Europe: The European Commission will expand the scope of the European Union’s (EU) Carbon Border Adjustment Mechanism (CBAM) to include industrial machinery at the start of 2028. The carbon tariff will add specific steel and aluminium-intensive downstream products. The majority, 94%, of these downstream goods concerned are industrial supply chain products with a high (on average 79%) steel and aluminium content, used in heavy machinery and specialised equipment, such as base metal mountings, cylinders, industrial radiators or machines for casting. A small share, 6%, of the downstream goods concerned are also household goods such as washing machines.
Importers of cement, aluminium, electricity, fertilisers, hydrogen and iron and steel will start to pay a tax based on the carbon emissions of these products from the beginning of 2026. The European Commission has also launched a Temporary Decarbonisation Fund in order to temporarily support EU producers of CBAM goods and mitigate carbon leakage risks.