Future Scope Expansion and Evolution
CBAM is a beginning, not an end
The current CBAM covers six sectors and is aligned with the phase-out of EU ETS free allowances through 2034. But Article 30 of the CBAM Regulation mandates that the European Commission review and potentially expand CBAM's scope and design. Understanding the trajectory of CBAM's evolution, what sectors may be added, and what design changes are under discussion, gives businesses and policymakers the foresight to prepare for a broader and more comprehensive mechanism.
The Article 30 Review Mandate
Article 30 of Regulation (EU) 2023/956 is the forward-looking provision of the CBAM framework. It mandates the European Commission to conduct a comprehensive review of CBAM's functioning and scope by 31 December 2025 and then again periodically thereafter. The review must assess:
- Whether the scope of CBAM should be extended to additional goods and sectors covered by the EU ETS, including organic chemicals and polymers
- Whether CBAM should be extended to EU exports, to address carbon leakage through export trade (the "export problem")
- Whether the mechanism for deducting third-country carbon prices needs refinement based on the experience of the transitional period
- Whether indirect emissions coverage should be extended to sectors beyond cement and fertilisers, where it currently applies post-transitional phase
- The potential impact of CBAM on developing countries and least developed countries, and whether additional support measures are warranted
Sectors Likely to Be Added
The most frequently discussed candidates for CBAM scope expansion are sectors already covered by the EU ETS that were excluded from the initial CBAM design for practical or political reasons. The Commission's 2021 Impact Assessment explicitly noted that the initial six sectors were chosen because they met specific criteria: high carbon intensity, high EU ETS coverage, and availability of reliable emission measurement methodologies. Sectors that may be added in future reviews include:
| Potential Sector | Why It May Be Added | Key Challenge |
|---|---|---|
| Organic chemicals | High carbon intensity; significant import volumes; EU ETS covered | Complex supply chains with many precursors; difficult to attribute embedded emissions |
| Polymers / plastics | Energy-intensive production; growing EU import volumes | Highly diverse product range; embedded emissions vary widely |
| Glass | Relatively straightforward emission measurement; EU ETS covered | Moderate import volumes; lower political urgency |
| Paper and pulp | Energy-intensive; significant biomass/fossil carbon distinction needed | Biogenic vs fossil CO₂ accounting complexity |
| Shipping (maritime) | Maritime transport now included in EU ETS from 2024 | Border adjustment for transport services raises novel legal questions |
The Export Problem: Indirect Carbon Leakage
One of the most significant structural gaps in CBAM's current design is the "export problem." CBAM addresses carbon leakage on the import side: it ensures that goods entering the EU pay a carbon cost equivalent to EU producers. But it does nothing for EU producers who export to third-country markets that have no carbon price.
Consider a German steelmaker competing with a Turkish steelmaker in the US market. The German producer pays full EU ETS costs; the Turkish producer does not. In the US market, where there is no carbon border adjustment, the Turkish steel is cheaper. This export carbon leakage has historically been addressed by providing EU ETS free allowances to export-exposed sectors. As CBAM phases out those free allowances on the import side, the export side becomes increasingly important.
In July 2025, the European Commission announced plans to introduce a new measure to address carbon leakage risk for EU-produced goods in CBAM sectors. The details of this export support measure were under development as of early 2026, but possible designs include output-based export rebates (similar to existing carbon leakage measures in some national ETS), carbon contracts for difference, or a dedicated export support facility.
Analogy: Fixing the import gate but leaving the exit road unguarded
Imagine a city that installs a high-tech tollgate on the road into the city centre (CBAM on imports), ensuring all vehicles pay a congestion charge. But the exit roads remain free. Businesses inside the city still face the congestion charge when driving their goods in, but competitors based outside the city can deliver freely to customers around the city without ever entering. Until the export roads also carry some kind of equivalent cost signal, the city's businesses remain at a disadvantage in the surrounding area. CBAM's export problem is structurally equivalent.
