Smoke billows from the chimneys of Belchatow Power Station, Europe’s biggest coal-fired power plant
| Photo Credit:
PETER ANDREWS
Brussels The European Union will expand its
carbon border levy – a fee charged on imports of high-emission
goods – to cover car parts and washing machines, according to
draft European Commission proposals due to be published on
Wednesday.
The proposals also aim to tighten loopholes that the
Commission worries could allow foreign firms to dodge the fee,
which is currently in a pilot phase and will start imposing
costs from January.
The EU’s Carbon Border Adjustment Mechanism – the world’s
first carbon border tariff – will impose fees on the CO2
emissions of imported goods including steel, aluminium, cement
and fertilisers.
The policy, known as CBAM, is designed to shield European
industries against cheaper imports from countries with weaker
climate rules. But it has irritated trading partners including
China, India and South Africa, which say it unfairly penalises
their economies.
EU SEEKS TO AVERT WORKAROUNDS
Despite these objections, draft EU legal proposals seen by
Reuters on Tuesday showed the bloc will double down on the
carbon border fee: expanding it to cover downstream products
that use a high share of steel and aluminium, including
construction products, power grid components and machinery.
Leon de Graaf, acting president of the “Business for CBAM
Coalition” of companies and industry groups, welcomed the EU
plans, which he said targeted “products that face the highest
risk of carbon leakage” – the risk that manufacturers relocate
abroad to avoid Europe’s strict climate policies.
The EU also plans to clamp down on foreign companies if
there is evidence they are under-reporting their emissions to
dodge the levy.
In this scenario, the EU could impose “default” emissions
values on that country’s products, resulting in a higher CBAM
bill, according to sources familiar with the plans, which could
still change before they are published.
That aims to address concerns among EU officials that foreign
companies – in particular those in China – could strategically
adjust by sending low-carbon products to Europe, while
continuing to produce high-carbon goods for other markets. This
would allow them to dodge the EU levy without making their
overall production any greener.
A Commission spokesperson declined to comment on the draft
plans.
While CBAM will charge importers for the emissions
associated with their imports from 2026, companies will have
until September 2027 to buy and surrender CBAM certificates to
the EU to comply.
Since Brussels announced its carbon border levy in 2021,
China, India and Brazil – while criticising the EU policy – have
begun developing or expanding their own carbon pricing systems.
“They have changed behaviour. That is the success of CBAM in
my book already,” said Totis Kotsonis, a partner at law firm
Pinsent Masons who advises on trade issues.
Brussels also plans to use 25% of the revenue from the
border levy to compensate European manufacturers for higher
costs associated with the carbon border levy. This support would
only go to industries that invest in lower-carbon manufacturing.
(Reporting by Kate Abnett
Editing by Frances Kerry)
Published on December 17, 2025
