On 29 June 2026, the European Parliament’s Environment Committee backed proposal to strengthen and expand the EU Carbon Border Adjustment Mechanism (“CBAM”). The new legislative proposal amending the CBAM  (“Proposal”) extends the carbon import levy to a broader range of downstream products, including many steel and aluminium-intensive goods. Lawmakers agreed that the changes are necessary to prevent carbon leakage and ensure imported products face climate-related costs comparable to those borne by EU producers. Further information is available at this link.

The key element of the Proposal is a package of stronger anti-circumvention measures. MEPs want stricter rules against minor product modifications used to avoid CBAM obligations and greater powers for the European Commission to address systematic attempts to bypass the mechanism. New measures would also target loopholes linked to online sales and small shipments.

The Committee also proposed changes to the way CBAM responds to market disruptions. Instead of temporarily removing products from the scheme during periods of price volatility, the members of the European Parliament in the Committee favoured using CBAM revenues to support affected industrial sectors. They also endorsed simplified reporting requirements and technical assistance for least-developed countries.

Alongside the CBAM reforms, lawmakers supported a Temporary Decarbonisation Fund (TDF) to help EU industry remain competitive during the transition to a low-carbon economy. The committee proposed that the fund provide support from 2027 to 2029, helping manufacturers and other affected sectors adapt to higher carbon-related costs while maintaining investment in decarbonisation.