European Commission announces simplifications to the CBAM mechanism

As part of the Omnibus Directive, the European Commission plans to simplify the CBAM (Carbon Border Adjustment Mechanism). What changes are expected?

The CBAM is a system that imposes additional charges on goods imported into the EU based on CO₂ emissions. It applies to products such as iron, steel, aluminum, and fertilizers.

Key Changes Under the Omnibus Directive

Raising the Import Threshold

• CBAM will only apply to importers bringing in more than 50 tonnes of goods per year. This change will exclude approximately 90% of importers—mainly small and medium-sized enterprises and individuals—who collectively generate just 1% of emissions covered by the mechanism.

Simplification of Procedures for Importers

• The authorization process for importers of CBAM-covered goods will be streamlined to reduce administrative burdens.
• Methods for calculating embedded emissions in imported goods will be simplified, making it easier for companies to meet reporting requirements.

Recognizing Third-Country Emissions Levies

• From 2027, the European Commission plans to publish average CO₂ emission costs for different countries. This will help importers prove the fees they have already paid and adjust their CBAM obligations accordingly. The goal is to reduce administrative complexity and lower the risk of double taxation in international trade.

Enhancing CBAM Efficiency and Preventing Abuse

• Stricter regulations are planned to better prevent circumvention of the CBAM mechanism and eliminate potential abuses. These measures will include improved supply chain monitoring and mechanisms to prevent artificial cargo splitting and shifting production to non-CBAM countries to avoid emission levies.

Preparing for the Expansion of CBAM to Additional Sectors

• The European Commission is planning the gradual expansion of the CBAM mechanism to additional sectors under the EU Emissions Trading Scheme (ETS) and to lower-value goods. Draft legislation is expected in early 2026, further integrating CBAM into the EU's climate and trade policies.

The Omnibus Directive is a legislative package from the European Commission aimed at simplifying and aligning existing EU regulations across various sectors, including sustainability and emissions trading. These changes are expected to enhance the competitiveness of the EU economy and unlock additional investment potential. More details on the planned changes can be found on the European Commission’s website.