Simplifying the Carbon Border Adjustment Mechanism (CBAM)
As part of the first Omnibus package on February 26, 2025, the European Commission proposed a set of changes aimed at simplifying the Carbon Border Adjustment Mechanism (CBAM) while maintaining its environmental objectives. These adjustments focus on reducing administrative burdens, particularly for small importers, and improving the mechanism’s efficiency in the long term.
Key Changes in the CBAM Simplification Package for EU importers of goods affected by CBAM regulation:
1. Exemptions for Small Importers
One of the most significant changes is the introduction of an annual cumulative exemption threshold of 50 tons per importer. This adjustment will eliminate CBAM obligations for approximately 182,000 importers (90% of the total), primarily small and medium-sized enterprises (SMEs) and individuals. Despite this exemption, the mechanism will continue to cover over 99% of the emissions within the CBAM’s scope, ensuring its environmental integrity.
2. Streamlined Compliance for Remaining Importers
For companies still subject to CBAM, several measures will simplify compliance:
- Easier authorization procedures for declarants.
- Improved calculation methods for embedded emissions.
- Reduced reporting requirements and simplified financial liability obligations.
3. Strengthening CBAM’s Long-Term Effectiveness
To prevent evasion and misuse, the European Commission plans to reinforce regulations around CBAM implementation. These measures will enhance monitoring and enforcement, ensuring that CBAM remains a robust tool for carbon leakage prevention.
Future Expansion of CBAM:
Looking ahead, the Commission intends to expand CBAM to additional sectors under the EU Emissions Trading System (EU ETS). By early 2026, a new legislative proposal is expected to extend CBAM’s scope to processed goods, further aligning it with the EU’s broader decarbonization strategy. The aim is to include over half of the emissions in EU Emissions Trading System (ETS) sectors by the full phase-in of CBAM in 2034.
Note: The primary product categories affected by CBAM include:
- Cement: All types of cement products.
- Iron and Steel: This encompasses a wide range of iron and steel products, including primary materials and certain downstream products such as screws, bolts, and washers.
- Aluminium: Covers various aluminium products.
- Fertilisers: Includes specific fertilisers.
Electricity: Imported electrical energy is subject to CBAM.
Hydrogen: Pure hydrogen as a commodity falls under CBAM regulations.
| Maria RomeroInternational Business Unit Manager |
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