The European Union has started examining the proposal to expand the scope of carbon tax and bring 180 new steel and aluminium products under it from January 2028.
The European Parliament’s Committee on the Environment, Climate and Food Safety has recommended to EU parliament for expanding the scope of Carbon Border Adjustment Mechanism (CBAM) to account for indirect carbon emissions and rejecting use of international carbon credits for compliance.
In a draft report issued on 10 April other measures that have been proposed are tightening carbon accounting rules for scrap-based production by including emissions from pre-consumer scrap, examining indirect emissions from electricity use across more sectors and introducing stricter anti-circumvention, reporting and verification requirements for suspected misuse.
“The proposed expansion would bring many new products under CBAM, including fabricated metal products, tubes, pipes, fasteners, structural components, machinery parts, aluminium containers, and other semi-finished and finished engineering goods,” founder of Global Trade Research Initiative (GTRI) Ajay Srivastava said in a report.
At present, CBAM applies to imports of iron and steel, aluminium, cement, fertilisers, hydrogen, electricity, and selected steel and aluminium products.
If the proposal goes through then most industrial products entering the EU could face carbon tax exposure by 2030, the report said.
The European Parliament has also asked the European Commission to study future inclusion of organic chemicals, polymers, and selected scrap materials, indicating that CBAM may gradually expand across most industrial manufacturing sectors, Srivastava said.
This development comes at a sensitive time, as the India–EU Free Trade Agreement (FTA) is expected to become operational soon. Under the FTA, EU products may gradually enter India at zero tariffs, while an increasing share of Indian industrial exports could face CBAM charges in Europe. India has limited ability to retaliate because of the limiting CBAM-related provisions in the FTA text, he said.
Indian exporters selling into Europe may therefore need to accelerate emissions accounting, supply-chain traceability, and decarbonisation investments to remain competitive in one of India’s most important export markets, the report said.
TOPICSEuropean UnionThis article was first uploaded on April sixteen, twenty twenty-six, at fifty-eight minutes past eleven in the night.