EU Carbon Border Tax Reforms: A Step Forward, but Not Far Enough for Metals

The EU’s proposed updates to the Carbon Border Adjustment Mechanism (CBAM) are being welcomed by the steel and aluminium sectors as a step forward, but industry leaders say the changes do not go far enough.

The European Commission has outlined plans to expand CBAM ahead of its January implementation, applying carbon charges to imports of steel, aluminium and selected goods. The revised scope would also include certain downstream products and specific scrap materials.

These changes aim to address concerns over carbon leakage, where production and jobs risk moving outside the EU to avoid climate-related costs. However, industry groups argue the proposals lack sufficient breadth to provide lasting protection.

Eurofer, the European steel association, noted that while some gaps are acknowledged, the number of downstream products covered remains limited and does not offer a durable solution to carbon and job leakage.

In the aluminium sector, Norsk Hydro has warned that a significant share of EU recycling capacity could be at risk if imported scrap enters the market without a carbon charge. While the inclusion of pre-consumer scrap is welcomed, the company says post-consumer scrap must also be covered to ensure fair competition.

European Aluminium echoed these concerns, stating that while the direction is right, further refinements are needed to close loopholes and reflect the realities of the aluminium industry.