European steelmakers insist on improving CBAM

The European Steel Association (EUROFER) insists on improving and urgently launching the carbon border adjustment mechanism (CBAM).

As noted, more than 25 million tons of steel (about 20% of EU production) are annually imported into the bloc from third countries without any carbon costs. At the same time, European steelmakers have been subject to the EU’s emissions trading system (ETS) since its inception. Recently, the price of carbon has reached about €75/t CO2.

Therefore, EUROFER emphasizes that the launch of the CBAM, scheduled for 2026, is essential. This will prevent carbon leakage and support the European rationale for investment in steel decarbonization announced in recent years.

However, as the association notes, the CBAM is an unprecedented, first-of-its-kind measure that poses significant risks, especially for the steel industry. The industry is characterized by numerous types of products used in many value chains, different production technologies with different carbon intensities, and global trade flows involving numerous partners.

EUROFER believes that the impenetrable effectiveness of the mechanism needs to be ensured from the outset, which requires urgent substantive changes to the current proposal.

In particular, we are talking about

• introducing a structural solution to preserve European exports and ensure their global competitiveness;
• introducing stricter rules against circumvention practices such as resource shuffling;
• expanding the scope of CBAM to metal-intensive downstream sectors.

Other elements of the CBAM design, such as hard defaults and free allocation adjustments, should also ensure the environmental integrity of the mechanism.

Without these changes, the association insists, the combination of CBAM and the planned phase-out of free allowances under the ETS will not provide adequate protection against carbon leakage. In addition, it will encourage more production offshoring to third countries.

“The most important thing is that these changes should be implemented this year, long before the start of the final period in 2026,” the association said.

Along with ensuring the effectiveness of the mechanism, representatives of the European steel industry believe that the administrative burden should be minimized (simplification and rationalization of procedures).

EUROFER proposes that CBAM reporting obligations should not apply to European products that are exported outside the EU, processed abroad and subsequently re-imported into the bloc as goods subject to the mechanism. Effective monitoring should prevent circumvention practices.

The current minimum threshold of €150 should be converted into a weight unit and increased (e.g., to 1 ton of CBAM product) to avoid unnecessary reporting for small consignments.

However, the simplification should not come at the expense of CBAM’s effectiveness, for example, for small companies without reference to the size of their cargo.

As GMK Center reported earlier, the European People’s Party (EPP) has proposed to change the approach to the bloc’s climate and economic policies to support its economy. In particular, EPP leaders emphasize the proposal to revise the CBAM mechanism, which is due to start operating in 2026, and to allocate more funds from the emissions trading system (ETS) to support green technologies.