Published by Global Banking & Finance Review®
Posted on December 17, 2025
2 min readLast updated: January 20, 2026
Add as preferred source on GoogleEU's carbon tax changes aim to prevent carbon leakage but are seen as insufficient by the steel and aluminium industries.
Dec 17 (Reuters) - Proposed changes to the European Union's carbon border adjustment mechanism are a step in the right direction for Europe's steel and aluminium sectors but not a complete solution, industry representatives said on Wednesday.
The European Commission earlier on Wednesday announced proposals to expand the scope of the CBAM - which will impose a carbon tax on Europe's imports of steel, aluminium and a handful of other commodities from January 1 - to cover some downstream products with a high content of those metals, such as machinery and appliances, as well as some scrap.
In doing so, it took account of warnings from metal industry players in Europe about "carbon leakage" - or the risk that industries concerned about a loss of competitiveness would move operations outside the region to avoid the cost of its climate policies.
European steel association Eurofer said in a statement the proposals identified loopholes, but failed to deliver "a comprehensive and durable response to carbon and jobs leakage," saying the number of downstream products included was "very limited".
"We stand ready to discuss further with the legislators how to make CBAM fully watertight," Axel Eggert, Eurofer's director general, said.
Norwegian aluminium producer Norsk Hydro was at the forefront of the lobbying for the expansion of CBAM to cover the downstream and scrap, saying that 35% of EU aluminium recycling capacity could close if remelted aluminium scrap entered the bloc free from a carbon levy. It said on Wednesday the inclusion of pre-consumer scrap was a "big step forward".
"However, post-consumer scrap must also be added to the scope," a company spokesman said. "Otherwise, half of the scrap loophole will remain open."
Pre-consumer scrap refers to scrap metal generated during the manufacturing process before a product reaches the consumer, whereas post-consumer scrap refers to end-of-life metal such as aluminium beverage cans.
(Reporting by Tom Daly; editing by Barbara Lewis)
A carbon tax is a financial charge imposed on companies for their carbon emissions, aimed at reducing greenhouse gas emissions and encouraging cleaner energy sources.
Carbon leakage refers to the situation where businesses transfer production to countries with less stringent climate policies, potentially undermining efforts to reduce global emissions.
The European Commission is the executive branch of the European Union responsible for proposing legislation, implementing decisions, and managing the day-to-day operations of the EU.
Downstream products are goods that are produced using raw materials, such as metals, and include items like machinery and appliances.
The aluminium sector encompasses the production, processing, and recycling of aluminium, a lightweight metal used in various industries, including construction and transportation.
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