MEPs on the European Parliament’s Environment Committee have backed proposals to expand the EU’s carbon border adjustment mechanism to more finished goods and to set up a temporary fund to support companies’ low-carbon transition.
The committee adopted its position on changes to the carbon border adjustment mechanism — known as CBAM — by 56 votes to 11, with 12 abstentions, the Parliament announced on Tuesday.
CBAM is designed to align the carbon cost paid by some imported goods with the cost faced by EU producers under the EU emissions trading system (ETS) — a scheme that makes companies buy permits for their greenhouse gas emissions.
MEPs supported extending CBAM beyond basic materials to a “long list” of downstream products, including finished steel and aluminium goods such as fasteners, wire, springs and household articles.
They also added an exemption for electricity flows from non-EU countries used by grid operators to keep electricity networks stable.
New rules on circumvention and online imports
On anti-circumvention rules, MEPs said “slightly modifying” goods should also cover slight processing, and tightened the rule so it targets arrangements set up purely to avoid CBAM rather than normal business decisions to cut costs, according to the Parliament.
The committee also supported giving the European Commission power to apply default values from the true country of origin where a pattern of circumvention is found.
MEPs deleted a proposed safeguard that would have allowed goods to be removed from CBAM’s scope in the event of price shocks, replacing it with a mechanism to temporarily redirect CBAM revenues from the goods concerned to affected sectors.
They also proposed new rules for online sales, recommending a single weight-based limit be applied to a seller’s shipments as a whole rather than parcel by parcel, alongside new reporting duties and retroactive liability where shipments are split to stay under the threshold.
In addition, the committee proposed simplified reporting for least-developed countries and a technical assistance framework, while removing an option to count Paris Agreement Article 6 carbon credits against CBAM obligations.
The Environment Committee separately adopted its position on a related temporary decarbonisation fund by 59 votes to 16, with six abstentions.
MEPs proposed that financial support from the fund should run from 2027 to 2029, rather than starting in 2028 as proposed by the European Commission.
They also backed opening the fund to fertiliser producers and downstream users facing higher carbon-related input costs, adding products such as urea, ammonium nitrate and ammonium sulphate to the list of eligible goods.
All downstream operators — firms that use CBAM-covered goods as inputs — should be eligible for support, while leftover revenue could be redirected to the EU’s international climate finance commitments under the Paris Agreement instead of being returned to member states.
Parliament is scheduled to adopt its mandate for negotiations with EU member states on the final shape of the legislation during the September plenary session.
