The Carbon Border Adjustment Mechanism (CBAM) imposes a carbon price on imports of selected products into the EU market, with the aim of creating a level playing field between domestic production and imports. According to Annex I of Regulation 2023/956, which establishes CBAM, 573 products, mainly from upstream sectors, are currently covered. The regulation simultaneously recognises the need to assess and implement an expansion of the scope to downstream products.

The present report discusses criteria that could be applied to inform decisions on the inclusion of downstream products in the CBAM. It examines the relevance and suitability of different criteria, as well as the availability and reliability of data to operationalise them.

The authors identify and discuss five main criteria:

• whether a product contains a significant share of at least one CBAM good;
• whether a product is relevant in terms of emissions;
• whether a product is exposed to carbon leakage;
• whether the inclusion of a product does not create excessive administrative burden;
• whether the inclusion of a product helps prevent circumvention.

The report also discusses various options for operationalising these criteria. In addition, it provides examples of how such criteria can be applied to a limited number of product groups and examines possible ways to combine them. However, the report does not provide a final recommendation on the criteria for including downstream products in CBAM. Instead, it aims to outline the operating space within which possible criteria can be selected and combined, thereby establishing a general foundation for the discussion on downstream expansion.

The broad spectrum of criteria and potential operationalisation and combination rules discussed in the report requires careful prioritisation of objectives. There are inherent trade-offs between broad coverage of products and the associated increase in administrative burden. The criteria examined in this report could potentially lead to a prioritisation list to guide decisions on which product should be included first within the CBAM scope. Ideally, such a scope expansion would be implemented over time, allowing necessary insights to emerge through cooperation with industry associations, trade partners and regulated entities.