The answer lies in the fact that the CBAM is coupled with the European Emissions Trading Scheme (EU ETS). This carbon market allows the regulation of European companies' emissions through a cap-and-trade system for greenhouse gas emission rights (emission quotas). It currently covers almost 40% of the EU's total emissions.

The EU's emissions trading scheme tackles "greenhouse gases from specific activities, focusing on emissions that can be measured, reported and verified with a high level of accuracy" (European Commission).

However, some activities relevant to the European market are not covered by the CBAM, as illustrated in the table below.

The sectors covered by the CBAM are currently limited to the highest emitters. This list could be extended to other industries after the full implementation of the mechanism, starting in 2026. One wonders why this mechanism does not apply to certain sectors of the European carbon market (ETS) or to other sectors (outside the ETS) such as textiles or cosmetics.

For example, plastic, which was responsible for 3.4% of global emissions in 2019 (OECD), is not included in the CBAM.

Low-carbon sectors are not covered by the EU ETS

There are several reasons why certain industries are excluded from the scope of the ETS. Thus, low-emitting sectors seem to be excluded from the scope of the carbon market. For example, the cosmetics sector accounts for between 0.5 and 1.5% of global emissions, a significantly lower share than that attributed to heavy industries (metals, cement, etc.).

In addition, the emissions market tackles emissions from the production phase. However, it has been observed that the different stages of the life cycle of cosmetic products do not have the same environmental impact. Carbon emissions come mainly from the packaging of products (covered by the ETS via the plastic and/or paper and cardboard sectors) and their use. The production phase, including energy consumption, would represent a maximum of 5% of total emissions (Quantis, Make Up The Future). It is therefore understandable that the ETS (and therefore the CBAM), which has historically focused on the emissions generated by the manufacturing phase (aviation and maritime transport aside), is not the most suitable tool to regulate the carbon emissions of this sector.

Some highly competitive industries could also benefit from a kind of protection: they are not put at a disadvantage compared to non-European competitors who are not subject to carbon pricing.

This is the case, for example, with maritime transport, which was completely excluded from the ETS before being partially integrated into it since 2024. Travel to or from a third country is thus covered up to 50% of emissions, while intra-EU travel is covered by the following emissions: (departure and arrival gates located in the E.U.) being 100% covered. Few countries impose a carbon price on maritime transport, the European Union did not include it in the ETS to avoid penalising European players.

Another reason that can also be put forward to explain the fact that some sectors are not covered by the ETS and CBAM: the difficulty of accurately measuring the carbon emissions associated with the production phase.

Textiles are a good example: they account for a significant share of carbon emissions (up to 10% of global emissions according to the highest figures) but those generated by the manufacturing phase are more complex to measure. However, the accuracy of the measurement of emissions is one of the main criteria of the European carbon market.

The difficulty of measuring carbon in the textile sector can be explained by the many steps and the diversity of actors involved in the manufacturing phase of the items, as illustrated in the diagram below. For example, for the manufacture of a 100% cotton coat in Asia, the transformation of the product, after recovery of raw materials, accounts for 50% of the garment's life cycle emissions. In addition, the processing phase of the raw material is divided into 4 different stages (spinning, weaving, finishing, tailoring), often taking place in several countries, which multiplies the intermediate transport phases and the number of interlocutors from whom to retrieve the emissions data.

Some industries - cosmetics and textiles, for example - are also affected by other environmental standards (outside the ETS) aimed, among other things, at regulating carbon emissions.  This is the case, for example, with the AGEC law in France. The Anti-Waste Law for a Circular Economy aims to support the change in production and consumption patterns to reduce the environmental impact of our society.

The AGEC law thus aims to limit waste and its harmful consequences on biodiversity and the climate. This policy should reduce the carbon emissions of various activities by imposing the end of disposable plastic, the improvement of consumer information (e.g. repairability index), solidarity reuse or by fighting against planned obsolescence.

Another EU regulation (2023/1115) aimed at limiting deforestation was recently published in the Official Journal of the EU. E in 2023. The regulation will prohibit the placing on the market or export of products whose production has contributed to deforestation or forest degradation after 31 December 2020 (Ministry of Ecological Transition, etc.). Sectors as varied as cocoa, rubber and wooden furniture are directly impacted by this new environmental standard. By helping to preserve forests, this European standard is also part of the broader fight against global warming: by combating deforestation, we protect natural carbon storage capacities and contribute to the achievement of carbon neutrality.

The sectors covered by the CBAM are by definition sectors already covered by the European carbon market (ETS). These sectors were selected because they account for a significant share of global emissions and the calculation of these emissions can be done accurately.

Energy-intensive industries (included in the EU ETS table) generated 22% of the European Union's emissions in 2019 (European Commission). According to the World Steel Association, in 2020, emissions from steel production accounted for 7% to 9% of global CO2 emissions.  Cement production accounts for 7% of annual global CO2 emissions, according to the Global Cement and Concrete Association (GCCA).

The most energy-intensive sectors are generally very carbon-intensive: whether through the direct use of fossil fuels (gas, etc.) or the consumption of carbon-intensive electricity, as is the case in China, for example, where coal plays a central role in electricity production.

Finally, it will be necessary to monitor the list of sectors covered by the CBAM as new industries could be integrated in the coming years, such as plastics or glass.