Under proposals unveiled on Wednesday by the European Commission, importers of products such as refrigerators, washing machines and car components would be brought under the bloc's Carbon Border Adjustment Mechanism (CBAM), significantly widening the scope of a policy originally designed to cover emissions-intensive raw materials.
From January 2026, imports of steel, aluminium, cement and fertilisers will be required to pay for the carbon dioxide emitted during their production, aligning them with European producers already subject to the EU's emissions trading system.
Levelling the playing field
CBAM is intended to prevent so-called "carbon leakage", where companies relocate production to countries with weaker climate rules to avoid emissions costs. European officials say the mechanism is essential to protecting domestic industry while maintaining climate ambition.
"We want to make sure we still have a steel and aluminium industry in the future," said Stéphane Séjourné, executive vice-president of the European Commission, speaking at a press briefing in Brussels.
The levy mirrors the costs faced by EU companies under the bloc's carbon market and is designed to ensure imported goods are not produced under looser environmental standards.
"We're not asking more from others than what we're asking from ourselves," added Wopke Hoekstra, the EU's climate action commissioner.
According to Commission data, the EU's largest importers of aluminium and steel include Turkey, the United States, the United Kingdom, Switzerland, Mexico and India. Officials stressed that concessions and simplifications already built into the system should limit disruption to transatlantic trade.
Higher costs — and financial support
The expanded CBAM will increase costs for importers unless their production processes meet EU climate standards. The Commission said targeted products were selected based on their risk of carbon leakage, climate impact and technical feasibility.
"We're putting an end to unfair foreign competition," Hoekstra said. "CBAM will strengthen Europe's industrial position at home and globally."
At the same time, the Commission acknowledged concerns from European exporters that higher emissions costs could undermine competitiveness abroad. To address this, it plans to channel a quarter of CBAM revenues from 2026 and 2027 into a temporary support scheme aimed at helping EU heavy industry reduce emissions and manage the energy transition.
The inclusion of additional products is expected to increase CBAM revenues by around 23 per cent, generating close to €500 million by 2030. Total revenues are projected to reach approximately €2.1 billion by the end of the decade.
"We're using the revenues to address the risks that come with the transition," Hoekstra said.
Praise — and caution — from green groups
Environmental organisations cautiously welcomed the plan to recycle some of the revenues back into decarbonisation efforts, while warning against loopholes that could dilute its impact.
"CBAM revenues must deliver real emissions reductions and be governed by transparent and credible criteria," said Andrea Spignoli, policy manager at Bellona Europa.
However, the group raised concerns over any potential reliance on international carbon credits to meet obligations.
"A steel producer could continue carbon-intensive production while purchasing credits instead of investing in cleaner processes," warned Amélie Laurent, a policy adviser at the organisation.
Global pushback and trade tensions
CBAM has drawn criticism from several major economies, including China, India, Brazil, Russia and South Africa, which argue the mechanism amounts to disguised protectionism and could violate international trade rules.
Commission officials reject that claim, insisting the policy is compatible with World Trade Organization rules and applies equally to domestic and foreign producers.
"We are confident CBAM is legally sound," one Commission official said, adding that the revised legislation and a proposed temporary decarbonisation fund are expected to enter into force in 2028.
The proposals will now be examined by the European Parliament and EU member states, with negotiations to be mediated by the incoming Cypriot presidency of the Council.
As the EU pushes ahead with its industrial climate agenda, CBAM is fast becoming one of the bloc's most consequential — and contested — tools in aligning competitiveness with decarbonisation.