CBAM entered its definitive phase on 1 January 2026, marking the first major implementation milestone. A proposed extension to downstream products is now being discussed as a potential next critical date. The focus is particularly on manufacturers of steel- and aluminium-intensive goods that are not currently covered. Under the European Commission’s proposed timetable, companies would have less than two years to prepare data systems and compliance processes.
The Commission’s strengthening package proposes applying the downstream extension from 1 January 2028. Negotiating positions have been adopted by the Council and the European Parliament, but key elements remain unresolved, including the final product scope, methodology and transitional arrangements. The proposal also includes anti-circumvention measures and changes to electricity rules. As a result, 2028 could function as a broader redesign point for CBAM rather than only an expansion of the product list.
Potential impact on downstream manufacturers starting in 2028
Companies entering CBAM in 2028 could face a more demanding cost environment than importers of basic materials encountered at the start of the definitive regime. For most covered steel and aluminium goods under the existing schedule, default-value mark-ups are set to rise to 30% in 2028. At the same time, free allocation under the EU Emissions Trading System continues to phase down. The combination could increase financial consequences for firms relying on default values or entering without adequate emissions evidence.
Preparation is expected to prioritise records that need continuity over time. These include supplier installation identity, precursor emissions, bill-of-material quantities, production allocation and product classification. If legislation requires evidence linked to 2028 production, reconstructing these relationships after the reporting period closes may be difficult or unreliable. Manufacturers are therefore encouraged to start mapping products and supply chains even while legal scope remains uncertain.
Product classification, supplier data access, installation identification and controlled emissions monitoring are identified as elements that can support preparation across multiple legislative outcomes. This approach is intended to reduce dependence on a single set of final parameters during negotiations. It also targets practical steps that can be carried out before product coverage is confirmed. The aim is to ensure continuity in the information needed for later reporting.
Managing legal status during negotiations
Legal-status management is described as essential as discussions continue across Commission proposals, Council positions and Parliament positions. Companies are advised to distinguish between current legislation, adopted implementing rules, Commission guidance and proposals still under negotiation. Each interpretation should be recorded with its source and date. This separation is intended to prevent contracts and internal procedures from treating a negotiating position as already binding.
The same separation is also presented as a way to update controlled interpretations when final text changes without correcting multiple spreadsheets maintained by different teams. A scenario-based approach is recommended to allow progress without prejudging outcomes. Firms can compare the current-law position with the Commission proposal and identify principal differences between Council and Parliament positions. Actions that remain useful across scenarios can then be selected.
Capital expenditure plans whose viability depends on a narrow legislative outcome may require additional legal certainty. In contrast, steps such as improving product classification, securing supplier data rights and establishing reliable monitoring procedures can begin earlier. This distinction links early operational work with areas that may still depend on final legal details. It also reflects how preparation timelines may vary across compliance tasks.
Contracting, financing and carbon-cost exposure
The proposed date has implications for agreements signed before final scope is known. Multi-year supply contracts concluded in 2026 or 2027 may extend into 2028. That creates a need to consider change-in-law provisions and carbon-cost pass-through clauses within those contracts.
Contracting parties are expected to define how additional costs would be allocated if a product enters CBAM coverage. They would also need clarity on what emissions evidence suppliers must provide and how changes in applicable methodology would be handled. Provisions should distinguish existing legal obligations from potential future requirements tied to the downstream extension.
Banks and investors financing industrial expansion are also expected to test whether project margins, customer pricing and debt assumptions remain viable under a 2028 CBAM scenario. The analysis should reflect uncertainty around the final product list and methodology rather than treating the extension as settled law. For Western Balkan manufacturers supplying EU customers, the proposed date could coincide with changes in market-access expectations, electricity decarbonisation and pressure for lower-carbon products.
Readiness milestones before final legislation
Management is advised to establish internal milestones before final legislation is adopted. Priorities include completing CN-code screening, securing supplier data rights, piloting product-level emissions allocation and defining contractual procedures for potential carbon-cost changes. These measures can proceed while capital spending remains conditional on final scope.
A readiness plan should identify responsible teams, deadlines, data owners and approval procedures so organisations can move quickly once legal requirements become clear. The underlying compliance file should connect purchasing, production, customs and finance records. Companies should be able to explain calculations to both a verifier and a commercial manager using consistent evidence, including assumptions behind results and circumstances under which they might change.
A minimum decision file is described as documenting legal status, customs treatment, data owner, implementation deadline and change-control decisions. It should also specify who approves key assumptions and what fallback applies if preferred treatment cannot be substantiated. Defining these arrangements early is intended to reduce risk of material exposure being identified only when a verifier, customs authority or authorised declarant challenges a claim.
A planning horizon tied to 1 January 2028
The downstream extension remains subject to negotiations, so 1 January 2028 should not be treated as confirmed for every product under discussion. Even so, the proposed timetable provides a planning horizon for industrial exporters, importers, lenders and investors involved in preparation activities.
If 2026 brought CBAM coverage to basic materials, 2028 could extend coverage further into factories that transform those materials into finished goods. Businesses building reliable product and supplier data early would be better positioned to assess final rules, update contracts and respond to new obligations without reconstructing records at the last minute.