CBAM: Extension of Scope and Strengthening of Enforcement
On 17 December, the European Commission published an extensive package of new CBAM implementing and delegated acts that apply directly across the EU. The adopted measures alone, including their annexes, comprise approximately 1,850 pages of binding regulatory text and mark a significant regulatory densification of the CBAM framework in view of its final phase from 2026.
In parallel, the Commission submitted a legislative proposal to amend Regulation (EU) 2023/956. The proposal aims to extend the scope of the Carbon Border Adjustment Mechanism (CBAM) and to further strengthen its enforcement. The proposal will be subject to the ordinary legislative procedure and requires adoption by both the Council and the European Parliament.
Extension to steel- and aluminium-intensive downstream products
Under the proposal, CBAM would no longer be limited to the basic materials currently covered but would also apply to selected downstream products that are particularly steel- and aluminium-intensive. The objective is to prevent relocation effects and to capture emissions that have so far fallen outside the scope of CBAM.
For affected companies, this implies that CBAM obligations would no longer arise solely from the import of primary materials but would increasingly also apply to more complex product structures.
Inclusion of emissions from scrap production
The proposal also provides for a stronger consideration of emissions generated during scrap production prior to further processing. This addresses existing boundary and verification issues related to secondary materials and closes potential loopholes for circumvention within recycling processes.
Strengthening measures against circumvention practices
A central focus of the proposal lies in addressing risks of circumvention and misuse. To this end, the Commission would be granted expanded powers, including:
- risk-based audits of CBAM declarations,
- additional evidentiary requirements for specific product combinations and origins,
- stricter requirements for the plausibility assessment of reported actual emissions values.
As a result, CBAM is increasingly evolving from a purely reporting-based mechanism into a system with effective control and sanctioning capabilities.
Stricter verification and traceability along the supply chain
In parallel, the requirements for the traceability of emissions data along the supply chain are further specified. Customs, product, supplier and emissions data are to be more consistently integrated and made verifiable through the CBAM Registry. Disruptions in data flows and inconsistencies between datasets will therefore significantly increase compliance risks.
Adjustments for electricity imports
With regard to electricity imports, the proposal provides for a simplified approach. Instead of individual emissions calculations, greater reliance would be placed on average grid emission factors of the exporting countries. This is intended to facilitate implementation while maintaining the incentive for decarbonisation.
Assessment: preparation for the final CBAM phase
Although the transitional phase formally continues until the end of 2025, the proposal clearly indicates that CBAM is to be established as a fully-fledged levy and control system from 2026. The gradual introduction of authorisations, accounts, certificates and risk management mechanisms within the CBAM Registry lays the foundation for future financial obligations and for closer integration with customs and tax processes.
Support by MAYGREEN
The CBAM experts at MAYGREEN support companies with:
- the operational implementation of CBAM requirements,
- authorisation as a CBAM declarant,
- the correct application of TARIC codes,
- and software-supported processes via the CBAM Facilitator.