BRUSSELS, 30 OCTOBER 2026 — The European Union is continuing technical negotiations on extending the Carbon Border Adjustment Mechanism (CBAM) beyond primary materials. Member-state representatives are reviewing revised documents on including steel- and aluminium-intensive manufactured goods from 2028.
The Council’s Ad Hoc Working Party on CBAM is scheduled to meet in Brussels on 30 October. Preparatory material includes a revised four-column negotiating table and a presidency steering note dated 25 October and circulated on 26 October.
The discussions relate to legislative file 2025/0419(COD), originating from the European Commission’s proposal of December 2025. The initiative combines an extension of CBAM product coverage with measures intended to strengthen protection against circumvention.
The updated negotiating documents represent another procedural step in reconciling positions among the European Commission, Council and European Parliament. The substantive contents of the latest restricted working papers have not been publicly established, and no new political agreement or definitive list of downstream products has been confirmed.
Different counts of downstream products in Commission, Council and Parliament positions
The European Commission’s December 2025 proposal identified approximately 180 downstream product categories for potential inclusion. The focus is on manufactured goods containing significant quantities of steel or aluminium, with a proposed starting date of 1 January 2028, subject to adoption of the legislation.
The Council set out its negotiating position on 12 June 2026, supporting the extension while adjusting the Commission’s proposed product coverage. Its approach also includes additional products from industrial, construction and electrical-equipment sectors.
The European Parliament adopted its position on 15 September 2026, with 464 votes in favour, 50 against and 159 abstentions. Its amendments would extend the mechanism to more than 400 downstream product categories, including additional metal components, machinery and manufactured goods.
The differences between published product counts reflect classification methods used by institutions and analysts. Product types, customs headings, subheadings and eight-digit Combined Nomenclature (CN) codes do not yield identical totals, meaning the final scope depends on the legally adopted CN list rather than headline comparisons.
Downstream CBAM coverage linked to steel and aluminium value-chain effects
Extending CBAM to downstream products is described as addressing a potential competitive imbalance between European primary-material producers and manufacturers importing finished goods. Within the EU, metal fabricators may buy steel whose price already reflects carbon-related production or import costs.
Manufacturers outside the Union can potentially process comparable materials into finished products that remain outside the current CBAM product scope. Those finished products could then be exported to European customers without an equivalent border-carbon obligation.
The negotiations indicate that this difference could create incentives to move certain manufacturing operations outside the EU rather than maintain production within the European market. Extending coverage further along the value chain is intended to address exposure for European steel and aluminium producers.
The commercial consequences are expected to vary by sector depending on how costs and compliance responsibilities apply. Automotive component suppliers, machinery manufacturers, electrical-equipment producers and construction businesses that rely on imported intermediate or finished products could face higher procurement costs if their products enter the expanded framework.
Scrap treatment, circumvention safeguards and resource allocation issues
The legislative negotiations also cover treatment of pre-consumer metal scrap, material precursors and production practices that could undermine CBAM effectiveness. Scrap accounting is relevant because primary metal production and recycled-metal processing have different emissions profiles.
Distinguishing between pre-consumer and post-consumer scrap affects how the framework recognises material recovery and circular production. Council negotiators have broadly supported including pre-consumer scrap within the proposed framework.
The European Parliament has pursued further amendments related to scrap treatment and anti-circumvention provisions. Negotiations also address resource shuffling, where producers allocate lower-emission output to EU customers while directing more carbon-intensive production elsewhere.
Regulatory safeguards are intended to prevent such practices from weakening CBAM environmental objectives. The measures are also expected to distinguish between arrangements aimed at avoiding carbon-border liabilities and legitimate differences in production technologies, sourcing and commercial supply chains.
Aluminium import threshold changes and electricity emissions methodology
The existing CBAM framework generally provides a single mass-based exemption threshold of 50 tonnes annually for relevant goods. The European Parliament’s negotiating position supports a lower threshold for aluminium-related imports, which could bring additional businesses into compliance requirements.
This threshold adjustment remains part of legislative negotiations and has not become effective legislation. The wider file also addresses methodology for determining emissions associated with electricity imports supplied through interconnected transmission networks.
Potential amendments could affect assessment of qualified actual-emissions claims, contractual documentation and how electricity generation relates to physical cross-border flows. Until completion of the legislative process, electricity exporters must continue complying with requirements currently in force.
Proposed changes cannot be treated as an effective relaxation or replacement of existing eligibility conditions for electricity-related exports. The file therefore keeps current compliance requirements in place while amendments are under discussion.
Implications for Serbia, Montenegro and other supplier markets
The proposed expansion has implications for manufacturers supplying European customers from China, India, Türkiye, Ukraine, Serbia and other Western Balkan markets. For Serbia, potential exposure would extend beyond primary steel production into metal processing, industrial components, machinery and other export-oriented manufacturing activities.
Products currently outside CBAM could become subject to additional emissions reporting and carbon-cost requirements if their CN classifications are included in final legislation. In Montenegro, relevant exposure includes aluminium-related industrial supply chains as well as potential changes affecting treatment of cross-border electricity.
European importers may begin requesting product-level emissions information ahead of the proposed implementation date. This reflects time needed for monitoring procedures, verification arrangements and contractual data-sharing systems.
Inclusion in a proposed customs classification does not create an immediate legal obligation. Businesses are expected to distinguish between products already covered by applicable CBAM regulation and those appearing only in negotiating positions of EU institutions.
Verification requirements shaping investment planning for industrial actors
The prospect of wider coverage from 2028 is relevant to investment decisions, long-term procurement contracts and industrial financing. Manufacturers may need systems capable of documenting emissions tied to purchased materials, production operations and relevant precursors if their products enter the expanded mechanism.
For industrial lenders, additional requirements could affect assessments of product margins, export demand, working-capital needs and investments in lower-emission production technologies. European importers may also seek more detailed contractual provisions covering emissions-data delivery, verification responsibilities and allocation of future carbon-related costs between suppliers and buyers.
Reliable calculations of additional landed costs cannot be established for products still under negotiation until final CN classifications are determined alongside applicable emissions methodologies and regulatory adjustments. Revised negotiating documents also indicate member states continue technical work on the legislative file.
Further institutional negotiations remain necessary before proposed changes can be adopted. The planned 1 January 2028 downstream expansion remains a legislative proposal rather than an obligation under current law.
The 30 October working-party meeting does not establish that a final political compromise has been reached.