The Parliament’s environment committee has settled its negotiating position on the next phase of the carbon border levy, and the headline number is 457: the count of CN codes that will fall under CBAM once the committee’s text becomes Parliament’s mandate. That is a substantially wider net than the roughly 180 additional downstream products the Commission had proposed in December, achieved by lowering the emissions threshold used to decide which finished goods qualify.
The vote and what changed in the text
ENVI adopted its report on the CBAM extension by 56 votes to 11, with 12 abstentions, under the stewardship of Dutch S&D MEP Mohammed Chahim, the file’s rapporteur. The committee also cleared a parallel report establishing a Temporary Decarbonisation Fund (TDF), led by French Renew MEP Pascal Canfin, by 59 votes to 16 with six abstentions. Both texts now go to plenary in September, with trilogue negotiations targeted to close before year-end. The Council reached its own position in June, which narrows the gap between the co-legislators going into autumn.
Two deletions matter more than the scope widening itself. The committee struck Article 27a, the “serious and unforeseen circumstances” clause that would have let the Commission suspend CBAM obligations for specific sectors or products. Rapporteur Chahim had already flagged in his April draft that this kind of safety valve created exactly the sort of regulatory uncertainty CBAM was meant to eliminate, and the committee agreed: a mechanism that can be switched off under political pressure is a weaker signal to both EU producers and third-country exporters than one that cannot. The committee also removed the Commission’s proposed option to let importers use international carbon credits, including Article 6 units, to discharge CBAM obligations, on the grounds that the environmental integrity of those credits remains unresolved and better left to the separate ETS revision.
Anti-circumvention gets teeth
The enforcement provisions are where the committee went furthest beyond the Commission’s original text. Imports from jurisdictions flagged as high-risk for circumvention will now face default emissions values as a starting presumption, with the burden shifted onto operators to prove they are not restructuring supply chains to dodge the levy. The committee also tightened the existing rule on minor product modifications so it captures light processing as well as cosmetic changes, while carving out an exception for genuine commercial decisions. A separate addition brings distance-sales importers, meaning e-commerce platforms selling CBAM goods into the EU, inside the compliance perimeter, closing what had been a recognised gap for low-value parcel imports. The committee paired this with a commitment to boost technical support for Ukraine’s CBAM implementation, reflecting the exposure of Ukrainian steel and fertiliser exporters to the mechanism.
The fund side of the ledger
On the TDF, MEPs pushed support further and earlier than the Commission intended: financial assistance would run from 2027 through 2029 rather than starting only in 2028, and eligibility would extend to fertiliser producers and downstream users facing higher input costs, with urea, ammonium nitrate and ammonium sulphate explicitly added to the covered list. The committee also broadened eligibility to any downstream operator using CBAM-covered inputs, and proposed that leftover fund revenue go toward the EU’s international climate finance commitments rather than back to member states, a redistribution choice that keeps the fund’s proceeds inside the climate policy envelope rather than national budgets.
Reaction from affected industries has been mixed rather than uniformly supportive of a text billed as pro-industry. European Aluminium has said the vote left unresolved the treatment of post-consumer scrap and did not adopt the 50-tonne mass-based threshold sought for imported goods, gaps it argues could still be exploited. Separately, Italian panel-sector body Assopannelli has warned that including urea confirms an additional cost of €40-60 per tonne in 2026 alone for wood-panel producers reliant on imported urea, a cost it projects could lift panel prices 10-12% over the first four years of implementation given that the large majority of Italy’s urea imports originate outside the EU.
Implications for carbon and industrial markets
For EUA-linked compliance strategy, the removal of Article 27a is the more consequential change than the code count: it forecloses the scenario traders had been pricing in of a politically triggered CBAM suspension for a favoured sector, which should modestly firm the long-run correlation between EU industrial cost pass-through and the carbon border price. For steel, aluminium and fertiliser exporters into the EU, the shift to default emissions values for high-risk origins changes the calculus on where intermediate processing happens, since the presumption of guilt now sits with the importer rather than the regulator. The less obvious read is on the TDF’s revenue redirection: routing surplus funds to international climate finance rather than national treasuries removes an incentive some member states had to expand CBAM’s product scope purely to grow their own rebate pool, which should make the September plenary negotiations on scope somewhat less transactional than they might otherwise have been. Watch the September vote less for whether the extension passes, which looks secure given the committee margin, and more for whether Council resists the TDF’s earlier funding start, the one element where the committee text visibly outran the member states’ June position.
