EU Proposes 180 More Products Under CBAM, Stricter Rules For Exports

SEATTLE (Scrap Monster): The European Union is planning to expand the list of products coming under its carbon tax by adding 180 more by January 2028. It also proposes to make the rules stricter on production based on scrap metal, buying carbon credits for CBAM and including electricity emissions under the tax.

As per the draft proposal, the Carbon Border Adjustment Mechanism will be applicable to 180 more products, including fabricated metal products, tubes, pipes, fasteners, structural components, machinery parts, aluminium containers, and other semi-finished and finished engineering goods. The EU has not yet published HS-code-wise product details, but the proposal shows that CBAM is moving deeper into the manufacturing value chain.

At present, CBAM applies to imports of iron and steel, aluminium, cement, fertilisers, hydrogen, electricity, and selected steel and aluminium products.

The European Parliament has also asked the European Commission to study future inclusion of organic chemicals, polymers, and selected scrap materials, indicating that CBAM may gradually expand across most industrial manufacturing sectors.

Further, the carbon accounting rules for scrap-based production will be tightened by including emissions from pre-consumer scrap. In steel, the impact would be important because around one-fourth of India’s steel output comes from Electric Arc Furnaces (EAFs) using scrap or mixed scrap-DRI feedstock. In aluminium, it would affect a major share of India’s recycled aluminium sector, where secondary production accounts for around 30–40% of output or consumption.

The draft also opposed allowing international carbon credits for CBAM compliance. Indian exporters will not be able to use carbon credits bought in voluntary or international markets to reduce their CBAM liabilities. The firms would have to physically reduce emissions at source or operate under a domestic carbon pricing system accepted by the EU.

Moreover, emissions generated from the electricity consumed during production are being brought under CBAM rather than from on-site fuel combustion. This would significantly raise CBAM costs for Indian exporters due to continued dependence on coal-based electricity generation.

These proposals could sharply increase carbon tax costs on Indian manufactured exports to Europe.

GTRI estimates that by 2030, most industrial products entering the EU could potentially face some form of carbon tax exposure.

Under the India–EU Free Trade Agreement (FTA), EU products may gradually enter India at zero tariffs, while an increasing share of Indian industrial exports could face CBAM charges in Europe.

Courtesy: www.deccanchronicle.com