Updates on CBAM, as part of the Omnibus Simplification Package

The European Commission has recently proposed updates to the Carbon Border Adjustment Mechanism (CBAM) as part of its Omnibus Simplification Package. The goal of these changes is to reduce the regulatory burden on businesses and ensure a smoother transition to full implementation in 2026. The proposal is currently under review by the European Parliament and Council, with adoption expected by mid-2025.

CBAM is designed to prevent carbon leakage by placing a carbon price on imports of goods from sectors covered by the EU Emissions Trading System (ETS). This applies to iron, steel, aluminum, cement, electricity, fertilizers, and hydrogen. Businesses have been required to report embedded emissions quarterly from October 2023, with this transitional phase running until the end of 2025. In 2026, companies will need to purchase CBAM certificates to cover these emissions unless the proposed changes adjust that timeline.

The updated proposal introduces several key adjustments. First, importers of less than 50 tonnes of CBAM-covered goods annually will be exempt from the mechanism. The deadline for purchasing CBAM certificates has also been extended to February 2027, giving businesses more time to adapt their emissions tracking and reporting systems. Additionally, new templates and tools will be introduced to assist small and medium-sized enterprises (SMEs) with the compliance process, simplifying their reporting requirements while still meeting the environmental objectives of CBAM.

Although the timeline for implementation has been adjusted, the overall structure of CBAM remains unchanged. Companies must continue to report emissions through 2025 and prepare for the purchase of CBAM certificates starting in 2026. European Shippers’ Council stays vigilant on the updates and implications for its members.