International trade

CBAM: how the EU aims to strengthen the ‘carbon border adjustment mechanism’

Brussels wants to extend the levy on non-EU polluting products to downstream goods such as household appliances and cars

by Sabrina Ferrazzi

1 October 2026

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CBAM CARBON BORDER ADJUSTMENT MECHANISM MECCANISMO DI ADEGUAMENTO DEL CARBONIO ALLE FRONTIERE DAZI AMBIENTALI DOGANALI GENERATE AI IA IMAGOECONOMICA

3' min read

Translated by AI

Versione italiana

3' min read

Translated by AI

Versione italiana

The Carbon Border Adjustment Mechanism (CBAM), the “tCO2 tax at the borders”, designed to ensure fair competition between European and non-EU producers ahead of the reform of the ETS (Emissions Trading System), is now in its first year of operation.

It has been a challenging year, which officially began on 1 January with many pieces still missing – pieces which – only in these final months of 2026 – are falling into place to lead to define the overall framework in the coming weeks (14 guidelines published at the end of August, the register beginning to take shape, accredited verifiers only available from September, a number of regulations still missing, and so on). Nevertheless, there is already talk of an extension.

Balancing the market

The EU’s new own resource is designed to apply to imports a levy based on the incremental cost that European producers of ‘polluting’ goods at risk of relocation will have to bear in the coming years, given the phasing out of the free allowances from which they have benefited up to and including 2025.

If, therefore, European manufacturers are paying (and will continue to pay) ever more to produce ‘polluting’ goods, it becomes essential to introduce – in parallel – an equivalent levy on non-EU manufacturers wishing to access our market: this, in fact, is the CBAM.

The transitional period, which began in the final quarter of 2023 and ended at the end of 2025, served as a test bed for the system: it enabled stakeholders to come to terms with the measure, come to terms with its impacts but, above all, to assess its effectiveness, highlighting both its practical challenges and benefits.

TEMPI E OBBLIGHI PER I DIVERSI SOGGETTI

The path to strengthening

In the early stages, several EU observers had viewed the mechanism with scepticism, given its obvious impact and complexity of management. In this vein, although supportive of the mechanism, the Draghi report of September 2024 (‘The Future of European Competitiveness’) also called for its adoption to be assessed carefully.

Today, however, there are calls to strengthen the mechanism, in the belief that it could provide useful protection for European businesses. Although there are certainly those who are concerned about possible price rises.

The pressures that have emerged in recent months are part of this trend, which culminated in the vote by the European Parliament on 15 September, which has reinforced the reform path set out by the Commission.

Among the most significant points are: the strengthening of anti-circumvention measures, the rejection of the proposal to suspend the mechanism (an issue that arose over the summer in relation to fertilisers), the provision of support measures for emerging countries, and a massive step-up in controls.

Downstream products

Above all, what can rightly be described as CBAM 2.0 is taking shape, namely the extension of the levy to so-called downstream products. This concerns over 400 products identified by the Commission and Parliament which, upon importation, would be subject to the ‘CO₂ tax’ from 1 January 2028.

The intention is to apply the levy to products manufactured from raw materials and components falling within the broad categories already subject to CBAM (with particular reference to steel, iron, aluminium and cast iron), which it is now deemed necessary to include within the scope of application for the sake of consistency and to protect the internal market. These include household appliances, cars and car components, transformers, certain items of furniture, etc., which would be subject, upon importation, to a levy proportionate to the quantity of CBAM macro-categories already included.

More main categories

Amidst the details of the reform, the possible extension of the CBAM scope in terms of broad categories is also beginning to take shape. The current scope, defined in 2023, covers cement, iron and steel , aluminium, fertilisers, hydrogen and electricity.

Extending the scope to other ETS macro-categories has always been one of the EU legislator’s long-term objectives. The sectors under consideration include glass, ceramics and plastics and – according to the amendments proposed by the Parliament and published on 15 September – chemicals and petrochemicals.

A turning point for the UK

Meanwhile, the United Kingdom is also preparing to introduce its own CBAM from 2027. This is an important sign: the European model is not an isolated one, but is set to spread to other legal systems, with effects that are likely to influence supply chain decisions and procurement strategies.