EU CBAM simplification: what has changed for importers?

The EU Carbon Border Adjustment Mechanism (CBAM) is about to be fully implemented. Designed as a climate mitigation instrument to prevent carbon leakage, its application is associated with considerable bureaucratic hurdles and data requirements, particularly affecting non-EU producers and suppliers of relevant goods. 

In its so-called “Omnibus I” package, the European Commission has introduced a set of amendments that could decrease the regulatory burden and strengthen the EU’s long-term competitiveness. On 17 October 2025, the final amending act was published in the Official Journal of the EU. These developments provide an opportunity to take a closer look at the core principles of the CBAM and consider the new simplifications enacted by the EU legislator.

Background to CBAM

The EU aims to be climate-neutral by 2050 – an economy with net-zero greenhouse gas emissions. This objective is at the heart of the European Green Deal and a legally binding target set by the European Climate Law. 

The EU Emissions Trading System (EU ETS) is the cornerstone for achieving this goal cost-effectively, putting a price on greenhouse gas emissions within the EU (“cap and trade”). As the EU raises its own climate ambition, and as long as less stringent climate policies persist in many non-EU countries, there is a risk of so-called “carbon leakage”. This occurs when companies based in the EU relocate carbon-intensive production to countries with less stringent climate policies, or when EU products are replaced by more carbon-intensive imports.

Principles of the CBAM Regulation

The CBAM is a comprehensive framework aimed at ensuring a price is also paid for the embedded carbon emissions generated in the production of certain goods produced in non-EU countries but imported into the EU, thus preventing carbon leakage. On 1 October 2023, the CBAM Regulation entered into force and commenced its transitional phase, with the first reporting period for importers ending 31 January 2024. The definitive period of CBAM will begin in January 2026.

Transitional period (until 31 December 2025)

During the transitional phase, importers of CBAM goods only have to report embedded emissions, without the need to buy and surrender certificates. The Implementing Regulation on reporting requirements and methodology provided some flexibility for values used to calculate direct and indirect emissions on imports. Until the end of 2024, companies could choose to report in one of three ways: full reporting according to the so-called EU method, reporting based on an equivalent method, or reporting based on default reference values (only until 31 July 2024).

Definitive period (from January 2026)

• Scope: The Regulation initially applies to imports of certain goods and selected precursors whose production is carbon-intensive and which are deemed at significant risk of carbon leakage: cement, iron and steel, aluminum, fertilizers, electricity and hydrogen (CBAM goods). In principle, imports of CBAM goods from all non-EU countries (including, among others, the United States) into the EU are covered.

• Authorisation: Goods may only be imported into the customs territory of the EU by an authorised CBAM declarant. Any importer established in a Member State or, where the importer is not established in a Member State, their indirect customs representative shall submit the application for an authorisation to the competent national authority.

• CBAM registry: Every authorised CBAM declarant receives an account in the CBAM registry. The CBAM registry is a standardised electronic database established by the Commission, containing various data, especially regarding the CBAM declaration and the CBAM certificates.

• Emissions: In the calculation procedure, the total embedded emissions of CBAM goods serve as the reference point. These cover direct emissions released during the production of goods and indirect emissions from the production of electricity that is consumed during the production processes. Every authorised CBAM declarant must keep records of the required information. Embedded emissions can be determined by using verified actual values or default values (which come with a surcharge).

• CBAM declaration: Originally, authorised CBAM declarants had to submit their annual declaration in the CBAM registry by 31 May each year, with the first due by 31 May 2027 for the year 2026. The Commission will oversee the review of CBAM declarations. EU importers must declare the emissions embedded in their imports and surrender the corresponding number of certificates each year. Declarants may claim a reduction in the number of CBAM certificates to account for the carbon price paid in the country of origin of the declared embedded emissions.

• CBAM certificates: By 31 May each year (and for the first time in 2027 for the year 2026) the authorised CBAM declarant must surrender a number of CBAM certificates corresponding to the embedded emissions. Each certificate covers one metric tonne of CO2 of embedded emissions in goods. Member States sell the certificates on a common platform to authorised declarants established in that Member State – there is no upper limit. The price of certificates will be calculated depending on the weekly average auction price of EU ETS allowances expressed in euros per tonne of CO2 emitted (however, the certificates required for 2026 imports will be priced on the 2026 EU ETS quarterly average allowance prices). According to the Regulation every authorised CBAM declarant must ensure that the number of CBAM certificates at the end of each quarter corresponds to at least 80 per cent of the embedded emissions in all imported goods since the beginning of the year. Submitted certificates will be deleted and will no longer be available. Where an authorised CBAM declarant so requests by 30 June each year, the competent authority will repurchase up to one third of the remaining CBAM certificates. The rest will be cancelled without any compensation.

