Op-ed in Sustainable Views: What does the EU carbon border tax mean for green steel?

By Colette van der Ven, Cláudia Azevedo, and Sanvid Tuljapurkar

6 January 2006

This op-ed was first published by the Financial Times' Sustainable Views

The EU’s Carbon Border Adjustment Mechanism entered into force on January 1, introducing binding monitoring, reporting, verification, and financial obligations for importers of certain commodities. This followed the release by the European Commission on December 17 of a package of more than 15 documents clarifying and expanding CBAM obligations. If adopted through the legislative process, these changes will have far-reaching implications for EU trading partners in the steel sector, particularly for smaller companies.

A key feature of the CBAM announcements is a legislative proposal to expand its scope to an additional 180 steel- and aluminium-intensive downstream products, which are considered at high risk of carbon leakage.

This expansion had already been signalled as part of a broader EU strategy outlined in the Steel and Metals Action Plan, which aims to boost the competitiveness of the struggling EU steel sector. However, the number and scope of downstream products covered, including complex goods that use numerous inputs and components from different CBAM sectors, some of which are not covered by the EU Emissions Trading Scheme — such as washing machines and automotive parts — was unexpected.

The proposed scope extension imposes additional pressure on exporters and creates compliance challenges. This will be particularly true in countries such as India, where SMEs play an essential role in exporting downstream steel products.

Read the rest of the article here.

This work forms part of TULIP's ongoing research on CBAM, with a focus on Indian steel. This work will be launched in Delhi the last week of March 2026. Stay tuned!