European Commission expands CBAM scope and introduces anti-circumvention measures
The European Commission has announced extensive expansions to the Carbon Border Adjustment Mechanism (CBAM), effective 1 January 2026. The reforms extend CBAM's scope to 180 steel and aluminium-intensive downstream products—covering 15% of current goods by volume and 53% by value—to mitigate carbon leakage risks. Enhanced anti-circumvention measures have been introduced, including the incorporation of pre-consumer scrap in emissions calculations and stronger reporting requirements. A temporary decarbonisation fund will provide support to EU producers facing carbon leakage risks, funded partly through CBAM certificate sales. The Commission has also adopted comprehensive implementing acts detailing methodologies, verification, certificate pricing, and related procedures, with sector-specific measures for fertilizers and new trade facilitation provisions to ensure WTO compliance and international cooperation.