CBAMBOO Insights #18

EU states want broader CBAM scope, suspension clause

EU member states have agreed a negotiating position that broadens the reach of the Carbon Border Adjustment Mechanism (CBAM) and preserves the contested suspension clause. On 12 June, the Council adopted its stance for talks with Parliament on the proposed changes.

Member states found unlikely consensus on Article 27a, which would let the Commission exempt an entire sector in extreme, unforeseen circumstances. They tightened the guardrails by tying its use to a 50% cost increase, sustained for six months, and independent of CBAM costs.

The Council also added roughly 200 new CN codes to the list of complex steel and aluminium goods, capturing adjacent products and new categories such as heat pumps.

In a quieter move, the Council proposed amending the CBAM law already in force. Importers could meet the "50% rule" using estimates based on 2026 verified values rather than defaults, and in 2027 compliance could force importers to commit significant cash.

Parliament will vote on the text in September, and the Council hopes to finalise the deal by year end. Cross-party support for deleting the exemption means that Article 27a could prove a sticking point.

MEPs on the Industry committee (ITRE) voted to delete Article 27a but expanded the downstream products covered further. ENVI, the lead committee, will adopt its report on 6 July.

Brussels adopts CBAM benchmarks in line with draft values

Brussels has finalised the carbon benchmarks that set free allowances through 2030.

The final legislation was published in the Official Journal on 26 June, confirming the draft figures in use for CBAM this year. CBAM benchmarks mirror the EU Emissions Trading System (ETS) and will align fully with these final values for imports from 1 January 2027, so importers face no surprise.

The adoption follows disputes over how much free allocation energy-intensive industries should retain amid economic disruption and high carbon costs.

Cement plant covered by CBAM benchmarks

A more material change could come from the ETS review due 15 July. Some member states have asked the Commission to consider a slower free-allocation phase-out from 2028, and officials say Brussels will propose extending it beyond the 2034 CBAM cut-off.

Since CBAM phases in as free allocations phase out, delaying one pushes back the point at which importers pay the full carbon price. One option under discussion would be to grant extra free allocation to industrials committing to decarbonisation investments in the EU.

A deal will take time, with political agreement expected only around the first quarter of 2027.

Webinar reveals just 6% of companies have a Monitoring Plan

We are still buzzing from this week's webinar with Normec Verifavia, where we ran a deep dive into building Monitoring Plans for production sites.

Over 300 people registered for the 24 June session, showing just how much businesses still need support climbing this "mountain".

Monitoring Plans are a non-negotiable requirement for CBAM audits. Yet an audience poll revealed that just 6% of companies have a draft in place.

CBAMBOO and Normec Verifavia webinar speakers

Thanks to everyone who joined and drove such a rich discussion. We have also published a Chinese-language recording, available directly on our website.

More on Monitoring Plans is coming soon. If you or your suppliers are still wondering how to pass verification, get in touch with our team.

Commission to publish default carbon prices by 2027

The European Commission will publish default carbon prices for producing countries.

A senior official confirmed the plan at a recent IETA webinar, with the list due by the end of 2026. Last month's draft implementing regulation mentioned the list but did not explain when or how officials would set it.

The Commission will set default values per country, drawing on public data and information supplied by third countries. It will publish the methodology alongside the list, but the default values will not build in any push towards higher price calculations, unlike the rules for emission values.

Exporters can still benefit from using actual figures instead. The EU will only publish country-level values, missing regional schemes such as Canada's provincial systems or California's cap-and-trade.

Companies under those regional schemes can claim greater relief by proving the price they actually paid. The default values also will not account for carbon credit deductions, limiting the relief on offer.

Study points towards full coverage of indirect emissions in CBAM

A technical study urges the European Commission to bring electricity emissions into CBAM across every sector. The assessment, published early June and meant to inform the Definitive Period, concludes that indirect emissions should fall within scope.

Indirect emissions cover the electricity consumed in making a good. CBAM currently captures them only for cement, fertilisers and electricity itself. Iron, steel, aluminium and hydrogen face charges on their direct emissions alone.

The study calls this a structural inconsistency that leaves electricity-intensive sectors exposed to carbon leakage.

European Commission technical study on indirect emissions in CBAM

Extending coverage would first require untangling how CBAM interacts with Indirect Cost Compensation, the state aid EU producers receive for ETS-driven electricity costs. By applying full coverage and leaving Indirect Cost Compensation intact, the EU would effectively provide double protection, making the pricing of imported emissions unfair.

The Commission will assess extending indirect emissions to iron, steel, aluminium and hydrogen in a 2027 review. Any obligation would arrive through separate legislation, most likely phased alongside the ETS free allocation phase-out to 2034.