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 examining revised documents on the inclusion of 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 revised negotiating documents reflect another procedural stage in reconciling positions held by the European Commission, Council and European Parliament. The substantive content of the latest restricted working papers has not been publicly established. No new political agreement or definitive list of downstream products has been confirmed.
Different institutional counts for downstream product scope
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 established its negotiating position on 12 June 2026. It supported the extension while adjusting the Commission’s proposed product coverage, and its approach also incorporates 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.
Published product counts differ due to classification methods used by institutions and analysts. Individual product types, customs headings, subheadings and eight-digit Combined Nomenclature (CN) codes do not produce identical totals. The final scope of CBAM obligations will depend on the legally adopted CN list rather than headline comparisons between proposals.
Downstream coverage linked to steel and aluminium value chains
The negotiations address a potential competitive imbalance between European primary-material producers and manufacturers importing finished goods. Within the EU, metal fabricators may purchase 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 goods could then be exported to European customers without an equivalent border-carbon obligation.
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 described as varying across manufacturing sectors. Automotive component suppliers, machinery manufacturers, electrical-equipment producers and construction businesses relying on imported intermediate or finished products could face higher procurement costs and additional compliance responsibilities if their products enter the expanded framework.
Scrap treatment, circumvention safeguards and aluminium import threshold
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 concerning scrap treatment and anti-circumvention provisions. Another issue under discussion is resource shuffling, where producers allocate lower-emission production to EU customers while directing more carbon-intensive output to other markets.
The file also addresses arrangements intended to avoid carbon-border liabilities alongside legitimate differences in production technologies, sourcing and commercial supply chains. In addition, the existing CBAM framework 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. This change remains part of legislative negotiations and has not become effective legislation.
Electricity emissions methodology for cross-border supply
The wider file addresses methodology used to determine emissions associated with electricity imports. This is particularly relevant for electricity producers outside the EU supplying European markets through interconnected transmission networks.
Potential amendments could affect assessment of qualified actual-emissions claims, contractual documentation and the relationship between electricity generation and 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. The negotiations therefore continue without altering current compliance obligations during the legislative process.
Implications for Serbia, Montenegro and Western Balkan exporters
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 to establish monitoring procedures, verification arrangements and contractual data-sharing systems.
However, inclusion in a proposed customs classification does not create an immediate legal obligation. Businesses must distinguish between products already covered by applicable CBAM regulation and those appearing only in negotiating positions held by EU institutions.
Verification requirements feeding into industrial financing decisions
The prospect of wider coverage from 2028 is also relevant for investment decisions, long-term procurement contracts and industrial financing. Manufacturers may need systems capable of documenting emissions associated with purchased materials, production operations and relevant precursors if their products become subject to expanded coverage.
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. The same depends on applicable emissions methodologies and regulatory adjustments that are not yet set out in adopted legislation.
The revised negotiating documents indicate member states continue technical work on the legislative file. Further institutional negotiations remain necessary before proposed changes can be adopted.
The planned downstream expansion starting on 1 January 2028 remains a legislative proposal rather than an obligation under current law. The meeting scheduled for 30 October does not establish that a final political compromise has been reached.