Simplification and Anti-Circumvention
The October 2025 simplification regulation amended the CBAM Regulation to reduce administrative burdens while strengthening anti-circumvention provisions. Key simplifications included:
- Replacing multiple sector-specific de minimis thresholds with the single 50-tonne mass-based threshold
- Streamlining the annual declaration process for declarants with simple, homogeneous import profiles
- Clarifying the rules for indirect customs representatives acting on behalf of non-EU exporters
Anti-circumvention measures were strengthened in December 2025, following feedback from industry that certain trade flows were being artificially re-routed through intermediary countries to avoid CBAM. The Commission proposed measures to close loopholes in the country of origin rules for CBAM goods, ensuring that goods cannot be minimally processed in a third country to change their customs origin and thereby avoid the CBAM charge applicable to their true country of production.
The 2034 Full Phase-In and Beyond
The CBAM regulation's current scope runs in lockstep with the EU ETS free allowance phase-out, reaching full CBAM coverage (zero free allowances, 100% certificate obligation) by 2034. At that point, CBAM will cover 100% of the embedded emissions in covered goods, with no adjustment factor reducing the certificate surrender obligation.
What happens after 2034 is not yet legislated. The next review cycle will need to assess whether CBAM should be maintained at its 2034 scope, further expanded, or eventually superseded by multilateral arrangements if global carbon pricing converges sufficiently to make border adjustments unnecessary. Most analysts consider the latter scenario optimistic in the near term, suggesting CBAM will remain a permanent feature of the EU's trade and climate policy architecture.
Example: Planning ahead for a polymer CBAM
A Belgian packaging company that imports polyethylene from Saudi Arabia is watching the Article 30 review process closely. Saudi polyethylene production is relatively energy-efficient but is not subject to any domestic carbon price. If polymers are added to CBAM scope in a future review, the Belgian company will face CBAM certificate costs on these imports. At current EU ETS prices and Saudi production emission intensities (~0.8 tCO₂e per tonne of polyethylene), this could add €48 per tonne of material cost. The company is already in discussions with its Saudi supplier about jointly commissioning an emission intensity measurement, so it is ready to use actual data rather than conservative default values if and when a polymer CBAM takes effect.
CBAM's ultimate justification rests on the persistence of significant differences in carbon pricing between the EU and its trading partners. If the global carbon price were to converge around a common level, either through voluntary adoption of domestic carbon pricing or through a multilateral carbon price floor agreement, border adjustments would become redundant: producers everywhere would face the same carbon cost signal without needing a border mechanism to equalise them.
The World Bank's 2024 report notes that while the number of carbon pricing instruments globally has grown significantly (covering nearly 25% of global GHG emissions), the average effective carbon price paid by covered emissions remains far below levels consistent with 1.5°C or even 2°C pathways. This structural gap between current carbon prices and required prices suggests that CBAM and similar instruments will remain relevant for decades, not years. The more realistic scenario is gradual convergence supported by instruments like CBAM, rather than rapid voluntary harmonisation.
Key Takeaways
- 1Article 30 of the CBAM Regulation mandates a Commission review of CBAM's scope and design, with potential expansion to organic chemicals, polymers, glass, and paper among sectors being discussed
- 2The 'export problem' - EU producers facing ETS costs but no equivalent cost signal when exporting to markets without carbon pricing - is a structural gap that the Commission plans to address with a new export support measure
- 3Anti-circumvention rules were strengthened in December 2025 to close loopholes where goods were re-routed through intermediary countries to escape CBAM
- 4CBAM reaches full phase-in (100% certificate obligation, zero free allowances) by 2034; what happens after 2034 remains subject to future legislative review
- 5Global carbon price convergence would eventually make CBAM obsolete, but the World Bank's data shows that significant divergence is expected to persist for decades, making CBAM a long-term fixture of EU trade and climate policy