EU finance ministers agree to extend carbon border levy to washing machines and other processed goods

The decision in Luxembourg

EU member states, meeting as the Economic and Financial Affairs Council in Luxembourg on 12 June, reached political agreement on a proposal from the European Commission to widen the scope of the carbon border adjustment mechanism (CBAM). The expansion will bring downstream products—most notably washing machines—under the levy alongside the basic materials already covered. The ministers intend to review the product list annually, allowing further adjustments as trade patterns and carbon intensity evolve. The agreement is a preliminary step; it must still be approved by the European Parliament before any changes enter force.

How CBAM works and why it's expanding

Since 1 January 2026, importers of steel, aluminium, cement, fertiliser, hydrogen and electricity have been required to buy certificates corresponding to the carbon emissions embedded in their goods. The mechanism is designed to equalise the cost of carbon between EU producers—who already pay for emissions through the Emissions Trading System—and foreign suppliers operating under weaker climate rules. By pricing the carbon differential, CBAM aims to prevent ‘carbon leakage’: the relocation of production outside the bloc or a surge in cheaper, higher-emitting imports that undermine European climate goals. The expansion to processed goods such as washing machines targets a gap in the current rules, where manufacturers could avoid the levy by importing semifinished materials and assembling them inside or outside the EU.

What changes for importers

Under the extended framework, any product with a significant share of iron, steel or aluminium will face carbon pricing at the border. The finance ministers specifically cited washing machines as an example, but the language in the agreement covers a broad range of industrial and, to a lesser extent, household goods. Importers will need to track and report the embedded emissions of these more complex products, a task that will require detailed supply-chain data. The annual review of the product list gives regulators flexibility to add or remove items as methodologies improve and as the Commission gathers experience from the scheme’s first phase.

Next steps

Before the expansion can be implemented, the Council must negotiate a final text with the European Parliament. The timeline for those talks has not been set, but EU officials expect the dossier to be a priority in the second half of 2026. The Parliament has previously signalled support for a broader CBAM, though details such as the speed of the phase-out of free allowances and the treatment of exports remain contentious. Once agreed, the new rules will be phased in, likely with a transitional reporting period similar to the one that accompanied the original CBAM launch.