Expert Group Convenes to Shape Carbon Border Policy

The European Commission's Directorate-General for Taxation and Customs Union assembled key stakeholders for the third meeting of the Informal Expert Group on the Carbon Border Adjustment Mechanism on May 15, 2025. This advisory body serves as a critical forum for shaping the development and implementation of CBAM, one of the EU's flagship climate policy instruments designed to prevent carbon leakage while maintaining the bloc's ambitious decarbonization goals. The Expert Group brings together representatives from industry associations, member states, academic institutions, and civil society organizations to provide technical expertise and practical insights into the complex mechanics of carbon border adjustments. EUROMETAL, representing the interests of steel distribution, processing, and trading sectors across Europe, participated actively in the discussions through its President, Alexander Julius. The meeting focused on addressing implementation challenges as the EU prepares for CBAM's transition from its current reporting phase to the full implementation with financial obligations beginning in 2026. This transition represents a watershed moment for European industrial policy, as it marks the first comprehensive attempt globally to price carbon emissions embedded in imported products, creating a level playing field between domestic producers subject to carbon pricing and their international competitors.

Advisory Body's Multifaceted Role in CBAM Development

The Informal Expert Group serves multiple critical functions in the CBAM policy ecosystem, operating as both a technical advisory body and a forum for stakeholder engagement. Its mandate encompasses several interconnected responsibilities: supporting the Commission in preparing both legislative and non-legislative measures, facilitating knowledge exchange among stakeholders and Member States, assisting in the implementation of existing EU legislation, providing input on policy initiatives, coordinating with national authorities, and supplying technical expertise ahead of comitology procedures. This comprehensive approach reflects the complexity of implementing a first-of-its-kind carbon border adjustment system that must function effectively across diverse industrial sectors while remaining compatible with international trade rules. The group's work is particularly important given CBAM's pioneering nature, as there are few international precedents to guide implementation. Participants contribute specialized knowledge on carbon accounting methodologies, verification procedures, administrative systems, and sectoral specificities that must be addressed for the mechanism to function as intended. The Expert Group also serves as an early warning system for identifying potential implementation challenges, allowing the Commission to develop solutions before problems emerge at scale during full implementation. This collaborative approach to policy development represents the Commission's recognition that successful implementation of such a complex instrument requires ongoing dialogue with those most directly affected.

EUROMETAL President Flags Critical Pricing Uncertainties

During the session, EUROMETAL President Alexander Julius raised significant concerns regarding two interrelated aspects of CBAM implementation that could create substantial financial uncertainty for European businesses. First, Julius highlighted the lack of clarity surrounding the average Emissions Trading System price that will be applied in 2026 when CBAM transitions to its full implementation phase. This price uncertainty makes it extremely difficult for businesses to forecast compliance costs and incorporate them into medium-term business planning. Second, and compounding this challenge, is the undefined "benchmark factor" that will be used to calculate CBAM obligations. This technical parameter will significantly influence the final financial impact on importers and downstream users of carbon-intensive materials. The combination of these two uncertainties creates a scenario where businesses in the steel value chain cannot accurately predict their cost exposure under CBAM, potentially leading to conservative business decisions that could hamper investment and growth. Julius emphasized that this uncertainty is particularly problematic for steel distributors and processors who operate with thin margins and face intense international competition. The intervention highlighted a fundamental tension in the CBAM implementation process: while the mechanism's overall structure has been established, many critical details that will determine its real-world impact remain undefined with implementation deadlines approaching rapidly.

Call for Realistic Benchmarks to Protect Industrial Competitiveness

EUROMETAL's intervention went beyond merely identifying problems to propose a specific solution: the prompt establishment of a modest and realistic benchmark factor for CBAM calculations. This recommendation reflects the organization's concern that overly stringent benchmarks, especially in the early implementation phases, could create disproportionate financial burdens for European manufacturers and processors who rely on imported materials. A carefully calibrated benchmark would provide greater predictability for business planning while still advancing CBAM's environmental objectives. Julius argued that a gradual approach to implementation would allow the industrial ecosystem to adapt to the new carbon pricing reality without creating economic shocks that could undermine European competitiveness. This position aligns with broader industry concerns that CBAM implementation must balance climate ambitions with practical economic realities, particularly as European industries already face significant cost pressures from energy prices and the ongoing industrial transformation toward lower-carbon production methods. The call for realistic benchmarks reflects EUROMETAL's dual commitment to supporting climate action while ensuring that European industries can remain competitive in global markets. This balanced approach acknowledges that CBAM's success will ultimately depend not just on its environmental impact but also on its ability to maintain a viable industrial base in Europe.

