should robustly document the volume, origin, and pre-consumer share of their scrap.

No shortage, but an outflow problem

The European market is not currently short of scrap. The EU is a substantial net exporter. In 2023, ferrous scrap exports reached around 18.9 million tonnes, more than double the 2015 level, and about 70 percent went to Türkiye. The Turkish steel industry covers around three quarters of its production via the electric arc furnace route and depends heavily on European scrap. The real problem is therefore not a present bottleneck but the outflow. The more European steelmakers shift to the electric arc furnace route to decarbonise, the faster domestic demand rises, and scrap becomes a strategically scarce raw material. More than 40 countries already restrict scrap trade.

What the CBAM addresses and what it does not

The inclusion of scrap operates on the import side. It closes a circumvention route but leaves the export side untouched, and that is where parts of the industry see the larger structural problem. Associations such as EUROFER and European Aluminium warn of scrap leakage and call for export curbs toward third countries that themselves restrict critical raw materials. EUROFER also criticises that the scrap inclusion was adopted without a dedicated impact assessment and warns of countereffects for the circular economy. For importers and processors, the rules tighten on one side while the supply question on the other remains open.

When reporting becomes the weak point

The second building block of the anti-circumvention package concerns the quality of reporting. The Council empowers the Commission to step in when deceptive practices in reporting are detected at companies considered high-risk. This shifts the focus of scrutiny from product classification alone toward the credibility of the reported data. For importers, this means that traceable and robustly documented emissions data gain weight. A clean data chain across suppliers becomes not only a cost question but a question of whether a declaration holds up at all.

Outlook

The Council position is the basis for negotiation, not the final result. The Parliament is expected to adopt its position in September, after which the trilogues begin with the aim of reaching agreement by the end of the year. Until then, the exact start date for the scrap inclusion, the requested impact assessment, and the criteria for high-risk companies remain open. We will continue to monitor these developments for you.

Support

If you would like to understand how the inclusion of metal scrap and the new anti-circumvention rules could affect your CBAM strategy, for instance when assessing your scrap routes, your sources of supply, or the robustness of your supplier data, please get in touch at helge@kolum.earth.