The European Parliament’s Environment Committee has voted heavily in favour of expanding the scope of the European Union’s Carbon Border Adjustment Mechanism (CBAM) to include downstream goods, whilst simultaneously backing a temporary fund to assist industries with the low-carbon transition.
Members of the Committee on the Environment, Public Health and Food Safety adopted their position on the proposed CBAM reforms by 56 votes to 11, with 12 abstentions. The approved measures align with the European Commission’s plan to extend CBAM beyond basic materials to a broad list of finished steel and aluminium products, including fasteners, wire, springs, and household articles, provided the expansion relies on transparent, quantitative methodologies.
To close existing loopholes, MEPs tightened anti-circumvention regulations to cover minor processing intended solely to evade the carbon tax, whilst ensuring legitimate cost-reduction business decisions remain unaffected. The committee also targeting online sales by recommending a single weight-based limit for a seller’s collective shipments, replacing the parcel-by-parcel threshold to stop companies splitting deliveries.
A safeguard that would have allowed goods to be removed from the mechanism during price shocks was deleted. In its place, a mechanism was introduced to temporarily redirect CBAM revenues back to the affected sectors.
In a parallel vote, the committee approved its stance on the related Temporary Decarbonisation Fund (TDF) by 59 votes to 16, with 6 abstentions. MEPs intend for this financial support to protect EU producers on export markets, arguing that the fund should launch early in 2027 rather than 2028. Due to food security concerns, the committee expanded fund eligibility to include fertiliser producers and downstream users grappling with elevated carbon costs for inputs like urea and ammonium nitrate.
Mohammed Chahim, the CBAM rapporteur, described the compromise as a balanced package that strengthens enforcement and closes vital loopholes to protect European industry during decarbonisation.
Pascal Canfin, rapporteur for the Temporary Decarbonisation Fund, added that the decision marks a significant step towards securing investment in European decarbonisation by broadening product coverage to create a level playing field and countering resource shuffling from international competitors.
The full European Parliament is scheduled to vote on the mandate during the September plenary session, which will establish its position for final negotiations with EU member states.
