EU plans to extend CBAM to 180 downstream products from 2028
The European Commission has submitted a legislative proposal to extend the Carbon Border Adjustment Mechanism to 180 aluminium and steel-intensive downstream products from 1 January 2028. The move addresses one of the key gaps identified during the transitional phase of the CBAM, when stakeholders warned that without extension, the mechanism risked merely shifting carbon leakage from primary materials to processed goods further down the supply chain.
Why downstream products matter
The original CBAM scope, in force since 1 January 2026, covers six primary sectors: cement, iron and steel, aluminium, fertilisers, electricity and hydrogen. Industries that import primary aluminium ingots or steel slabs from outside the EU pay the CBAM levy. However, importers can avoid the levy by sourcing finished goods such as aluminium window frames, steel pipes or fabricated components from third countries. This creates an incentive to relocate processing activities outside the EU, undermining both the climate objectives of the policy and the competitiveness of European manufacturers who comply with EU emission rules.
The Commission’s proposal
The 180 downstream products selected for inclusion were identified as having the highest and most clearly defined carbon leakage risks, combined with strong technical feasibility for obtaining actual emission values. The list covers a wide range of items, from basic processed steel products to fabricated aluminium components used in construction, automotive and consumer goods sectors. The proposal also introduces additional anti-avoidance measures, including potentially closing the scrap loophole by including pre-consumer aluminium and steel scrap in the CBAM scope, as well as enhanced reporting requirements for better traceability of CBAM goods.
Industry response and the path to adoption
European primary metals producers have broadly welcomed the proposal, arguing it is essential for a level playing field. Downstream importers and some manufacturing associations have raised concerns about administrative burden and supply chain disruption. The proposal must still be agreed by the European Parliament and the Council, with negotiations expected to extend through 2026 and into 2027. The Commission has also pledged a comprehensive review of how to address remaining carbon leakage risk from 2028 onward, as part of the scheduled EU ETS review.
