Adds deletion of Paris agreement carbon credits clause
The European Parliament today confirmed its rejection of a proposed new Article 27a to the carbon border adjustment mechanism (CBAM) that would have allowed the temporary suspension of the scheme for certain products. At the same time, they backed extending the CBAM to more than 180 additional steel and aluminium-intensive downstream products, including structures, pipes, tubes and components.
Parliament's environment committee had already voted in July to extend the CBAM to a long list of downstream goods containing steel or aluminium.
"This Article [27a] prevents investments in technologies of the future and punishes those that have already moved ahead," parliament's centre-left S&D draftsman Mohammed Chahim said. "The same people that are sceptical of the CBAM come to me and ask whether certain CN codes can be added to the list," he said.
Chahim said parliament had rejected what he described as a "disguised" subsidy for foreign fertilizers through Article 27a. Instead, support for affected sectors in serious and unforeseen circumstances should come from CBAM revenues, he said.
EU member states agreed on their CBAM revisions in June, supporting a similar expansion to downstream products while retaining a narrower version of Article 27a. Under the states' proposal, the CBAM could be suspended for certain products if import prices rose to 50pc above a 10-year average and remained at that level for six months.
Argus analysis in June indicated that the CBAM was unlikely to be suspended for fertilizers under current market conditions if member states' proposed amendment was included in the final legislation. Only phosphate prices in some markets were above the threshold at the time.
In a separate vote, parliament extended the list of products eligible for support under the temporary decarbonisation fund (TDF) to include urea, ammonium nitrate, ammonium sulphate and other mineral or chemical fertilizers containing nitrogen, phosphorus and potassium. Wheat and barley, excluding seed, as well as iron, steel, cement and aluminium products, also remain eligible.
Parliament said MEPs want TDF support available from 2027 to 2029, rather than starting in 2028 as proposed by the European Commission. And they want downstream products that use CBAM-covered goods as inputs to be eligible for support from the fund.
Parliament confirmed the environment committee's previous deletion of the clause enabling the commission to take into account carbon credits under Article 6 of the Paris Agreement when calculating the carbon price paid abroad.
Parliament also approved new anti-circumvention provisions requiring the commission to monitor patterns "indicative of artificial splitting of transactions or other circumvention strategies aimed at falling below the de minimis threshold set at 50 tonnes of net mass in the CBAM regulation".
EU climate commissioner Wopke Hoekstra urged parliament and member states to reach agreement "well before" year-end. "Without agreement, there is a risk that the downstream extension simply cannot enter into force on 1 January 2028 as planned," he said.
The vote, which passed by 464 votes to 50 with 159 abstentions, clears the way for negotiations with member states on a final legal text. Governments continue to support a more limited safeguard clause that could trigger temporary CBAM suspensions for sectors facing crisis conditions.
