In addition to postponing the sale of certificates until February 2027, the European Commission intends to exempt about 90% of importing companies from the carbon border adjustment mechanism (CBAM).
This is stated in the so-called Omnibus Package to the Clean Industry Agreement, published on February 26.
These changes were a long-awaited response to concerns raised by business and politicians about the complexity of CBAM. According to officials, they are intended to make the mechanism more efficient and less burdensome for small businesses, while maintaining its environmental effectiveness.
Here is a list of the main changes proposed by the European Commission regarding CBAM
1. Postponement of the mandatory purchase of CBAM certificates
Importers will be able to purchase certificates only from February 2027 to cover emissions for 2026. Previously, the obligation to purchase CBAM certificates was established from January 1, 2026.
2. Introduction of a new threshold value
The European Commission is proposing to replace the current threshold, which is based on the monetary value of the supply, with a mass aggregate threshold of 50 metric tons.
It is expected that this change will exempt about 90% of importers (approximately 182 thousand companies) from obligations. At the same time, 99% of emissions covered by the CBAM will remain covered by this mechanism.
Experts at S&P Global Commodity Insights say that the European Commission considered setting a threshold based on carbon intensity, but rejected it in favor of a mass approach to simplify administration.
Global business leaders have also previously spoken about the too low threshold for joining the CBAM – €150.
3. Simplification of the administrative burden
Small importers will not need to be authorized and submit CBAM declarations. This will mainly apply to small and medium-sized enterprises, as well as individuals who import small volumes of CBAM goods and have very small amounts of embedded emissions coming to the EU from third countries.
The threshold of 50 metric tons mentioned above will serve as a parameter for identifying such importers. This innovation should facilitate the work of small businesses, reduce bureaucratic pressure and simplify the CBAM mechanism.
These changes are expected to help re-industrialize the EU by reducing costs for businesses and making the CBAM more efficient from a trade and environmental policy perspective.
How the price of certificates will be calculated
The European Commission has explained that the method of calculating the price of CBAM certificates will remain unchanged, and certificates purchased in 2027 will reflect the corresponding weekly ETS price.
The price of certificates will be based on the average quarterly closing price of EU ETS allowances, which will be calculated by the Commission to determine the relevant EUA price.
On October 1, 2023, the EU launched a transitional period for the application of the carbon adjustment mechanism for imports. It was supposed to last until January 1, 2026. Until then, companies were only required to report on carbon emissions released into the environment during production.
And from the first day of 2026, the full implementation of CBAM, which involves the payment of a carbon duty, was planned. At this stage, importers will be required to obtain so-called CBAM certificates for their products to cover the gap in carbon prices between EU products and products manufactured outside the EU.
In May 2024, global business leaders sent an open letter to the European Commission, in which they identified 5 main obstacles that CBAM creates for global trade. Among them, they named access to the CBAM reporting platform, difficulties in identifying a declarant, too low a threshold for entering the CBAM system, difficulty in collecting the necessary data and a complex and controversial methodology for calculating embedded emissions, as well as the problem of collecting CO2 emissions data from all participants in the supply chain.
Ukrainian stakeholders are constantly reminding officials that our country must defend its right to apply paragraph 30.7 of the CBAM regulations to Ukraine, which provides for the possibility of excluding a country from the CBAM during force majeure circumstances, including war. This will help to avoid the destructive impact of this mechanism on the Ukrainian economy. If this declarative principle is applied, domestic enterprises will report on their own emissions but will not pay the cost of certificates.
