The Council of the European Union has agreed to strengthen its Carbon Border Adjustment Mechanism (CBAM), expanding the carbon tariff to over 180 additional processed goods beyond the initial focus on raw materials like steel, aluminium, cement, and fertilizers. The decision, made at the ECOFIN meeting in Luxembourg, also introduces a new anti-circumvention framework to prevent exporters from bypassing the tax through product modifications or rerouting trade via third countries. The move aims to close loopholes and ensure imported goods face the same carbon costs as EU-produced goods under the Emissions Trading System (ETS). For major exporters to the EU, such as India's steel and aluminium sectors, this tightening signals higher compliance costs and the need for cleaner production methods. The Council's position sets the stage for negotiations with the European Parliament later this year to finalize the legal text. The updated rules reflect the EU's commitment to preventing carbon leakage and maintaining a level playing field for its domestic industries already paying high carbon prices.
