Changes from report parliamentary committee draft to plenary report

As foreseen in the original Regulation, the European Commission has come forward with this proposal following the transitional phase of the CBAM (2023–2025), taking into account the lessons learned from this period. The Commission proposes to expand the scope of the CBAM as of 1 January 2028 to include selected steel- and aluminium-intensive downstream products, thereby addressing the risk that emissions are shifted along the value chain rather than effectively reduced. Moreover, this extension aims to safeguard the competitiveness of EU producers by levelling the playing field with producers outside the EU. At the same time, the Commission proposes additional measures to prevent avoidance behaviour, including enhanced reporting requirements, improved traceability of goods, the integration of pre-consumer scrap in emissions calculations, and strengthened powers to address misdeclaration and abusive practices. The underlying principle of the CBAM remains strong: equal carbon pricing to both EU-based producers and those supplying the European market from abroad. The Rapporteur considers this proposal in the broader context of ongoing geopolitical developments, in particular the exceptional and continuing impact of Russia’s war of aggression against Ukraine, which deserves our utmost attention. While acknowledging the Commission’s evaluation of the current regulatory framework, the Rapporteur stresses the need for ongoing monitoring and adaptability. At the same time, the proposal is assessed in light of wider economic and energy developments, including pressures on the prices of certain commodities, the need to safeguard the security of energy supply, and the importance of maintaining energy cooperation with like-minded neighbouring countries.

Acknowledging the risk of carbon leakage in downstream sectors, the Commission proposed a list of 180 products to be added to the current CBAM scope. During the stakeholder consultation phase, the Rapporteur notes numerous requests from sectors, also beyond aluminium and steel sectors, to further expand the list. The Rapporteur supports the Commission’s approach, which relies on quantitative criteria, recognised EU databases, and follows the methodology used for the original CBAM. Product selection is based on an assessment of individual goods’ carbon leakage risk, their climate relevance, and the technical feasibility of inclusion. Carbon leakage risk is measured using trade intensity and cost-push indicators, while an emissions floor excludes products with sectoral emissions below a defined threshold, ensuring that the CBAM covers only goods with the highest climate impact. Moreover, the Rapporteur considers that in the upcoming review, the Commission should consider the extension of the scope to include so-called split CN codes originating from the list of products included in the Commission proposal. At this stage, the Rapporteur does not propose extending the CN codes but wishes to continue discussions with other political groups on the basis of the methodology used by the Commission. This makes the CBAM predictable and increases certainty for investors.

The prospect of the CBAM’s definitive application from 1 January 2026 has already begun to incentivise emission reductions and foster international debate on climate action. Regulatory stability is crucial to attract investment for the clean transition, and the newly introduced Article 27a on ‘Serious and unforeseen circumstances’ risks undermining the CBAM’s resilience and predictability, as it could allow scope exclusions to become the target of sector-specific interests. The provision also raises institutional concerns, as the product scope of the CBAM is a core element of the Regulation and should not be subject to the delegated acts procedure. For these reasons, the Rapporteur proposes to delete Article 27a in its entirety. Moreover, the Rapporteur considers that the discussions on the inclusion of international carbon credits for the CBAM compliance are premature and counterproductive. Furthermore, international carbon credits remain characterised by significant price volatility and variable environmental integrity, concerns that have been underlined in a recent assessment by the European Scientific Advisory Board on Climate Change. At the same time, the Rapporteur anticipates that, in collaboration with the Least Developed Countries (LDCs) there could emerge a shared interest in recognising other forms of carbon pricing as a complementary measure to accelerate decarbonisation and facilitate CBAM compliance. Therefore, a thorough assessment is required to evaluate the risks, data requirements, and broader implications of recognising carbon pricing mechanisms in LDCs as potentially compatible within the CBAM framework.

The Rapporteur proposes a series of measures to enhance the practical applicability of the CBAM Regulation and reduce uncertainties for operators. Among others, the Commission should publish default values for the newly included downstream goods in a timely manner before their application, using transparent and robust methodologies. At the same time, the Rapporteur highlights that the use of actual values should be the guiding principle. Furthermore, the Rapporteur proposes to define “pre-consumer scrap” and make explicit that the burden of proof lies with importers who wish to declare post-consumer scrap. Considering the newly introduced concept on abusive practices, the Rapporteur stresses the need for clearer rules; defining abusive practices more explicitly, specifying the parameters on which the Commission will monitor risks of such practices, clarifying the Commission’s mandate to adopt additional and ensuring safeguards and transparency in the exercise of these powers.

The Rapporteur stresses that the next CBAM revision, due by the end of 2027, should progressively extend coverage to indirect emissions in additional sectors, supporting a coherent EU carbon pricing framework and the Union’s climate-neutrality objectives. Given current disparities in indirect cost compensation across Member States, the Commission should assess technical and policy options, including a gradual phase-in of indirect emissions and a coordinated phase-out of compensation measures. The Commission’s review report from the transitional phase indicates that certain chemicals, polymers, and selected scrap materials could be feasibly included in the future, starting with products with simpler value chains or established EU ETS benchmarks and gradually expanding.

The Rapporteur is of the opinion that the proposed amendments create a coherent, technically feasible, and predictable framework, which balances the needs of short-term industrial competitiveness with long-term decarbonisation objectives, strengthens the EU’s carbon pricing framework, and incentivises a fair and effective reduction of greenhouse gas emissions across the Union and with its trading partners.