EU Expands Carbon Border Levy To Car Parts & Household Appliances

The European Union will extend its Carbon Border Adjustment Mechanism (CBAM) to cover car parts, refrigerators, washing machines, construction products, power transformers, cables, and farming machinery, according to draft documents.

The expansion aims to prevent carbon leakage, where foreign manufacturers might relocate production to avoid EU climate rules. The CBAM currently applies to steel, cement, and other high-carbon products. Under the draft proposal, 25% of revenue collected from the levy in 2028-2029 would compensate EU manufacturers for higher costs, provided they invest in reducing carbon emissions. The EU expects the carbon border tariff to generate 2.1 billion euros by 2030. While some officials have raised concerns about WTO compliance, the EU maintains that CBAM aligns with global trade rules. The draft may change before formal publication.