The Carbon Border Adjustment Mechanism (CBAM) is a tool that puts a price on certain carbon intensive goods entering the EU in order to encourage climate friendly industrial production. But here’s the problem: the CBAM, as it stands, is full of loopholes. If not fixed, it would undermine decarbonisation investments, accelerate deindustrialisation, favour production in third countries, and fail to cut global emissions.
Fair play for a fair transition
European steel producers are facing increasing carbon costs under the EU Emissions Trading Scheme (ETS), while competitors in third countries have been exempted from any carbon costs. The EU steel industry is leading the transition to green production, but cheap imports risk undermining that effort.
The CBAM can be a game-changer, but only if it’s designed right.
Right now, loopholes allow foreign producers to sidestep carbon costs, shifting emissions elsewhere instead of reducing them. Without fixing these flaws, the CBAM would fail to protect EU industry and could even accelerate deindustrialisation.
CBAM Toolbox: fixing the loopholes to prevent carbon leakage
The CBAM was designed to ensure fair competition and reduce global emissions, but loopholes threaten to undermine its effectiveness. Here’s how we can fix it:
Find out more details in our full fact-sheet available for download below.
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Brussels, 02 July 2025 – The 90% climate target proposed today by the European Commission demands an unprecedented transformation of EU society and industry in just 15 years. The European steel industry is already doing its part, but a viable business case for the transition is still lacking. To enable it, the EU needs to implement the Steel and Metals Action Plan much more decisively, delivering a highly effective trade protection against global overcapacity, access to internationally competitive low carbon energy and scrap, and a watertight CBAM, says the European Steel Association.
How global overcapacity is destroying European industries
European Steel in Figures 2025 is EUROFER's statistical handbook, laying out in an easy-to-use format the key statistics and data about the performance and footprint of one of Europe's most important strategic sectors