The next major policy dispute over the Carbon Border Adjustment Mechanism (CBAM) focuses on downstream products made from steel and aluminium. The European Commission has proposed extending the mechanism to 180 additional steel- and aluminium-intensive products starting in 2028. The Council has supported a broader list of approximately 200 goods, while Parliament adopted a negotiating position covering a substantially larger range. The final scope will be set through negotiations between the EU institutions.
Manufacturers and importers are being advised to separate proposed changes from the rules that govern imports in 2026. The Commission proposal and the positions adopted by the Council and Parliament can be used for scenario planning and contract preparation. However, they should not be treated as binding requirements before amending legislation takes effect. Companies are expected to plan for uncertainty while policy discussions continue.
Scenario planning for potential CBAM expansion
A two-scenario approach is described as a way to prepare for possible changes. One model would be based on current law, while another would reflect potential reform. This structure is intended to help businesses build data systems and consider optional contract clauses. It is designed to avoid compliance decisions that depend on legislation still under negotiation.
The definitive CBAM regime continues to apply to goods already covered by the regulation. The proposed downstream extension is intended to address carbon leakage further along industrial value chains. It aims to reduce the risk that imported finished products gain an advantage because their steel or aluminium inputs were processed outside the EU. The scope debate therefore targets how far coverage extends beyond primary materials.
Institutional differences could affect product-level coverage
Differences between the institutional positions are described as commercially significant. A fastener, cable, machinery component, or fabricated metal product could be included in one proposed list but excluded from another. As a result, broad assumptions that all downstream steel or aluminium products will be covered are not considered sufficient for business planning.
Manufacturers are expected to map their product Combined Nomenclature (CN) codes alongside bills of materials and covered metal precursors. Supplier installations and available emissions data are also identified as inputs for assessment work. The objective is to support multiple legislative scenarios and enable responses to EU customer requests before new obligations begin. A product-level scope review is highlighted as especially important for diversified portfolios.
Exposure is described as needing assessment against the precise customs classification of each product rather than its general industrial category. This approach is intended to reflect how customs treatment can determine whether a product falls within the final CBAM scope. For companies with mixed product lines, this method can help avoid relying on category-level assumptions. It also supports scenario comparisons across different lists under discussion.
Potential impacts on sourcing, emissions data, and contracting
The final product list could influence sourcing strategies, manufacturing locations, and investment decisions. EU downstream producers seek protection against imports containing carbon-intensive metals. Non-EU manufacturers using verified lower-emission inputs may retain a competitive advantage if the final methodology allows those emissions differences to be reflected in CBAM calculations.
The source material also points to potential cost pressures linked to default emissions values if the extension takes effect from 2028. Manufacturers able to obtain reliable information about metal inputs and production installations may be better positioned under different scenarios. For exporters outside the EU, proposed changes may affect commercial negotiations before direct legal obligations arise. EU buyers planning multi-year contracts or 2028 sourcing arrangements may request emissions information in advance.
Suppliers are described as needing to provide available evidence and identify which regulatory scenario it supports. They are also expected to distinguish verified information from assumptions rather than offer a specific CBAM treatment prematurely. This approach is tied to the unresolved nature of final legal scope and methodology during negotiations.
Western Balkans supply chains and early data preparation
The Western Balkans are cited as having automotive, machinery, electrical, and metal-processing supply chains serving EU markets. An extension to downstream goods could therefore affect a broader group of regional exporters than the original coverage of primary materials. Proximity to EU customers may support logistics, but reliable carbon information is also described as part of supplier assessment.
Preparing emissions data for steel and aluminium inputs alongside consistent product and customs records is identified as a way for exporters to respond to customer requests during negotiations. Companies are also advised to prioritize products with high revenue exposure that appear across all or most institutional positions under consideration. Early data preparation is described as relevant for these products, while investment decisions dependent on exact final scope may be delayed until legislation is settled.
Operationalising negotiation outcomes into compliance files
Monitoring negotiations is described as needing translation into specific actions rather than tracking announcements alone. Each material change should have an owner, a decision date, and an assessment of implications for procurement, customs, engineering, finance, and customer communications.
A three-column scope matrix covering the Commission, Council, and Parliament positions is cited as a tool for tracking differences in proposed coverage. As negotiations progress, companies would update the matrix and identify which CN codes, supplier records, contracts, and investment cases require reassessment.
The underlying compliance file should connect purchasing, production, customs, and finance records so assumptions can be explained consistently. It should support communication with both a verifier and a commercial manager using shared evidence. This includes documenting conditions under which an emissions calculation or regulatory assessment might change.
A minimum decision file is described as documenting legal status of the relevant provision, customs treatment, responsible data owner, implementation deadline, and approval of key assumptions. It should also include an alternative approach if preferred treatment cannot be substantiated. Establishing this fallback early is described as reducing risk if positions are challenged by a customer, verifier, customs authority, or authorised declarant.
How far CBAM may extend beyond primary metals
The central question identified is how far CBAM will extend beyond basic steel and aluminium into finished and semi-finished industrial products. The answer would determine which manufacturers remain mainly subject to customer data requests versus those facing direct obligations under an expanded legal framework.
Until final legislation is adopted, companies are advised to keep current compliance requirements separate from future scenarios while preparing product classifications and emissions evidence usable under either outcome. The final CN-code scope is described as critical for determining which supply chains must convert that preparation into formal CBAM compliance.