CBAM for plastics?

Balancing producer and consumer interests

The EU’s Carbon Border Adjustment Mechanism (CBAM) currently covers six product groups: iron and steel, aluminium, cement, fertilisers, hydrogen, and electricity. From 1 January 2026, these goods will be subject to the same carbon pricing as applies within the EU. The aim is to prevent so-called “carbon leakage” – that is, the relocation of production to countries with less stringent climate policies for cost reasons. The long-term objective is for CBAM to cover all sectors included in the EU Emissions Trading System.

The purpose of this report is to provide background material to the Government Offices of Sweden ahead of the forthcoming EU negotiations on a potential extension of CBAM to include chemical and plastic products. A central question in this context is whether all products should be included, or only those parts of the value chain with the highest emissions intensity. Where the boundary is drawn requires a careful balance between climate benefit and the administrative burden placed on industry.

This report focuses on plastic products defined under HS Chapter 39, divided into base plastics, semi-finished products, and final plastic goods. Base plastics are produced by the chemical industry, while semi-finished and final products are manufactured within the plastics industry, but also by other sectors using plastic as a material component.

The protection interests of producers must be weighed against the needs of user industries for plastic parts and components used as inputs in production. These products will become more expensive if CBAM is extended, and would also be subject to increased administrative costs due to extensive reporting requirements – requirements which, according to a recent German study, only around six per cent of importers currently manage to comply with. To enable a potential extension, CBAM must therefore be simplified. A proposal is currently on the table from the European Commission, which includes, among other things, an exemption for smaller importers.

In 2022, plastic production in Sweden amounted to SEK 45.9 billion, while imports totalled SEK 48.9 billion. The majority of imports come from the EEA and Switzerland, i.e. countries already covered by the EU ETS and therefore subject to the same carbon price as Swedish producers. Imports from the rest of the world account for only 15.9 per cent of value and 12.8 per cent of volume, figures that do not significantly differ from other product categories. There is therefore currently no clear evidence of carbon leakage.

The future need for CBAM, however, is difficult to assess. This will depend, among other factors, on the pace at which global carbon prices converge, and how quickly the EU phases out free allowances. These issues will be further analysed in collaboration with the Swedish Environmental Protection Agency and the National Institute of Economic Research.

The report concludes with a discussion of the data requirements for continued analytical work. The greatest challenge is the lack of emissions data across the plastics value chain – both within and outside the EU. These data are required to assess the risk of carbon leakage and the potential climate benefit of an expanded CBAM.