Serbian manufacturers of machinery, electrical equipment and processed metal products could face additional EU carbon-compliance requirements as the European Union considers extending the Carbon Border Adjustment Mechanism (CBAM) to downstream industrial goods.
- Downstream products broaden the potential exposure
- Embedded carbon enters procurement decisions
- Data requirements extend across the supply chain
- Machinery and electrical equipment require product-level traceability
- Verification becomes part of export preparation
- 2027 preparation period precedes proposed 2028 expansion
The European Parliament voted on the proposed expansion and returned the legislation to interinstitutional negotiations. The legislation has not yet been finalised, while the proposed extension is scheduled to apply from 2028. The European Commission has proposed adding 180 downstream products, with steel or aluminium accounting for an average of about 79% of their content. The Council subsequently expanded its negotiating list to 200 industrial, construction and electrical-equipment products, while Parliament’s environment committee supported a broader list covering 457 products.
Downstream products broaden the potential exposure
The existing CBAM framework covers iron and steel, aluminium, cement, fertilisers, hydrogen and electricity. The proposed changes would extend the mechanism further into manufactured goods containing substantial quantities of steel and aluminium. This could bring companies into the CBAM supply chain even when they do not manufacture primary metals. Serbian producers transforming purchased steel or aluminium into machinery, electrical equipment, structural components, fasteners, industrial parts and other finished products could therefore face additional carbon-data requirements.
The precise scope will depend on the CN customs codes ultimately agreed by EU institutions. For downstream manufacturers, a key element will be the emissions associated with the metal inputs used in their products. A company’s own manufacturing process may generate relatively limited emissions, while a significant share of the embedded carbon in its finished product may originate from the steel or aluminium purchased from another installation.
Embedded carbon enters procurement decisions
The proposed expansion could require manufacturers to establish where their metal inputs were produced, determine their embedded emissions and allocate those materials and emissions to exported products. This adds carbon information to existing procurement considerations such as price, technical specification, quality and delivery.
For Serbian manufacturers supplying EU markets, the availability of verifiable emissions information from steel and aluminium suppliers could consequently become part of the purchasing and supply-chain process. Companies selling only within Serbia could also encounter CBAM-related data requirements if their customers subsequently export finished products to the EU.
Data requirements extend across the supply chain
The formal CBAM obligation remains with the authorised EU declarant or importer, but the information needed for the declaration can originate with producers and exporters outside the EU. The evidence chain can therefore extend from the Serbian precursor supplier through the Serbian manufacturer and exporter to the EU importer or declarant, with verification and CBAM Registry requirements forming part of the process.
EU customers may seek information on embedded emissions, precursor materials, production allocation, supporting documentation and verification, as well as contractual provisions covering the handling of carbon data. For exporters, this places CBAM information within commercial relationships with EU customers and intermediaries.
Machinery and electrical equipment require product-level traceability
Machinery production can involve numerous metal inputs, including structural steel, aluminium housings, wire, castings, fasteners, motors and externally purchased assemblies. Manufacturers may therefore need systems capable of connecting suppliers and materials with emissions data, inventory records, production orders, finished products and individual EU shipments.
Electrical-equipment producers face similar traceability requirements. Products such as transformers, switchgear, motors and electrical cabinets can contain significant quantities of steel and aluminium, although their final CBAM treatment will depend on the customs classification adopted under the EU legislation. The proposed expansion therefore places CN-code screening among the initial compliance tasks for exporters seeking to determine which products and materials could be affected.
Verification becomes part of export preparation
The proposed rules could also increase the importance of documented and verifiable emissions information for manufacturers supplying EU customers. According to CBAM.Clarion.Engineer, exporters should approach the requirements as an engineering and supply-chain verification process rather than solely as environmental reporting.
A verification-ready file should enable an independent verifier to trace emissions information through identifiable production installations, precursor materials, energy consumption, production records and the allocation of emissions to exported products.
CBAM.Clarion.Engineer also identifies pre-verification as potentially relevant before formal accredited verification, particularly for companies operating complex precursor supply chains or serving multiple EU buyers.
2027 preparation period precedes proposed 2028 expansion
The EU’s definitive CBAM regime has applied, while the proposed downstream expansion is intended to begin in 2028. For Serbian manufacturers, 2027 would therefore provide a preparation period before the proposed extension. Companies could use that period to screen CN codes, identify covered precursor materials, link suppliers to production installations, establish product-level emissions allocation, review electricity-related evidence and determine which EU customer or intermediary would serve as the authorised CBAM declarant.
The final product coverage remains subject to negotiations between the EU institutions. The current proposals differ substantially, with the Commission identifying 180 products, the Council 200, and the Parliament’s environment committee supporting 457 products. The different positions mean that the definitive downstream product list has yet to be established.
