EU: Commission proposes changes to Carbon Boarder Adjustment Mechanism (CBAM) as part of first Omnibus package

The EU Carbon Border Adjustment Mechanism (CBAM) and the EU Emissions Trading System (ETS) both aim to reduce carbon emissions by placing a price on carbon. They are intended to be complementary, with the revised ETS applying to intra-EU goods and the CBAM affecting goods imported into the EU. 

The CBAM will impose a carbon cost on imports of certain goods (cement, fertilizers, iron and steel, aluminum, electricity and hydrogen) based on the carbon emissions associated with their production. Importers need to be authorised by national authorities from whom they can buy CBAM certificates. They must declare the quantity of in-scope goods, their total embedded carbon emissions, and surrender corresponding numbers of CBAM certificates. The CBAM will be fully applicable starting from 2026. For more information on the CBAM, see our client briefing. 

Multiple companies and stakeholders have raised concerns about the administrative burden resulting from the CBAM, as well as challenges with its implementation. 

As part of the first Omnibus simplification package published on 26 February 2025, the European Commission has proposed certain changes to the CBAM (see Proposal, Annexes, Q&A and press release). For more information on the rest of the first Omnibus package, see our separate blog post.

Proposed key changes to CBAM

• Exemption for small importers: This applies to importers bringing in small quantities of CBAM goods, representing minimal quantities of embedded emissions entering the EU from third countries. The Commission has suggested a new CBAM cumulative annual threshold of 50 tonnes per importer, excluding electricity and hydrogen.

The Commission can amend this threshold to reflect a material change in the average emission intensities of goods used for the calculation of the threshold, or significant changes in the pattern of trade in goods, including practices of circumvention.

Commissioner Dombrovskis mentioned in his remarks on the Omnibus proposal that changes to the CBAM were based on reporting and data gathered during the current CBAM transitional phase. This data indicated that tens of thousands of small importers were subject to the CBAM but their imports represented only about 1% of CO2 emissions. The new threshold suggests eliminating CBAM obligations for approximately 182,000 or 90% of importers, many of which are SMEs. This adjustment is expected to save about €1.12 billion while still covering over 99% of emissions.

• Simplify the rules for companies that remain in CBAM scope: The proposal aims to ease compliance with CBAM reporting obligations by simplifying some reporting requirements which rely on complex calculations and data collection processes. Proposed changes include: 
  1. allowing authorised CBAM declarants, who remain legally responsible for their CBAM obligations, to technically delegate reporting requirements to third parties;
  2. authorised CBAM declarants are required to submit their annual CBAM declaration and surrender the corresponding number of certificates by 31 May of the year following the year of import. The Commission has proposed to move the submission date to 31 August allowing more time to collect the necessary information, verify embedded emissions with an accredited verifier, and purchase CBAM certificates. The cancellation date for CBAM certificates will be adjusted accordingly;
  3. possibility to claim a carbon price paid in a third country other than the country of origin;
  4. amending emission verification rules so the obligation to verify embedded emissions only applies to actual values;
  5. creation of the registration of accredited verifiers so they can access the CBAM registry to facilitate reporting obligations;
  6. moving the start date for the sales of CBAM certificates to February 2027 (as opposed to the current date of end of 2026) to address uncertainties related to 2026, the first year of the post-transitional period;
  7. adding electricity to the list of CBAM goods for which only direct emissions are to be considered in the calculation of the embedded emissions.
• Monitoring and supervision: The proposal is also intended to enhance the Commission’s ability to process data and share relevant information with national authorities.  

Next steps

The proposal will now need to be debated and agreed on by the European Parliament (“EP”) and Council under the ordinary legislative procedure. 

The Commission has asked the EP and Council to “fast-track” the CSRD and CSDDD parts of the first Omnibus package. It is not yet clear whether the fast-track request also applies to the CBAM proposal. Normally, a Commission proposal subject to the ordinary legislative procedure would take around 18 months to be finalised and adopted.

Further amendments to CBAM in the future

The Commission has also announced that it will present, in the second half of 2025, a comprehensive CBAM review report as provided in Article 30 of the CBAM Regulation. 

As stated in the Clean Industrial Deal, the Commission will assess extending the scope of the CBAM to additional EU ETS sectors and downstream products. 

The report will also consider the inclusion of indirect emissions across all CBAM sectors, taking into account the indirect costs of electricity for EU producers. 

It will also outline a strategy to manage potential circumvention risks. Additionally, the Commission will review measures to address the problem of carbon leakage of goods exported to third countries.

This review will be followed by a legislative proposal in the first half of 2026.