Parliament adopts its CBAM position: more downstream products, fewer loopholes
CBAM Weekly – Issue 112
Parliament sets its negotiating position
On 15 September, the European Parliament adopted its position for the negotiations with member states. By 464 votes to 50, with 159 abstentions, MEPs backed a stronger CBAM and the closing of circumvention loopholes. That clears the way for the trilogue. It is there that importers will learn how far the mechanism reaches into the value chain.
How far the line runs downstream
The extended scope carries the greatest practical weight. The Commission had proposed around 180 downstream products. Parliament supports the far broader line taken by its environment committee, reaching more than 450 product categories, while the Council's position sits at roughly 200 metal-intensive products. The new additions are more processed and complex goods with a high steel and aluminium content that are currently classified outside the metal customs headings, such as machinery, vehicle parts and household appliances like washing machines. Simple steel goods such as screws, containers and building structures already fall under CBAM today. The dispute in the trilogue therefore turns precisely on these more complex products and on the gap between Parliament's broad list and the Council's narrower one. For importers, every additional customs code means further businesses fall under CBAM obligations for the first time, having imported their input products free of that cost until now.
Tighter rules against circumvention
The second focus is loopholes. Parliament lowers the threshold at which small changes to a good count as circumvention and aims the rule squarely at modifications made only to avoid CBAM obligations, not at normal business decisions. This is complemented by definitions for practices such as resource shuffling. Where a pattern of circumvention is identified, authorities can apply the default values of the good's actual country of origin. An importer who slightly alters goods to fall outside the scope now carries a higher risk of being pulled back in.
Export protection runs through the decarbonisation fund
Separately, Parliament adopted its position on the temporary decarbonisation fund by 433 votes to 97, with 146 abstentions. The fund would run from 2027 to 2029, one year earlier than the Commission proposed, and would reimburse part of the ETS-related costs of European producers competing on export markets against rivals without a comparable carbon price. Fertiliser products such as urea, ammonium nitrate and ammonium sulphate are included. Parliament rejected an option that would have exempted certain goods from the mechanism. For European exporters this is a temporary cushion through reimbursements, not a permanent arrangement within CBAM itself. What replaces it after 2029 is open.
Why the same vote divides industry
Manufacturers demand opposite things from this vote, depending on where they sit in production. CBAM draws a line through the value chain. Whoever produces inside that line gains protection against imports that carry no comparable carbon price. Whoever processes goods just behind it inherits higher input costs without the same protection. This is why base-material producers push for the line to sit as far downstream as possible, while the processing and more export-oriented industries view an extension to complex products critically and point to the still unresolved disadvantage on markets outside the EU. Move the line further down, and protection, reporting duty and competitive effect all move with it. For importers, what matters is less which association prevails than on which side of that line their own products end up.
Outlook
The trilogue must reconcile Parliament's broad list with the Council's narrower one, roughly 450 against around 200 product categories. That gap, not the principle of downstream extension, will decide how many importers are covered for the first time from the planned start in 2028. Anyone who checks today which of their steel- and aluminium-containing goods appear on both lists and which only on Parliament's knows exactly which positions the trilogue will settle. We will continue to monitor these developments for you.
Support
If you would like to understand how the planned extension to downstream steel and aluminium products and the tightened circumvention rules could affect your CBAM obligations, for instance which of your customs codes are contested between the Parliament and Council lists, please get in touch at helge@kolum.earth.