• Liability: An authorised CBAM declarant who fails to surrender the required number of CBAM certificates by 30 September each year will be subject to a penalty identical to the excess emissions penalty under the EU ETS. This penalty will apply in the year of importation and for each CBAM certificate not surrendered. The competent authority may reduce the penalty if the failure results from incorrect information provided by a third party – such as an operator, verifier, or independent certifying person. Payment of the penalty does not release the authorised CBAM declarant from the obligation to surrender the outstanding certificates.

What simplifications does the Omnibus package include?

Although the CBAM has yet to prove itself in practice, the transitional phase already suggests that the instrument involves significant administrative and regulatory burden, as well as compliance costs for EU companies. The Commission has therefore proposed, and the European Parliament and the Council have adopted, revisions to simplify and strengthen the CBAM Regulation as part of the “Omnibus I” legislative package.

The revised Regulation was published in the EU Official Journal on 17 October, entering into force on 20 October 2025. The Commission announced that the new measures “will not undermine the environmental objective of CBAM, rather the measures will enable a more efficient CBAM while the key design principles of the mechanism will remain unchanged.”

The regulation includes two main types of simplification for this purpose: “a broader derogation from CBAM requirements of importers of very small quantities of CBAM goods, and a set of simplifications for the rest of the importers of CBAM goods to facilitate their compliance with the administrative requirements”.

• Derogation: The initial CBAM Regulation exempted goods of negligible value (150 euros per consignment) from CBAM. The amendments set a new ‘de minimis’ mass threshold whereby imports up to 50 tonnes per importer per year will not be subject to CBAM rules. However, if an importer exceeds the threshold, all its imports will be subject to CBAM (and not only those exceeding 50 tonnes). The measure is expected mainly to exempt small and medium-sized enterprises (SMEs) and individuals, importing small or negligible quantities of CBAM goods. The exemption does not apply to hydrogen and electricity. The climate ambition behind the CBAM remains unchanged, as about 99 per cent of embedded emissions in imported CBAM goods are expected to remain covered, and the Commission will review and, if necessary, adjust the threshold annually to ensure the 99 per cent coverage.

• Simplification: The amended Regulation contains several simplification measures for all remaining importers of CBAM goods:

  • “Stop the clock”: The Omnibus Package introduces several postponed deadlines. Under the revised CBAM Regulation, registrants will have an extra four months to submit their annual CBAM declaration (for the first time in 2027). The deadline will move from 31 May to 30 September. This means that importers will first report the emissions embedded in CBAM goods imported during 2026 by 30 September 2027. The Omnibus package also extends the deadline for surrendering CBAM certificates to 30 September (and for the first time by 30 September 2027) – granting an additional four months. Consequently, the deadline for repayment requests and for the cancellation of CBAM certificates will be postponed to 1 November.

  • Mandatory registration:Another important modification is that the amended regulation will permit imports of CBAM goods under certain conditions at the start of 2026, even while importers await CBAM registration, to avoid disruptions.

  • Reporting requirements: CBAM declarants may delegate reporting obligations to an authorised CBAM representative.

  • Carbon price deduction: Importers may deduct carbon costs paid in any third country, not solely the country of origin.

  • Purchase requirements: The percentage of CBAM certificates to be purchased in advance each quarter will decrease from at least 80 per cent to 50 per cent of the embedded emissions in goods imported from the start of the year to the end of the relevant quarter, on a cumulative basis. 

  • Repurchase requirements: The number of CBAM certificates eligible to be repurchased will be limited to the total number of certificates that the authorised CBAM declarant had to purchase under the quarterly purchase requirements during the calendar year. This represents a change from the previous limit of one third of all certificates purchased and is now tied to the quarterly purchase obligation (which is 50 per cent of embedded emissions). Certificates shall be repurchased in full from CBAM declarants who do not exceed the de minimis mass threshold.

What’s next?

The new simplification of the CBAM is a significant relief for businesses importing smaller quantities of CBAM goods, as they now fall outside the scope of the CBAM Regulation – the EU has taken note of concerns about its effect on SMEs. However, for importers of larger quantities who remain within scope, the obligations continue to be complex and challenging, even with the (welcome) procedural simplifications. As part of the US-EU Framework Agreement, the EU announced it would work “on additional flexibilities” in CBAM implementation. It is not clear whether the latest requirements already fulfil this simplification commitment.

CBAM is relevant not only for EU importers, but also for non-EU exporters and producers, as EU obliged parties will depend on comprehensive embedded emissions data to be able to fulfil CBAM duties, likely impacting their supplier choices and international supply chains. Affected companies should continue preparing for compliance, adapting to the new CBAM framework. This includes reviewing internal data collection systems, assessing supply chain reporting capabilities, and ensuring readiness for the first reporting cycle in 2027.

Commission’s plan to extend CBAM scope

On 2 July 2025, the Commission launched a public consultation and call for evidence on extending the scope of CBAM to include certain downstream products. The objective is to further reduce the risk of carbon leakage and introduce anti-circumvention measures targeting practices intended to avoid CBAM financial obligations. The consultation closed on 26 August 2025. The Commission plans to adopt a proposal for a Regulation in Q4 of 2025. For more information, see our blog post.