EU Parliament votes to scrap carbon border tax's emergency brake, setting up clash with member states

European Union lawmakers voted on Tuesday to scrap a clause that would let the bloc suspend its carbon border levy if it drives up the cost of imported goods, setting up a clash with EU member states that want to keep the emergency brake in place, Reuters reported.

What is the carbon border levy?

The EU's Carbon Border Adjustment Mechanism (CBAM) came into force on January 1, 2026, moving into its definitive phase after a three-year transitional period that began in October 2023.


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It imposes CO2 emissions fees on imports of steel, cement, fertilisers, aluminium, electricity and hydrogen to ensure they don't gain an unfair price advantage over goods made in Europe, where industries already pay for their carbon emissions under the EU's Emissions Trading System.

The mechanism was formally adopted by the EU Council in April 2023 as a central pillar of the bloc's "Fit for 55" climate agenda, and is designed to eventually cover more than half of all emissions from sectors under the EU's carbon market, according to EU Council documents.

Why lawmakers want to scrap the emergency brake

The European Parliament voted on Tuesday to delete a clause that would have allowed the EU to temporarily exempt goods from the levy in future if "serious and unforeseen circumstances" pushed up their prices.

Instead, lawmakers proposed using revenue collected from the border fee to compensate industries if the scheme raises costs, Reuters reported.

EU member states, however, want to retain the option to suspend the carbon fee under specific conditions, including if a product's price jumps more than 50% within six months, per the Council's position agreed in June this year. The European Commission had proposed the emergency brake last year after France called for the fertiliser levy to be suspended to ease costs for farmers.

The proposal has since proved divisive: some companies have warned that activating the brake would undercut low-carbon investment and hurt the very domestic industries the levy was meant to protect from cheaper imports, Reuters reported.

EU countries and the European Parliament will now enter negotiations to agree on final rules, which are also set to extend the border fee to new products including washing machines and car parts.

Aluminium loopholes to be tightened

Lawmakers also voted to lower the threshold at which the carbon border fee applies to aluminium shipments, from 50 metric tonnes to just 5 metric tonnes, a change aimed at capturing imports of high-value, low-weight aluminium components used in cars, doors and solar panels, Reuters reported.

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They also backed extending the levy to post-consumer aluminium scrap, which had not been covered under the original rules. European aluminium producers had warned that foreign suppliers could exploit this gap by using more scrap to sidestep the EU border fee and undercut domestic producers on price.

"Our companies will get absolutely eaten alive if these problems aren't solved," said Paul Voss, director general of the industry association European Aluminium, as per Reuters.