New CBAM scope: Potentially affected Thai goods account for less than 1% of total exports, but risks are concentrated in the industrial equipment and automotive sectors

• The European Union (EU) is set to expand the Carbon Border Adjustment Mechanism (CBAM) from upstream products to downstream goods with high iron and aluminum content by early 2028, including industrial equipment, automotive vehicles and parts, home appliances, furniture and construction products, and metal packaging. The draft legislation remains in its first reading.

• The risk to Thailand's overall exports remains limited but has increased, compared with the previous scope, and may be concentrated in certain product categories. Collectively, CBAM-related goods accounted for 0.98% of Thailand's total export value in 2024, with most Thai exports to the EU under the draft scope expansion falling within the industrial equipment and automotive segments.
• Potentially affected businesses should begin screening risks across three dimensions: whether their products fall within the scope of the expanded CBAM, their degree of reliance on the EU market, and whether they operate within the supply chains of EU-exporting clients. They should also prepare data on raw materials, energy consumption, and product-level carbon emissions, while closely monitoring developments in Thailand's climate-related legislation and future carbon pricing mechanisms.

 
The EU is set to expand the CBAM from upstream products to downstream goods with high iron and aluminum content.
 
The original CBAM, which has been fully implemented since January 1, 2026, covers six major carbon-intensive product groups: iron and steel, aluminum, fertilizers, cement, electricity, and hydrogen.

The newly drafted CBAM legislation expands its scope to certain downstream products with high iron and aluminum content to prevent circumvention through the processing or transformation of covered products, thereby amplifying the CBAM's role in curbing carbon emissions outside the EU.

Key downstream product categories to monitor under the current draft include industrial equipment, such as conveyor belts, industrial robots, transformers, and electric wiring; automotive vehicles and parts, such as chassis, bodies, wheels, and suspension systems; home appliances, such as washing machines and certain types of refrigerators and freezers; furniture and construction products, such as metal furniture, metal-framed chairs, and prefabricated buildings; as well as metal packaging, including metal containers, cans, and metal closures. It should be noted that this list does not yet represent the final product coverage under the legislation and remains subject to change, following further deliberations by the EU.
 
Draft CBAM expansion not yet finalized but targeted for implementation in 2028.

The expanded scope covering downstream products is expected to take effect on January 1, 2028, pending completion of the legislative process. The draft legislation is currently in its first reading. The European Commission proposed the draft on December 17, 2025, the Council of the European Union agreed on its position on June 12, 2026, and the European Parliament's Committee on the Environment, Climate and Food Safety (ENVI) adopted its position on July 6, 2026.
 
The next step involves a plenary vote in the European Parliament, followed by trilogue negotiations between the European Parliament, the Council of the European Union, and the European Commission to finalize the legislative text and final product list.

The overall impact on Thai exports remains contained despite rising exposure, with risks clustered in industrial equipment and automotive exports to the EU.
 
Even when combining both the original scope and the proposed downstream products, the total value of CBAM-related exports accounts for just 0.98% of Thailand's total export value in 2024, reflecting that the overall risk to Thai exports remains limited.

The draft CBAM expansion would add exposure equivalent to 0.89% of Thailand's total export value in 2024, on top of roughly 0.09% already covered under the six main product groups under the existing CBAM scope.
 
In terms of Thailand's export value structure, Thai exports to the EU covered under the draft CBAM expansion are predominantly concentrated in industrial equipment and automotive products. Industrial equipment accounts for approximately 68.1% of Thailand's exports to the EU that were covered by the draft CBAM expansion in 2024, followed by automotive vehicles and parts at 24.1%, home appliances at 5.9%, furniture and construction products at 1.8%, and metal packaging at 0.2%. This indicates that, while the overall risk to Thai exports remains contained, sector-specific risks warrant close monitoring – particularly in the industrial equipment and automotive sectors.
 
From the EU's import perspective, goods imported from Thailand in these categories accounted for merely 0.5% of the EU's total global imports in the same product groups, indicating that Thailand is not yet a major import source for the EU within the draft CBAM expansion scope.
 
Regarding EU imports from Thailand under the draft CBAM expansion, industrial equipment accounted for roughly 0.57% of the EU's total imports of the same product groups from the world in 2024. Automotive vehicles and parts accounted for around 0.40%, followed by home appliances at 0.36%, furniture and construction products at approximately 0.07%, and metal packaging at close to 0.03%. This reflects that Thailand still plays a relatively limited role as an import source for the EU across all product groups targeted in the draft CBAM expansion.

If a product falls within the scope of the draft CBAM expansion, risks for Thai businesses are likely to emerge in two key areas: data-related burdens and indirect cost burdens. Data-related burdens may materialize first, as EU trading partners may request product-level carbon emissions data. Concurrently, indirect costs could follow if EU importers are required to purchase more CBAM certificates and pass part of those costs on to Thai suppliers through price renegotiations, contract adjustments, or the selection of suppliers with greater readiness to provide carbon emission data. Consequently, while Thai exporters are not legally required to pay for CBAM certificates directly, they may still be affected indirectly through commercial relationships within the supply chain.

Looking ahead, Thailand's carbon pricing mechanism could help reduce the CBAM burden, provided that the carbon price is effectively paid and auditable under EU criteria. This is because CBAM regulations allow EU importers to claim a reduction in the number of certificates they must surrender if they can demonstrate that an effective carbon price has been already paid in the country of origin. Therefore, businesses should closely track the progress of Thailand's draft Climate Change Act – specifically its carbon pricing mechanism, emissions trading scheme (ETS), and the evidence required to demonstrate payment of the carbon price.​

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