The European Union will expand its carbon border levy - a fee charged on imports of high-emission goods - to cover car parts and washing machines, under European Commission proposals published on Wednesday.

The plans would also tighten loopholes that the Commission worries could allow foreign firms to dodge the fee, which is currently in a pilot phase and will start imposing costs from January.

The EU's Carbon Border Adjustment Mechanism - the world's first carbon border tariff - will impose fees on the CO₂ emissions of imported goods including steel, aluminium, cement and fertilisers.

The Commission proposed expanding the levy to cover downstream products that use a high share of steel and aluminium, including construction products and machinery, confirming draft EU legal proposals previously reported by Reuters.

Leon de Graaf, acting president of the "Business for CBAM Coalition" of companies and industry groups, welcomed the EU plans, which he said targeted "products that face the highest risk of carbon leakage" - the risk that manufacturers relocate abroad to avoid Europe's strict climate policies.

The EU also wants to clamp down on foreign companies if there is evidence they are under-reporting their emissions to dodge the levy.

In this scenario, the EU could impose "default" emissions values on that country's products, resulting in a higher CBAM bill, the proposals said.