The proposed changes would broaden CBAM beyond its current focus on carbon-intensive materials such as iron and steel, aluminium, cement, fertilisers, electricity and hydrogen. Instead, the mechanism would also extend to certain products manufactured using these materials. The European Commission had initially proposed adding 180 downstream products with significant steel or aluminium content and a high risk of carbon leakage. The European Parliament’s negotiating position goes further, proposing to expand the scope to 457 products. The proposed additions span a wider range of manufactured goods, including machinery, construction equipment, vehicle components, appliances, solar panels and heat pumps. This means that CBAM could increasingly look beyond the carbon-intensive material to the products made using that material. For businesses, this represents a broader regulatory footprint; one that could reach further into their products, suppliers and international supply chains.
Expanding the product list is only one part of the proposed changes. The European Parliament also wants to strengthen CBAM safeguards against circumvention; deliberate attempts to avoid CBAM requirements by changing how products are processed, classified or traded. The concern is straightforward: adding more products to CBAM will have limited impact if businesses can still find ways around the rules. For example, a product containing a significant amount of steel or aluminium could undergo limited processing outside the EU before being exported to Europe. If that change allows the product to avoid CBAM requirements, the carbon-related cost may not fully reflect the emissions associated with its production. To address these potential loopholes, Parliament’s position includes measures to:
Lower the threshold for “slightly modified” products, making it harder to avoid CBAM through minor changes.
Target deliberate attempts to evade the mechanism, particularly where product modifications are made specifically to escape CBAM requirements.
Protect legitimate business decisions, so that normal changes in manufacturing, product design or processing are not automatically treated as an attempt to evade the rules.
The aim is to close potential loopholes while maintaining a clear distinction between legitimate business activity and deliberate efforts to avoid CBAM obligations. As CBAM evolves, businesses will need greater visibility into how products are made, where materials come from and how emissions are generated across the supply chain.
As CBAM could cover more products, its impact could extend beyond companies directly importing steel or aluminium into the EU. Manufacturers and exporters may need to look more closely at the materials, suppliers and production processes behind the products they sell in the European market. The key challenge is carbon visibility. Businesses may need reliable information on the emissions embedded in their products, particularly where those products contain CBAM-covered materials. This could make carbon data increasingly relevant to everyday business decisions, including:
For companies with complex international supply chains, this can be challenging. Emissions data may come from multiple suppliers, use different calculation methods or be unavailable at the product level. As a result, preparing for CBAM is not simply about understanding the regulation. It is about building the data and supply-chain visibility needed to understand how carbon exposure could translate into business impact.
With CBAM potentially expanding to more products, businesses can start by identifying where they may be exposed and whether the data needed to assess that exposure is available. Key steps include:
Identify products sold to the EU that contain CBAM-covered materials and assess where the proposed changes could affect them.
Review whether product-level emissions data is available, consistent and reliable across suppliers.
Work with suppliers to improve the collection and reporting of embedded emissions data.
Evaluate how potential carbon-related costs could affect products, sourcing decisions and margins.
Track the final CBAM scope and requirements as the European Parliament and EU Council continue negotiations.
Early preparation can help businesses move from reacting to new requirements to understanding their exposure and making better-informed sourcing, costing and supply-chain decisions.
As CBAM expands, businesses need more than regulatory awareness. They need clear visibility into their products, suppliers, emissions and potential carbon-related costs. Cognitud helps organisations connect carbon intelligence, supply-chain data and cost analysis to assess CBAM exposure, identify emissions data gaps, strengthen supplier data and evaluate how carbon-related costs could affect products, sourcing decisions and margins. By combining emissions insights with cost and supply-chain intelligence, businesses can better understand their exposure, identify opportunities to reduce risk and prepare for evolving CBAM requirements. As CBAM moves beyond carbon-intensive materials towards a broader range of products, carbon visibility will increasingly influence how businesses manage sourcing, costs and supply chains. Cognitud helps turn complex regulatory and supply-chain data into actionable intelligence, enabling businesses to make informed decisions as the EU’s carbon-related trade requirements evolve.
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Abhigyan Gupta
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The Carbon Border Adjustment Mechanism (CBAM) is an EU policy designed to address carbon leakage by applying a carbon cost to certain carbon-intensive goods imported into the European Union.
Businesses exporting products to the EU may need greater visibility into their materials, suppliers, production processes and embedded emissions. Potential carbon-related costs could also influence product costing, sourcing, pricing and supply-chain decisions.
Reliable carbon data can help businesses understand the emissions embedded in their products and assess potential CBAM-related exposure. It can also support decisions around suppliers, sourcing, product costs and supply-chain strategy.
CBAM currently covers iron and steel, aluminium, cement, fertilisers, electricity and hydrogen. The proposed expansion would extend coverage to certain products manufactured using these carbon-intensive materials.
No. The 457-product figure represents the European Parliament’s negotiating position, not the final CBAM scope. Parliament’s position will form part of the negotiations with the EU Council before the final rules are agreed.
