Brussels looks to delay CBAM charges to 2027 in major revamp of reporting rules

The European Commission has proposed significant adjustments to streamline the Carbon Border Adjustment Mechanism (CBAM), including a one-year delay in the purchasing timeline for CBAM certificates, along with a revised exemption threshold for small importers, according to a leaked document obtained by Platts, part of S&P Global Commodity Insights.

One of the most notable changes is the one-year delay in buying CBAM certificates, which covers the carbon cost of imports.

"To provide authorized CBAM declarants sufficient time to adapt to the amendments ... they should exceptionally only be obliged to purchase CBAM certificates in 2027 for emissions embedded in goods imported during the year 2026," the document states.

It adds that the proposed simplification will exempt around 90% of importers from CBAM obligations while maintaining more than 99% of embedded emissions within the scope of CBAM.

The changes may relieve some immediate pressure but the financial risk exposure stays the same, according to Dan Maleski, a senior environmental markets adviser at Redshaw Advisors.

"Companies will still be on the hook for 2026 emissions, but won't need to fully account for them until 2027," he said. "This delay doesn't remove the financial burden, it just shifts when it hits."

"For this reason we don't expect any short-term EU Allowance price impact. Because liability doesn't go away and anyone pre-hedging has no reason to change their approach."

Deferring carbon costs

CBAM is currently operational in the EU in a "transitional phase," where importers must report emissions embedded in relevant products they bring into the bloc.

However, from Jan. 1, 2026, under its "definitive phase," importers will be obliged to purchase CBAM certificates. This proposal means these certificates will now need to be purchased until 2027.

"The price of CBAM certificates purchased in 2027 corresponding to emissions embedded in goods imported into the EU in 2026 should reflect the prices of EU ETS allowances in 2026," the document adds.

The sectors covered by the legislation include iron and steel, aluminum, fertilizers, cement, electricity, and hydrogen. The levy is designed to reflect the difference between EU carbon prices and carbon costs in exporting countries.

The price of the CBAM certificates is based on the weekly average auction price of EU ETS allowances.

Carbon prices vary significantly on a country-to-country basis due to the differing sectoral scopes of many emissions trading systems globally.

Exceptions

Another key change proposed is the alteration of the exemption threshold, which is now based on carbon intensity rather than financial value.

Under the proposal, the exemption threshold would be set at a level of 100 mtCO2e or 50 mt net mass, which will exempt the vast majority of importers while maintaining more than 99% of embedded emissions within the scope of CBAM, the document states.

A spokesperson for the European Commission declined to comment.

The document explains that the goal of these changes is to "simplify and streamline" certain reporting requirements in a bid to reduce administrative workload without undermining relevant policy objectives.

The current CBAM legislation states that the "de minimis exemption" applies to consignments in which the total intrinsic value of the CBAM goods does not exceed Eur150 ($157).

"Therefore, the overall value of the total CBAM goods in one consignment must be considered, and if that value is above Eur150, then the 'de minimis exemption' does not apply," the legislation states.

Pressure to simplify

The proposed changes come as pressure has mounted on the EU to simplify CBAM amid a greater focus from the trading bloc on industrial competitiveness.

EU Commissioner for Climate, Net-Zero and Clean Growth Wopke Hoekstra discussed exempting most companies from CBAM requirements in early February.

The previous month, the European People's Party, the largest political group in the European Parliament, proposed a two-year delay and simplification of the policy.

The EU also plans an additional review of CBAM in 2025 to "analyze the possible extension of scope to further sectors and downstream products, as well as possible measures to address impacts on exports of relevant goods," the EC noted in its Competitiveness Compass published in late January.

Carbon permits under the EU Emissions Trading System are currently around six times more expensive than compliance prices in China, the world's industrial powerhouse.

Platts assessed EU Allowances for December 2024 at Eur73.82/mtCO2e Feb. 21.

This compares with China's compliance emission allowance, or CEA, which was valued at Yuan 89.90/mtCO2e ($12.54/mtCO2e) on Feb. 21, according to the Shanghai Environment and Energy Exchange.