The European Parliament has adopted its negotiating position on proposed changes to the EU’s Carbon Border Adjustment Mechanism (CBAM), supporting a significant expansion of the products covered by the carbon import levy and introducing additional measures to prevent circumvention. 

The position was approved by 464 votes to 50 and will serve as the basis for Parliament’s upcoming negotiations with EU Member States in the Council. 

Under the proposal, Parliament would expand CBAM coverage by more than 450 additional products, going significantly beyond the European Commission’s proposed addition of 180 downstream products. The expanded scope would include steel- and aluminium-intensive goods as well as products such as solar panels, heat pumps, appliances, machinery, vehicle components and construction equipment. 

MEPs also backed a range of anti-circumvention measures designed to close potential loopholes. These include lowering the threshold for determining when minor modifications to imported goods could constitute circumvention, while ensuring that legitimate business-related modifications are not unnecessarily captured. 

Other amendments include an exemption for certain electricity flows from non-EU countries used by grid operators to maintain network stability, simplified reporting requirements for least-developed countries, and changes to the mechanism that applies during significant price shocks. 

The Parliament also adopted its position on the proposed Temporary Decarbonisation Fund (TDF), which would provide support to EU producers affected by carbon leakage risks. Parliament proposes expanding eligibility to fertilizer producers and downstream users facing higher carbon-related input costs, including products such as urea, ammonium nitrate and ammonium sulphate. 

The next step will be negotiations between the European Parliament and the EU Council to agree on the final amendments to CBAM and the related decarbonisation fund.