The European Commission decided to update its carbon measurement system after hearing industry stakeholders, to prevent companies from circumventing checks and to reward companies working under the system for their efforts to balance productivity and the energy transition.
After speaking with industry leaders, the Commission will upgrade certain parts of the Carbon Border Adjustment Mechanism (CBAM) to address their concerns.
Commenting on the changes, European Commissioner for Climate Wopke Hoekstra said that “Building on lessons from the transitional period, this package prepares CBAM for the future at the heart of Europe’s clean and competitive transition.” Meanwhile, Stéphane Séjourné, Executive Vice-President for Industrial Strategy, added that “this CBAM reform brings crucial and long-awaited measures to ensure a level playing field between EU and non-EU industrial producers.”
The CBAM will cover 180 steel and aluminium-intensive products, allowing producers to continue investing in the EU. Previously, the consumption of materials such as steel, aluminium, cement, and electricity was cumulated and calculated under the CBAM, leaving companies at risk of breaching EU targets, even though there are no green alternatives in some sectors. Most of the products included are industrial supply chain products, primarily heavy materials used in the production of goods, such as household appliances.
To avoid circumventing the CBAM rules, the Commission will include pre-consumer aluminium and steel scrap in calculations, levelling the playing field between EU and non-EU producers. In addition, the Commission will strengthen reporting requirements to improve tracing and prevent misdeclarations of consumption.
The new rules for the CBAM will enter into effect from 2028. To help companies during the transitional phase, the EU will launch a temporary fund for companies subject to CBAM. It will reimburse a portion of the EU-ETS carbon costs for goods that will remain under the previous rules until 2028.
