EU lawmakers have backed plans to widen the bloc’s carbon border adjustment mechanism to cover more finished goods and to set up a temporary fund to support companies facing carbon-related costs.
MEPs adopted Parliament’s negotiating position on changes to the carbon border adjustment mechanism (CBAM) by 464 votes to 50, with 159 abstentions.
CBAM is the EU’s system that applies a carbon price to certain imports to mirror costs paid by EU producers under the EU Emissions Trading System, the Parliament said in a release on Tuesday.
The agreed position supports extending CBAM beyond basic materials to a longer list of “downstream” products, including finished steel and aluminium goods such as fasteners, wire, springs and household articles, and MEPs broadened the list further than the European Commission proposed.
An exemption was also added for electricity flows from non-EU countries used by grid operators to maintain network stability.
MEPs also backed changes designed to reduce attempts to avoid the rules, including lowering the threshold at which small modifications to a product could be treated as circumvention.
Parliament also tightened the definition so that enforcement targets arrangements set up purely to avoid CBAM, rather than “normal business decisions” to cut costs.
Temporary fund and fertilisers
Parliament separately adopted its position on a temporary decarbonisation fund (TDF) to support EU producers in export markets by 433 votes to 97, with 146 abstentions, it said.
MEPs want the fund to run from 2027 to 2029, rather than starting in 2028 as the Commission proposed.
They also want fertiliser producers and downstream users to be eligible for support, with products including urea, ammonium nitrate and ammonium sulphate added to the list.
Under Parliament’s position, all downstream operators — companies that use CBAM-covered goods as inputs — would be eligible for support from the fund.
It also proposes that leftover revenue could be redirected to the EU’s international climate finance commitments under the Paris Agreement rather than being returned to member states.
Parliament is now ready to begin negotiations with EU member states on the final shape of the legislation.
