Solar component imports into Europe could become more expensive if a proposal to extend the Carbon Border Adjustment Mechanism (CBAM) to solar modules, trackers, and mounting structures is accepted by the European Commission.

The European Solar Manufacturing Council (ESMC) has recommended to the Commission that solar products be brought under the CBAM’s ambit, as they rely heavily on carbon-intensive materials such as aluminium and steel, which are already covered by the adjustment mechanism.

“However, finished solar equipment imported into the European Union (EU) currently avoids the carbon costs faced by European manufacturers. This loophole gives non-EU manufacturers, particularly in China, an unfair advantage and undermines CBAM’s core objective of preventing carbon leakage,” ESMC has said.

The production of solar modules, mounting structures, and trackers involves the use of carbon-intensive materials, including aluminum, steel, and glass. ESMC said that in a standard 22 kg module, 14 kg is glass, 3 kg is aluminum, and the remainder consists of other components. A typical ground-mounted solar structure is almost entirely made of steel and aluminum, as is the case for trackers. These products are heavily reliant on CBAM-covered materials, but due to their downstream nature, they are not currently included under it.

ESMC pointed out that European solar manufacturers importing steel and aluminum for domestic production will be required to purchase CBAM certificates. In contrast, Chinese manufacturers are exempt from these costs when they export finished solar products to the EU, despite their products containing large quantities of steel and aluminium. “As a result, a Chinese-made module entering Europe receives a free pass on its embedded carbon, giving it a cost advantage over EU-made solar modules,” ESMC said.

Extending CBAM to downstream solar photovoltaic goods would make Chinese solar modules, trackers, and systems more expensive and give European manufacturers a long-awaited competitive advantage, ESMC said.

If the European Commission approves the proposal, Indian solar exporters could also have to pay a price. Historically, the U.S. has been the prime destination for Indian solar exports. However, the 50% trade tariffs and the recent threat of antidumping and countervailing duties could dent the competitive advantage of Indian solar modules. Indian manufacturers would have to look at other markets, such as Europe.

The European Commission is expected to respond to ESMC’s proposal later this year.

From January 1, 2026, when CBAM comes into force, importers must purchase CBAM certificates that reflect the embedded emissions of covered products. The purpose is to prevent carbon leakage by imposing the same carbon price as in the European Union Emissions Trading System.

As of now, cement, electricity, fertilizers, iron and steel, aluminum, and hydrogen are covered under CBAM.

The transitional phase of CBAM will run until the end of 2025.