The European Union is advancing a broader Carbon Border Adjustment Mechanism (CBAM) framework that extends beyond primary materials to selected downstream products, increasing carbon reporting requirements across metals supply chains. On 12 June 2026, the Council of the European Union adopted its negotiating position supporting an expansion of CBAM, tighter anti-circumvention measures and broader coverage of steel- and aluminium-intensive goods ahead of negotiations with the European Parliament. The objective is to reach a final agreement before the end of 2026.
The revised framework marks a shift from regulating embedded emissions in basic commodities toward monitoring carbon intensity throughout industrial value chains. The proposed changes are expected to affect exporters, importers, manufacturers and processors supplying the European market with metal products and industrial components.
CBAM enters operational phase for carbon-intensive sectors
Since 1 January 2026, CBAM has entered its definitive implementation phase covering imports of iron and steel, aluminium, cement, fertilisers, electricity and hydrogen. Under the mechanism, imported products are assigned a carbon cost designed to align with that paid by EU manufacturers through the EU Emissions Trading System (EU ETS).
Importers exceeding the applicable thresholds must register as authorised CBAM declarants, report embedded emissions in imported goods and surrender CBAM certificates. Certificate prices are directly linked to EU ETS auction values.
The Council’s latest position addresses concerns that the initial CBAM design focused primarily on raw and semi-finished materials while leaving many downstream manufactured products outside the mechanism. This created the possibility that production could relocate outside the EU into later manufacturing stages while continuing to access the European market.
Downstream steel and aluminium products targeted
Under the Council proposal, the expanded downstream scope would apply from 1 January 2028, giving exporters and industrial buyers approximately 18 months to prepare emissions reporting systems, supply-chain documentation and verification procedures.
The proposed product categories include fabricated steel and aluminium goods such as steel structures, structural components, tanks, tubes, pipe fittings, wire ropes, fasteners, springs, as well as metal-intensive manufactured products including fittings, caps, lids, metal-framed seating, metal office furniture and prefabricated buildings incorporating steel or aluminium.
The expansion means that compliance increasingly depends on production-level emissions information rather than customs classification alone. Exporters supplying the EU will need verified information covering the origin of steel and aluminium inputs, production methods, emissions calculations and traceability throughout the manufacturing process. The European Commission has confirmed that actual emissions reporting requires independently verified emissions data from third-country producers, while CBAM declarations covering 2026 imports must be submitted by 30 September 2027.
Carbon pricing becomes part of commercial contracts
The financial implications are becoming increasingly significant as carbon costs are incorporated into cross-border trade. The first published CBAM certificate price for the first quarter of 2026 reached €75.36 per tonne of CO₂, calculated using EU ETS auction prices. During 2026, certificate prices are published quarterly before transitioning to weekly publication from 2027.
Carbon intensity and emissions documentation are therefore becoming commercial variables alongside production costs and delivery schedules. Producers capable of providing verified lower-emission manufacturing data may strengthen their competitiveness compared with suppliers relying on default emissions values.
Council strengthens anti-circumvention measures
A major component of the Council proposal focuses on preventing circumvention through selective allocation of lower-carbon production. The revised framework targets so-called “resource shuffling,” where producers export lower-emission products to Europe while directing higher-emission production elsewhere without reducing overall emissions.
Under the proposed rules, the European Commission could request additional evidence for combinations of products and countries considered to present elevated circumvention risk. Where sufficient evidence is unavailable, CBAM declarations may rely on Commission default values rather than verified producer data. Pre-consumer scrap also receives greater attention under the proposed revisions.
The Council supports including emissions associated with pre-consumer aluminium scrap and pre-consumer steel scrap when those materials serve as feedstock for CBAM-covered products. Claims that scrap qualifies as post-consumer material would require robust and verifiable documentation; otherwise, it may be treated as pre-consumer scrap for emissions calculations.
Implications for mining and mineral processing
The proposed expansion does not extend CBAM broadly to mining extraction or all mineral refining activities. Instead, its relevance for the mining industry is concentrated in processing chains supplying steel, aluminium, semi-finished products and fabricated metal goods entering European industrial markets. Processing facilities producing CBAM-covered materials or components may therefore face increasing demands for emissions monitoring, traceability and verification.
Electricity remains a separate category under CBAM with strategic importance for cross-border energy markets. The Council acknowledges that electricity flows are influenced by transmission system operations in addition to commercial trading. Future treatment of third-country electricity imports will take into account market coupling arrangements, implementation of electricity market rules, transmission system operator cooperation and progress toward carbon pricing aligned with the EU ETS.
For Serbia, Montenegro and other members of the Energy Community, this links CBAM compliance more closely to electricity market integration, grid operation, hourly metering, renewable electricity documentation and carbon intensity reporting.
Verification becomes central to market access
The strengthening of CBAM increases the importance of monitoring, reporting and verification systems across industrial supply chains. Exporters of steel, aluminium, cement, fertilisers, hydrogen-related materials and electricity supplying the European market will increasingly require emissions reporting systems acceptable to lenders, accredited verifiers and EU customers.
Documentation supporting renewable electricity purchases, power purchase agreements (PPAs), guarantees of origin and direct electricity supply arrangements will need to be supported by metering records, registry documentation and verified emissions calculations. Administrative responsibilities also extend to EU importers and customs representatives, who remain legally responsible for declarations, certificate surrender and supporting evidence.
Alongside the proposed strengthening measures, the earlier Omnibus I simplification package introduced a 50-tonne per importer per year de minimis threshold, primarily reducing obligations for smaller importers while maintaining coverage of approximately 99% of embedded emissions associated with imported CBAM goods.
Annual reviews could broaden future product coverage
The Council also proposes an annual review process allowing the European Commission to evaluate additional downstream products for future inclusion within CBAM. This approach would create a dynamic scope capable of expanding as carbon leakage risks emerge across industrial supply chains. Companies currently outside direct CBAM coverage but supplying metal-intensive, energy-intensive or EU-oriented manufacturing sectors may therefore face future reporting obligations as the mechanism develops.
Negotiations between the Council and the European Parliament will determine the final legislative framework, but the proposed reforms indicate increasing emphasis on verified emissions data, supply-chain traceability and carbon accounting across metals, electricity and downstream manufacturing entering the European market.
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