The European Council has announced that EU member states have reached agreement on a package of proposed amendments to the Carbon Border Adjustment Mechanism (CBAM), the EU’s carbon levy on imported goods. The proposed changes include extending the CBAM’s scope to certain downstream products to help prevent carbon leakage and avoid production shifting from EU manufacturers to competitors in countries with less stringent climate policies.
The Council’s position will serve as the basis for forthcoming negotiations with the European Parliament on the European Commission’s proposal to strengthen the CBAM framework. Notably, member states support including a broader range of industrial products within the CBAM than originally proposed by the Commission.
In addition, the Council has proposed requiring the Commission to conduct annual reviews of the CBAM’s scope, assessing whether further downstream products should be brought within the mechanism in the future.