European Commission Proposes Simplifications to CBAM Regulations

The Omnibus package proposes a series of changes to simplify the regulations governing the Carbon Border Adjustment Mechanism (CBAM).

The package of legislative proposals will need to go through the EU legislative process and approval from the Parliament and the Council. The current Regulation continues to apply until the changes are approved into law.

Understanding CBAM

The European Union's CBAM regulation is designed to address carbon leakage by requiring reporting on carbon embedded emissions for certain goods and precursors imported into the EU. This regulation places rigorous third-party accredited verification requirements on exporters, aiming to create a level playing field for manufacturers inside and outside the EU. Unlike carbon accounting protocols and standards used for voluntary disclosures, such as the GHG Protocol, ISO 14064-1 and ISO 14067, CBAM requirements have unique complexities, which makes pre-verification essential for a smooth transition.

Industries and products affected:

• Cement
• Iron and steel
• Aluminum
• Fertilizers
• Hydrogen
• Electricity

The main proposed changes are:

• Tonnage threshold: to exempt importers if the net mass of the CBAM imported good does not exceed an annual threshold of 50 tons
• Liability: the authorized CBAM declarant can delegate the submission of the CBAM declaration to a third party ("CBAM representative"), but the authorized CBAM declarant will remain liable for all CBAM obligations
• System boundaries for emissions calculations: certain downstream processing emissions for aluminum and steel are excluded from the calculations, and precursors emissions are used for the calculations to align with EU ETS
• Verification: emissions based on default values do not need to be verified. The third-party accredited verification of embedded emissions applies only to actual values
• Exclusions: non-calcinated kaolinic clays are excluded from the goods' scope
• Deadlines: the deadline for importers to submit their declarations is moved to August 31, 2027
• Carbon price paid in a third country: the carbon price paid in a third country, other than the country of origin, will count towards reducing the number of CBAM certificates to be surrendered
• Sale of CBAM certificates: the sale of CBAM certificates is deferred to February 1, 2027
• Certificate holding requirements: the quarterly requirement to hold CBAM certificates is reduced from 80% to 50% of the embedded emissions. Furthermore, the authorized CBAM declarant should be able to rely on the information submitted in the CBAM declaration in the previous year, for the same goods and third countries

Sources: Carbon Border Adjustment Mechanism, European Commission

Learn more about CBAM pre-verification

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For further information, please contact:

Jerónimo Casas
Global Product Manager Climate Change & Sustainability Solutions
Industries & Environment
t: +34 661419553