Identifying products and sectors at risk of carbon leakage in view of an inclusion into the CBAM scope

The transitional period of the Carbon Border Adjustment Mechanism (CBAM) will expire on 31/12/2025. After that date, the definitive regime will lead to a gradual phasing-out of free ETS allowances and a gradual phasing-in of payable CBAM import certificates, for the products listed in Annex I (cement, iron, steel, aluminium, fertilisers, hydrogen, electricity).

Article 30 requires the European Commission to assess the risk of carbon leakage for downstream goods, i.e. goods made from the goods already in scope, and to prepare a legislative proposal notably aiming at extending the scope of the CBAM.

Home appliances (washing machines, fridges, dishwashers, water heaters, etc.) contain a high share of CBAM-covered raw materials and compete on a general consumer market with tight profit margins. We call on the European Commission to pay particular attention to the risk of carbon leakage in home appliances.

We propose the following methodologies to identify products and sectors at risk of carbon leakage in view of an inclusion into the CBAM scope. We applied them on a specific product (washing machines) and a specific sector (home appliance manufacturers) in the context of a case-study performed by APPLiA, the European association for home appliance manufacturers.

On this basis, we propose 3 options to apply the CBAM price at imports on complex goods.

1. Product-specific methodologies

2. Sector-specific methodologies

3. Applying CBAM at imports for finished goods

Check out our full sector analysis and actionable proposal for extending CBAM to home appliances ↓