What the EU carbon border levy does not cover

The short version

The EU's carbon border adjustment mechanism does not price carbon at the border in general. It applies to goods on a list, and that list is set out by customs code in Annex I of the regulation that created it. The Commission summarises the covered sectors as cement, iron and steel, aluminium, fertilisers, electricity and hydrogen — which means the titanium, zirconium and rare-earth chains this hub follows sit outside the mechanism, and the emissions in those chains are not measured at the EU frontier by anyone. That boundary is a legislative choice, and it is under review.

The mechanism is a list, not a principle

It is easy to describe carbon border measures as though they applied to imported carbon. They do not. They apply to imported goods, named in advance.

The governing sentence of the EU regulation is unusually plain about this. The regulation "applies to goods listed in Annex I originating in a third country"↗(opens in a new tab), where those goods are imported into the customs territory of the Union (Regulation (EU) 2023/956, Article 2(1)). Everything else the mechanism does — the reporting of embedded emissions, the authorised declarant, the certificates surrendered against a year's imports — hangs off that list. A good on it is in; a good not on it is out, and there is no residual test that catches a carbon-intensive import because it is carbon-intensive.

Annex I identifies goods by Combined Nomenclature code, the same eight-digit customs classification used on a shipping declaration. The sector names are a summary of those codes, not the legal scope, and the distinction matters whenever a product sits at the edge of a category. Nothing in this article should be read as a statement about where any individual code falls; that is a question for the Annex itself and for a customs classification, not for a reference page.

Which sectors are on it

The Commission's own description of the covered ground is short. CBAM, it says, "applies to imports of selected goods in the following carbon-intensive sectors: cement, iron and steel, aluminium, fertilisers, electricity and hydrogen"↗(opens in a new tab).

Read that list against the minerals followed here and the shape of the boundary becomes clear. Titanium mineral concentrates are not a listed sector. Titanium dioxide pigment is not. Titanium sponge and titanium metal are not. Zircon, zirconia and zirconium metal are not. Separated rare-earth oxides, rare-earth metals and the permanent magnets made from them are not. Hafnium is not.

That is not an oversight so much as a consequence of how the mechanism was built. CBAM is the border counterpart to the EU emissions trading system: its purpose is to stop production of ETS-covered goods relocating to jurisdictions without a carbon price. Where there is no ETS obligation on the domestic producer, there is no leakage to offset, and no border charge to impose. The list of CBAM goods therefore tracks the industries already inside the ETS rather than the industries with the largest footprints.

A carbon border levy does not follow the carbon. It follows the goods someone has already decided to price at home.

What that leaves unmeasured

The practical effect is not only that no charge is levied. It is that no measurement is required.

An importer of a listed good has to establish the embedded emissions of that good and report them. An importer of titanium sponge, zircon sand or neodymium oxide has no such obligation, and in consequence there is no dataset of embedded emissions for those materials entering Europe — nothing comparable to the figures the mechanism is generating for steel and aluminium. This is the ordinary condition of most traded materials, and it is worth stating plainly rather than assuming the numbers exist somewhere unpublished.

For a mineral set whose emissions sit overwhelmingly in downstream conversion — reduction to metal, smelting to slag, the repeated chemical stages of rare-earth separation — that gap falls precisely where the carbon is.

The boundary is not fixed

Scope has already moved once in a different direction. A simplification regulation adopted in autumn 2025 introduced a single mass-based threshold exempting importers who bring in "50 tons or less (cumulative net mass) of CBAM-covered goods into the EU per year"↗(opens in a new tab), identified as Regulation (EU) 2025/2083 and published on 17 October following adoption by the Council; the same package postponed the start of CBAM certificate sales "from 1 January 2026 to 1 February 2027"↗(opens in a new tab).

On extension, the position as recorded at that time was prospective rather than settled: the Commission was reported to be planning a broader review of CBAM legislation "by the end of 2025, followed by a new legislative proposal in early 2026 potentially expanding the scope to additional sectors and downstream goods covered under the EU ETS"↗(opens in a new tab). The hedge in that sentence is the source's own and is load-bearing — "potentially expanding" is a plan, not a change in the law. What that review concluded, and whether any product in these chains has since been added to Annex I, is not established here in either direction.

The durable point survives the review whichever way it went. A border carbon measure prices what a legislature has listed. Reading the list is therefore the whole of the exercise, and reasoning from the phrase "carbon border" to a conclusion about any particular material is how people end up describing an obligation that does not exist.

Related

• Regulation — the legal instruments behind mandatory reporting, and how European law reaches national permitting
• ESG — where reported emissions figures are disclosed and examined
• Refining and Metallurgy — the energy-intensive steps where these chains' emissions actually sit
• Government Policy — the wider set of instruments states use on minerals