Carbon Counts 2026

Research evidence excerpt

J P M O R G A N

Europe Equity Research

16 September 2026

Carbon Counts 2026

EU Parliament removes CBAM safeguard clause and

broadens downstream scope

What happened? Yesterday, the European Parliament adopted its negotiating

position on the proposed strengthening of the Carbon Border Adjustment

Mechanism (CBAM). For background, this sets Parliament's mandate ahead of

trilogue negotiations with EU member states, who agreed their own Council

position in June (our view: here).

What’s new / different about Parliament’s position vs the initially agreed

Council position?

Price-shock safeguard deleted. Parliament rejected the

Commission's and the Council's safeguard clause that would have

allowed goods to be removed from the CBAM scope during price

shocks. The Council had defined this as a sustained >50% price rise

over six months (relative to a 10-year average). In its place, MEPs

propose temporarily redirecting CBAM revenues from the affected

goods back to the impacted sectors as compensation.

Downstream scope broadened. MEPs endorsed and expanded the

extension beyond basic materials to finished steel/aluminium goods

(fasteners, wire, springs, household articles), going further than the

Commission's original ~180-product list. An exemption was added for

non-EU electricity flows used by grid operators for network stability.

Aluminum: MEPs voted to lower the aluminium shipment threshold

from 50 to 5 metric tons, ensuring the levy applies to imports of high

value, low-weight aluminium parts for cars, doors and solar panels, and

to also bring post-consumer aluminium scrap into scope. The Council's

text had covered pre-consumer scrap only, but the Parliament now

extends this to the post-consumer side, which European producers had

flagged as a loophole where foreign suppliers could use more scrap to

dodge the border fee and gain a price advantage.

Temporary decarbonisation fund: Parliament seeks an earlier and

broader fund than the Council: support running from 2027 to 2029

(versus a 2028 start), extended to fertiliser producers (urea, ammonium

nitrate, ammonium sulphate and other N/P/K fertilisers) and to all

downstream operators using CBAM-covered inputs, with leftover

…