EU CBAM struggles to adjust exports of steel and fertilisers as WTO constraints limit permanent solution

The EU's carbon border adjustment mechanism (CBAM) has been in effect since January 2026, requiring importers of carbon-intensive goods like steel, aluminium, and fertilisers to pay a tariff matching the EU carbon price. The goal is to prevent carbon leakage, where companies shift production to regions with weaker climate rules. However, the policy is seen as incomplete because it does not yet address exports: European producers face a carbon cost that competitors outside the EU do not, putting them at a disadvantage in global markets. The European Commission has pledged a permanent solution for exporters, but global trade rules under the WTO constrain what it can do. Until that solution is in place, industry groups and some MEPs argue the CBAM is unfinished business. The article covers the ongoing debate over how to extend the levy to cover exports without violating trade commitments, and the political pressure to deliver a fix that keeps EU industry competitive while maintaining climate ambition.