European Parliament Approves Amendments to the Carbon Border Adjustment Mechanism

The European Parliament approved stricter implementations in the European Union's Carbon Border Adjustment Mechanism, supporting the removal of the emergency brake mechanism from the text. This decision will impact Turkey's exports of carbon-intensive products to the EU in terms of costs and reporting.

Scope of the Mechanism and New Practices

The Carbon Border Adjustment Mechanism transitioned into the period where financial obligations began to be applied as of January 1, 2026. The system introduces additional costs on the import of carbon-intensive products such as steel, aluminum, fertilizer, cement, electricity, and hydrogen.

Emergency Brake and Exemptions

The European Commission had proposed flexing the system in the event of extraordinary increases in carbon prices. The Parliament, while supporting the removal of this emergency brake, aims to narrow exemptions in aluminum imports to include small-scale shipments within the scope.

Reflections on Turkey's Exports

The regulation is of great importance for Turkey as well. Companies in the steel, aluminum, cement, and fertilizer sectors, which hold a significant place in Turkey's exports to the EU, are expected to face higher costs and additional reporting obligations.

Competitiveness and Next Steps

The regulation, which does not impose a direct import ban, could reduce the competitiveness of high-carbon emission producers in the EU market. The Parliament's decision is not yet final and will take its final form following negotiations between the parties.