CBAM simplification adopted in committee

Yesterday (13 May), the European Parliament’s ENVI committee agreed to the simplification of the CBAM Regulation via the ‘omnibus package’, introduced as a part of the Clean Industrial Deal. The committee made few changes to the proposal and is now passing the legislation on to a wider vote in the European Parliament’s plenary session on 22 May. Following adoption of the Parliament’s position, the Council will follow suit. Then, negotiators from both legislative bodies will meet to finalize the legislation. This legislative process is expected to proceed rapidly, potentially falling into place before the end of the summer.

For CBAM, the simplification has three key elements: exempting small importers, pushing the start date for selling CBAM certificates, and simplifying some administrative and reporting requirements.

Exempting small importers

As written, the initial CBAM Regulation imposes compliance on imports of EUR 150 or higher. The changes pushed by the omnibus package would create an annual, mass-based threshold seeking to exclude small importers or those that import CBAM goods infrequently.

Under the new rules, firms that import less than 50 tonnes of CBAM goods per annum will not be required to report emissions or purchase CBAM certificates. The European Commission estimates that by lowering the threshold, 90% of companies will be exempted from reporting requirements while 99% of emissions embedded in imports will remain covered. The mass threshold does not apply to hydrogen or electricity.

CBAM certificate delay

CBAM certificate sales were initially intended to begin in January 2026, based on the average weekly price of EUA auctions. Under the omnibus changes, the start date for selling CBAM certificates will be pushed to February 2027. Importers will remain on the hook for their embedded emissions but will have to wait until 2027 to begin purchasing.

For 2026 emissions, the price of CBAM certificates will be tied to the quarterly average price of EUAs at the time of import. If a firm were to import goods solely in Q1 of 2026, they would only be exposed to the average EUA price of Q1, but the purchase of the corresponding CBAM certificates would take place in 2027.

For all imports from 2027 onwards, CBAM certificates will be priced equal to the average weekly EUA auction price, as originally envisaged in the CBAM Regulation.

Simplification of administrative and reporting requirements

The omnibus legislation includes a longer list of measures taken to simplify reporting and compliance with the border levy. The list below is non-exhaustive, but highlights some of the key elements.

• The annual deadline for compliance with CBAM will be shifted from May 31 to August 31, with the Commission’s cancellation of CBAM certificates also shifting from 1 July to 1 October.
• Declarants will be able to use default emission values, set by the Commission as the average value of the ten worst performing countries, where reliable data is unavailable. The simplification will also make it possible to use a default ‘effective carbon price paid’ where actual values cannot be determined.
• Importers are required to meet a threshold for CBAM certificate purchases by the end of each quarter, corresponding to a percentage of emissions embedded in that quarter’s imports. Initially set at 80%, the simplification legislation drops the threshold to 50%.
• The quantity of CBAM certificates that may be repurchased by the European Commission was also adjusted. Previously, up to one-third of the certificates purchased by an importer each year could be sold back to the Commission. Under the updated text, this was adjusted to a volume of certificates corresponding to 50% of that year’s total embedded emissions.

Market (non) impact

As most of the simplification changes are technical calibrations aimed at simplifying reporting and administrative burden, they are not expected to have a major impact on EUAs.

The only change that might impact behavior within the EU ETS is the delay of CBAM certificate sales to 2027. If importers intend to mitigate their 2026 carbon price risk in 2026, they cannot do so through the purchase and resale of CBAM certificates and would likely have to turn to EUA proxy hedging. Proxy hedging is a cap-neutral behaviour, but could drive some additional demand for EUAs. That said, during the early years of CBAM when the phase-in rate is low, we do not expect these volumes to be substantial.

Implementation status update and what is next for CBAM?

The implementation of CBAM involves a raft of interconnected legislation, studies, review processes, and political debate. Below, we have broken down what has come and what is scheduled, either as a part of the European Commission’s roadmap or as required by the CBAM Regulation.

Most of the secondary legislation that is scheduled is backwards looking, establishing the rules and administrative systems needed to support the functioning of the CBAM in its current form, as prescribed by the CBAM Regulation.

The report on CBAM scheduled for the summer (Q3 2025) will be forward-looking and policy design oriented. The CBAM Regulation identifies possible direction for development of the policy that will be addressed in the report. Simultaneously political priorities and gaps in coverage will be considered. The report is expected to lead to a legislative proposal in Q4 2025, with exports, circumvention protection, and downstream products likely on the docket.

For an overview of the past and upcoming communications, secondary legislation, reviews, and studies on CBAM, see the table below.

*Before the end of the transitional period (Jan 2026), the CBAM Regulation obliges the European Commission to provide a report to the Council and to the European Parliament that covers the following:

1. Possible scope expansion to:
   • Indirect emissions
   • Embedded emissions in the transport of CBAM goods
   • Other sectors exposed to carbon leakage (emphasis on organic chemicals and polymers)
   • Precursors for CBAM goods
2. Criteria used to identify CBAM goods, accompanied by a timetable for the gradual inclusion of new sectors and additional products within CBAM sectors
3. Embedded emissions calculations
4. Administrative costs and governance of CBAM
5. Impact of CBAM on LDCs
6. Methodology for calculation of indirect emissions

Based on communications from the European Commission and pressure from member states and the EP, we expect that this report will also cover support for export-oriented production of CBAM goods and anti-circumvention measures.

**Before January 2026, the CBAM Regulation requires an impact assessment and legislative proposal on the basis of the conclusions drawn in the report listed above.