Steel Value Chain Faces Unique Implementation Challenges

The steel sector presents particularly complex challenges for CBAM implementation due to its global supply chains, diverse product categories, and varying production methods with significantly different carbon intensities. EUROMETAL's concerns reflect the unique position of steel distributors, service centers, and traders who operate at the intersection of primary steel production and downstream manufacturing industries. These companies must navigate the administrative and financial implications of CBAM while maintaining competitive offerings to customers who have alternatives from non-EU suppliers. The steel value chain is characterized by multiple transformation steps, each potentially subject to CBAM obligations, creating the risk of cascading compliance costs that could disadvantage European processors compared to competitors importing finished products. Additionally, the sector faces challenges related to data availability and verification, particularly for materials sourced from regions with less developed emissions monitoring systems. EUROMETAL's advocacy emphasizes the need for implementation approaches that recognize these sectoral specificities and avoid unintended consequences that could harm European industrial capabilities. The organization's input reflects deep practical knowledge of how carbon border adjustments will interact with existing business models and trade patterns in the steel ecosystem, providing valuable ground-truth perspectives to complement more theoretical policy discussions.

CBAM's Evolution from Concept to Implementation Reality

The meeting represents an important milestone in CBAM's evolution from a conceptual policy instrument to a practical reality with significant economic implications. The mechanism was initially proposed as part of the European Green Deal to address the risk of carbon leakage, the potential relocation of production to countries with less stringent climate policies. After extensive debate and negotiation, the CBAM Regulation was adopted in 2023, establishing a transitional phase focused on reporting obligations before financial adjustments begin in 2026. This phased implementation approach was designed to allow both EU authorities and affected businesses to develop necessary systems and processes before full implementation. The current discussions in the Expert Group focus on the critical transition from reporting to financial obligations, addressing technical details that will determine how the mechanism functions in practice. These include verification procedures, calculation methodologies, administrative systems, and the treatment of complex products. The input from stakeholders like EUROMETAL is especially valuable at this juncture, as it helps identify potential implementation challenges before they manifest at scale. The Commission's willingness to engage with industry concerns through forums like the Expert Group reflects recognition that successful implementation requires ongoing dialogue with those directly affected by the policy.

Industry Association's Ongoing Engagement in Climate Policy

EUROMETAL's participation in the Expert Group meeting demonstrates the organization's commitment to constructive engagement in EU climate policy development. As the representative voice for Europe's steel distribution, processing, and trading sectors, EUROMETAL brings perspectives from companies that play a crucial intermediary role in industrial supply chains. The organization has consistently advocated for climate policies that recognize the interconnected nature of industrial ecosystems and the need for approaches that maintain European competitiveness while advancing environmental objectives. This engagement extends beyond CBAM to include related policies such as the EU Emissions Trading System reform, the Circular Economy Action Plan, and initiatives to support industrial decarbonization. EUROMETAL's approach combines technical expertise with practical business insights, helping policymakers understand the real-world implications of regulatory decisions. By participating in forums like the Expert Group, the organization ensures that the perspectives of steel distributors and processors are considered alongside those of primary producers and end users. This multi-stakeholder approach is essential for developing policies that work effectively across entire value chains rather than optimizing for any single segment. EUROMETAL's continued engagement reflects the recognition that climate policy will fundamentally reshape industrial competitiveness in the coming decades, making active participation in its development a strategic priority.

Balancing Environmental Ambition with Economic Pragmatism

The discussions at the Expert Group meeting highlight the fundamental challenge at the heart of CBAM implementation: balancing ambitious climate action with pragmatic economic considerations. The mechanism aims to create a level playing field between EU producers who pay for their carbon emissions under the ETS and foreign competitors who may not face equivalent carbon costs. However, achieving this balance requires careful calibration of numerous technical parameters to avoid both undermining environmental objectives and creating disproportionate burdens for European industries. EUROMETAL's intervention emphasizes the need for implementation approaches that recognize the economic realities facing European manufacturers and processors, particularly in internationally competitive sectors like steel. The organization's call for realistic benchmarks reflects a broader concern that climate policy must advance decarbonization while preserving industrial capabilities and employment in Europe. This position acknowledges that successful climate policy must be sustainable not just environmentally but also economically and socially. The Expert Group's work represents an important forum for finding this balance, bringing together diverse perspectives to develop implementation approaches that can achieve environmental objectives while maintaining industrial competitiveness. The outcome of these discussions will significantly influence whether CBAM becomes a model for effective climate policy that other regions might adopt or a cautionary tale about the challenges of implementing carbon border adjustments.

Key Takeaways:

• The European Commission's Informal Expert Group on CBAM provides critical technical guidance and stakeholder input for implementing the EU's carbon border adjustment mechanism, with EUROMETAL actively participating to represent the interests of steel distributors, processors, and traders

• EUROMETAL President Alexander Julius highlighted significant concerns about the uncertain ETS pricing for 2026 and undefined benchmark factors that create unpredictable cost exposure for European manufacturers, calling for modest and realistic benchmarks to ensure business predictability

• The implementation of CBAM presents unique challenges for the steel value chain due to its global supply chains, diverse product categories, and multiple transformation steps, with potential cascading compliance costs that could disadvantage European processors compared to competitors importing finished products