The European Parliament has adopted its negotiating position on proposals to expand the EU’s Carbon Border Adjustment Mechanism (CBAM) to a wider range of steel and aluminium products while establishing a temporary fund to support industrial decarbonisation.

The Parliament’s position would extend CBAM beyond basic materials to include a broader range of downstream products, including finished steel and aluminium goods, fasteners, wires, springs and certain household products. The proposed expansion goes beyond the European Commission’s original list of products.

The measures are designed to address the risk of carbon leakage as more carbon-intensive products enter the EU market. Parliament has also called for stronger anti-circumvention provisions, including measures targeting practices intended to avoid CBAM obligations through changes to imported products or their sourcing.

Alongside the CBAM expansion, Parliament has adopted its position on a proposed Temporary Decarbonisation Fund. MEPs want financial support to be available from 2027 through 2029, rather than beginning in 2028 as initially proposed.

Parliament also wants the fund to cover downstream companies that use CBAM-covered products as production inputs, as well as additional fertiliser-related products. The proposal would also allow unused revenues to be directed toward international climate-finance commitments under the Paris Agreement rather than returned to member states.

The developments could have significant implications for manufacturers, importers and companies with international supply chains. Businesses handling steel- and aluminium-intensive products may face broader requirements relating to embedded-emissions data, reporting and carbon costs if the proposed expansion becomes law.

The measures also illustrate the EU’s approach of combining stronger carbon-border requirements with potential support for industries exposed to international competition and the costs of decarbonisation.

The European Parliament’s position is not yet final legislation. Negotiations with EU member states in the Council will determine the final form of the CBAM amendments and the Temporary Decarbonisation Fund.

For companies operating across European supply chains, the proposed changes reinforce the importance of monitoring product classifications, emissions data, supplier information and carbon-related compliance requirements as the EU continues to develop its carbon-border framework.