CBAM, but Make It Simple: The EU’s CBAM Omnibus Package — in Short

In the first Omnibus packages, introduced on February 26, 2025, the European Commission (EC) has (among other proposals, which we have covered in detail here) proposed changes to streamline the Carbon Border Adjustment Mechanism (CBAM) Regulation (EU 2023/956) and enhance its effectiveness (the Proposal). The Proposal aims to reduce compliance burdens, particularly for small- and medium-sized enterprises (SMEs).

The CBAM introduces a price or duty on greenhouse gases emitted during the production of carbon intensive goods imported into the EU. The CBAM’s goal is to level the playing field for EU producers of the same goods that are subject to extensive EU greenhouse gas regulation that may not exist outside the EU. The CBAM’s current scope covers cement, aluminium, fertilizers, iron and steel, hydrogen, and electricity.

The CBAM entered into force on May 17, 2023, and during the transitional period, which started on October 1, 2023, and is scheduled to end on December 31, 2025, the EC collected data and information on its implementation. The information collected on the CBAM, as well as exchanges with stakeholders and experts, outlined possibilities for simplifications and improvement to ensure a smooth roll-out of the CBAM during the post-transitional period, starting on January 1, 2026.

The key elements of the Proposal to assist in this simplification are:

1. Annual mass-based threshold: Instead of a monetary or consignment-based threshold (previously consignments of a total intrinsic value below €150), the Proposal introduces a 50-tonne annual cumulative mass threshold per importer across all CBAM goods imported in the cement, aluminium, fertilizer, and iron and steel sectors. This ensures that over 99% of emissions stay covered, while reducing regulatory and administrative burden. The EC will also have the power to amend this threshold to capture changes in trade patterns and maintain the environmental objective of the CBAM into the future.
2. Adjustments to compliance deadlines: The commencement of CBAM certificate sales has been postponed to February 1, 2027, extending the transition period by an additional 12 months in a practical sense (although the transition period referred to in the CBAM regulation is still scheduled to end on December 31, 2025). This adjustment eases the financial burden on importers, as they will not need to make payments for 2026 emissions until 2027. Additionally, recognizing the challenges importers face in meeting the May 31 CBAM declaration deadline, the Proposal includes a revised timeline for the surrender of certificates of August 31, a certificate cancellation date of October 1 and a repurchase request deadline of November 30.
3. Changes to CBAM certificate embedded emissions ratios: Currently, declarants are required to purchase CBAM certificates covering at least 80% of embedded emissions from imported goods, quarterly for the calendar year to date. The Proposal reduces this obligation to 50% and integrates the free allocation of allowances under the EU ETS.
4. Streamlining authorization and reporting: The process for authorizing CBAM declarants has been criticized for being complex and resource intensive. To ease the burden, the mandatory authorization consultation procedure will become optional, allowing national competent authorities to consult as needed. Additionally, to provide further flexibility, authorized CBAM declarants will be able to delegate the submission of the CBAM declaration to third parties.
5. Clarified emissions calculation: Authorized CBAM declarants are required to submit an annual CBAM declaration containing the calculation of embedded emissions. Under the Proposal, CBAM declarants now have the option to choose between actual emissions or default values based on the 10 exporting countries with the highest emission intensities for which reliable data is available. This will assist in simplifying the determination of default values when reliable data for the exporting country is not available for certain goods. Additionally, where input materials (precursors) have already been subject to the EU ETS or to a carbon pricing system that is fully linked with the EU ETS, the embedded emissions of those precursors will not count towards the embedded emissions of complex goods (i.e., where CBAM goods are used as input materials into the production of other CBAM goods). Finishing processes that are not covered by the EU ETS are also excluded from the calculation of embedded emissions.
6. Enhanced enforcement focus: Authorities will concentrate on high-emission importers to monitor the quantities of goods imported to assess compliance with the new threshold and strengthen EU industry protection against carbon leakage.

See our CBAM White Paper for additional detail.