Carbon Counts 2026: EU Council reaches agreement to extend CBAM to downstream sectors

Research evidence excerpt

Carbon Counts 2026: EU Council reaches agreement to extend CBAM to downstream sectors

J P M O R G A N Europe Equity Research

16 June 2026

Carbon Counts 2026

EU Council reaches agreement to extend CBAM to

downstream sectors

• EU Member States Agreement: The EU Council reached an agreement on a

set of proposed changes to the Carbon Border Adjustment Mechanism

(CBAM) at the ECOFIN Council on June 12, 2026. The agreed amendments

would expand the CBAM to cover selected downstream products from January

1, 2028, with the aim of preventing production from shifting away from EU

manufacturers to countries with weaker climate policies. The Council's EMEA Sustainable Investing

position will form the basis for upcoming negotiations with the European Research

Parliament on the European Commission's proposal to strengthen the CBAM. Jean-Xavier Hecker AC

• Background: On December 17, the European Commission proposed (33-1)jean-xavier.hecker@jpmorgan.com4015 4472

expanding the scope of the CBAM, which is currently limited to basic materials J.P. Morgan Securities plc

such as aluminium, cement, electricity and steel, to include specific steel- and Hugo Dubourg

aluminium-intensive downstream products from January 1, 2028. CBAM in its (33-1) 4015 4471

current form raises costs for EU producers of basic materials, creating a risk hugo.dubourg@jpmchase.com

that downstream production shifts to other countries, particularly as the EU J.P. Morgan Securities plc

ETS free allowances are phased out progressively. The Commission's proposal Noemie de la Gorce, CFA

addressed this by adding 180 products with a high carbon leakage risk and a (44-20) 7134-4229

high share of steel or aluminium content, including machinery, hardware and noemie.delagorce@jpmorgan.com

J.P. Morgan Securities plc