EU-CBAM Implementation Costs For Malaysia's Iron, Steel Industry Could Reach RM970.7 Mln In 2026
KUALA LUMPUR, Aug 4 (Bernama) -- A study by the Malaysian Steel Institute (MSI) estimates that costs associated with implementing the European Union’s Carbon Border Adjustment Mechanism (EU-CBAM) could reach RM970.7 million for Malaysia’s iron and steel industry in 2026, with the cost expected to rise progressively in subsequent years.
The Ministry of Investment, Trade and Industry (MITI) said it views the implementation of the EU-CBAM not only as a challenge but also as an opportunity to accelerate the transformation of Malaysia’s steel industry towards more competitive and sustainable low-carbon steel production.
"The government acknowledges that the implementation of the EU-CBAM from Jan 1, 2026, will have implications for carbon-intensive industries, including the iron and steel sector.
"The mechanism imposes a carbon cost based on the embedded carbon emissions of products exported to the EU market," the ministry said in a written reply published on Parliament's website today.
The ministry was responding to a question from Senator Sheikh 'Umar Bagharib Ali on the government's measures to address the impact of the EU-CBAM without undermining the competitiveness of the domestic industry.
MITI said the iron and steel industry is among Malaysia's key export sectors. In 2025, Malaysia exported an estimated 6.0 million tonnes of iron and steel worldwide, valued at approximately RM24 billion.
Of the total, exports to the EU amounted to around 752,000 tonnes worth RM3.23 billion, representing about 12.5 per cent of total export volume and 13 per cent of total export value.
MITI said the government, through collaboration among relevant ministries and agencies, has implemented several strategic measures to address these challenges while safeguarding the competitiveness of the domestic industry.
The initiatives focus on enhancing industry readiness by creating a Carbon Measurement, Reporting, and Verification (MRV) system. They aim to accelerate decarbonisation efforts in the iron and steel sector by improving energy efficiency and increasing the use of renewable energy.
Additionally, the plan includes offering policy and financial support to aid the industry's transition to greener practices.
In addition, the government will continue engaging with the EU to ensure that the implementation of the EU-CBAM takes into account the interests of developing countries while ensuring fair market access for Malaysian products.
-- BERNAMA