BRUSSELS, Oct. 21, 2026 — A coalition of European industrial organisations has asked EU lawmakers to extend the Carbon Border Adjustment Mechanism (CBAM) beyond basic materials into a broader set of manufactured products. The group argues that differences in carbon-cost exposure could disadvantage European factories competing with imported finished goods.
The initiative was announced on Oct. 19 and brings together 20 European industry associations and industriAll European Trade Union. It calls on the European Parliament, Council and Commission to pursue the broadest possible downstream extension as negotiations continue on the mechanism’s future product scope.
The campaign includes EUROFER, European Aluminium, EUROMETAL and Steel for Packaging Europe. It also involves organisations representing metal processors, component producers and wider industrial supply chains.
CBAM enters definitive phase as procurement and costs are affected
The coalition’s intervention comes as CBAM entered its definitive period in January 2026. Industry representatives say the mechanism increasingly influences procurement decisions, production costs and cross-border trading relationships across energy-intensive sectors.
The group’s central concern is that European manufacturers face carbon-related costs through the EU Emissions Trading System (EU ETS) and the prices of covered steel and aluminium inputs. At the same time, certain finished products manufactured outside the EU can enter the bloc without equivalent border-carbon obligations.
Industry representatives argue that excluding downstream goods from CBAM could weaken European processing and manufacturing rather than prevent carbon leakage. They point to differences in how carbon costs can be reflected across supply chains depending on whether particular products are covered by the mechanism.
Covered sectors and downstream exposure concerns
CBAM currently covers selected goods in six sectors: iron and steel, aluminium, cement, fertilisers, electricity and hydrogen. The mechanism is designed to align carbon costs of covered imports with those faced by comparable EU production.
According to the coalition, CBAM’s product-specific structure can still lead to different outcomes between basic materials and finished goods incorporating them. It describes a scenario in which a European component manufacturer buys steel or aluminium priced with carbon costs, while an overseas competitor processes similar materials into a finished product not covered by CBAM.
The issue is described as becoming more significant as EU ETS free allowances are progressively withdrawn. The coalition says European processors could face rising carbon-related costs in input supply chains while competing against imported products that do not incur corresponding obligations under the current CBAM scope.
The sectors potentially affected include automotive components, machinery, industrial equipment, construction products, electrical systems, packaging, household appliances, cookware and clean-energy equipment. The coalition states that exposure in these industries is not limited to imported raw-material prices but also reflects cumulative carbon pricing along manufacturing chains.
EU institutions back different CBAM downstream product lists
The European Commission presented COM(2025)989 in December 2025 proposing to add 180 steel- and aluminium-intensive downstream products to CBAM. The proposed extension would begin on Jan. 1, 2028 if legislation is adopted.
The Council’s June 2026 negotiating position supported broader product coverage and stronger safeguards against circumvention. In September, the European Parliament adopted a more extensive position backing 457 downstream product categories.
Parliament approved its amendments by 464 votes to 50, with 159 abstentions, setting its mandate for negotiations with the Council. The legislative file also addresses treatment of steel and aluminium scrap, emissions associated with precursors, default emissions values for high-risk cases and practices involving allocation of lower-emission production to goods exported to the EU.
The Parliament’s position includes lowering the annual mass-based exemption threshold for aluminium goods from 50 tonnes to 5 tonnes. The coalition notes these elements remain negotiating positions rather than adopted legislation, with final coverage and compliance details depending on negotiations between EU institutions.
Downstream manufacturers cite compliance risks; exporters face product-specific effects
The coalition says support for expanded coverage is not uniform across European industry. It reports that steel producers and metal processors generally favour stronger measures against imports benefiting from lower carbon costs, while some downstream manufacturers fear faster expansion could raise procurement expenses and add reporting requirements.
An October statement cited objections from ACEA, CLEPA and TyresEurope to extending CBAM across hundreds of additional customs classifications before existing verification and implementation problems are fully resolved. The organisations called for proportionate product coverage, workable exemptions and realistic implementation deadlines.
The coalition links these concerns to differing effects within supply chains. It says broader coverage could improve competitive positioning for European producers versus imported finished goods but could also increase compliance costs for manufacturers, distributors and industrial buyers relying on imported components.
If adopted, CBAM obligations could extend further into international trade in components and manufactured goods rather than focusing only on primary materials. Suppliers in China, India, Türkiye, Ukraine, the Western Balkans and other manufacturing markets could face additional requirements where their products fall within final EU customs classifications.
The impact would vary by product and production route. The coalition says suppliers using lower-emission steel or aluminium with reliable installation-level emissions records could be better positioned than competitors relying on more carbon-intensive processes or unfavourable default values.
It also states that manufacturers without credible emissions documentation could face higher calculated liabilities, more demanding compliance procedures or less favourable procurement terms from EU customers. It adds that country-level trade statistics alone cannot determine which exporters would gain or lose market share without exact Combined Nomenclature (CN) codes included in final legislation alongside comparable EU import volumes, customs values and verified emissions data.
Traceability requirements expand; electricity accounting varies by sector
The coalition says broader downstream coverage would increase the importance of emissions monitoring, verification and traceability across industrial supply chains. Importers would need to account for carbon exposure when selecting suppliers, calculating landed costs and negotiating contracts.
Manufacturers would face greater pressure to document links between production installations, purchased materials, precursor emissions and energy consumption alongside finished products. The coalition notes this could be particularly relevant where emissions from multiple facilities or intermediate production stages contribute to a final good.
It highlights electricity procurement as another consideration for energy-intensive manufacturers while stating that treatment of electricity-related emissions varies between CBAM sectors and products. Renewable electricity contracts or certificates do not automatically establish a lower CBAM liability; any claimed reduction must meet applicable product-specific methodology and verification requirements.
The coalition also points to carbon accounting potentially playing a larger role in financing decisions. It says banks supporting industrial expansion or cross-border acquisitions may need to assess prospective CBAM exposure alongside energy-price volatility, raw-material availability and market demand.
Negotiations continue amid industrial policy considerations
The dispute is framed around balancing industrial competitiveness with affordable energy, emissions reduction and economic security within EU policy discussions. The coalition states that steel and aluminium producers face international competition alongside decarbonisation costs while manufacturers using those materials must remain competitive in markets where prices are highly sensitive.
The coalition says a narrower mechanism could leave gaps through which carbon-intensive production shifts into finished goods remaining outside CBAM coverage. It also states that an overly broad or poorly designed extension could create administrative and financial burdens for manufacturers dependent on imported components.
The legislative challenge described by the coalition is addressing genuine carbon-leakage risks without unnecessarily raising the cost of European manufacturing. It notes political-level talks were scheduled for Oct. 20 with an aim of reaching an agreement before the end of 2026; no final legislative compromise had been confirmed at the time of publication.