CBAM Downstream Extension

Annex I — extension of the goods list to downstream steel and aluminium products

The Annex replaces the steel table so that, alongside the existing upstream goods, a broad range of downstream steel products (e.g. tubes, structures, screws, articles of iron or steel) is covered, while certain ferro-alloys (7202) and ferrous waste (7204) are excluded; a new table of Combined metal products covers articles such as wire netting (7314), nails (7317), certain articles of base metal (ex-7415, 8302, 8309), diesel engines (8408), cables (8544) and, at the downstream end, furniture and prefabricated buildings (9403, 9406), with the greenhouse gas listed as carbon dioxide and perfluorocarbons. — Reference: COM(2025) 989 Annex I.

Annex II — amended Annex IV definitions and the composite-goods formula

Amended Annex IV defines the electricity emission factor (e) as the CO2 intensity of electricity generated in a geographical area, weighted by production, and a power purchase agreement (f) as a contract under which a person purchases electricity directly from an electricity producer and that includes physical delivery. For composite goods the embedded emissions are calculated as SEE_g = (AttrEm_g + EE_InpMat) / AL_g, where EE_InpMat is the sum over input materials of their mass multiplied by their embedded emissions, counting only precursors listed in Annex I or Annex VIII that do not originate in an exempted third country. — Reference: COM(2025) 989 Annex II amending CBAM Regulation Annex IV points (e), (f) and 3.

Annex III — new Annex VIII: precursors that are not themselves CBAM goods

A new Annex VIII lists precursor materials that do not constitute CBAM goods in their own right but whose embedded emissions must be taken into account: for steel, ferrous waste and remelting scrap ingots of iron or steel (ex 7204), excluding post-consumer scrap; and for aluminium, aluminium waste and scrap (ex 7602), excluding post-consumer scrap. — Reference: COM(2025) 989 Annex III inserting Annex VIII into the CBAM Regulation.

Explanatory memorandum — scope of the downstream extension

The proposal will extend the scope of the CBAM to address the risk of carbon leakage for products further down the value chain of the steel and aluminium products currently in CBAM’s scope.

Proposed recital (20) — pre-consumer scrap as a precursor

emissions of pre-consumer aluminium scrap and pre-consumer steel scrap should be taken into account for the calculation of embedded emissions of goods. ... The emissions of pre-consumer aluminium scrap and pre-consumer steel scrap should only be taken into account when used as a precursor for goods listed in Annex I of this Regulation.

Proposed recital (42) — calculation of embedded emissions in downstream goods

Following the principles and calculation methods applicable to other goods, embedded emissions in downstream goods should be calculated on the basis of actual emissions verified by a verifier, or by reference to default values calculated and made available by the Commission.

Proposed recital (53) — application dates

To provide sufficient predictability, the extension of the scope of Annex I to Regulation (EU) 2023/956 and to input materials (precursors) listed in Annex VIII should apply from 1 January 2028