On 26 February 2025, the European Commission unveiled its inaugural Omnibus Simplification Package, designed to alleviate the administrative burdens associated with recent EU Green Deal legislation. Central to this initiative is the proposed streamlining of the Carbon Border Adjustment Mechanism (CBAM), aimed at enhancing its efficiency and effectiveness in mitigating carbon leakage. The key question remains whether these proposed changes will indeed simplify the implementation of CBAM, thereby easing compliance for participants without undermining the EU’s competitiveness and economic prosperity.
The amendments outlined in the Omnibus Simplification Package align with the EU’s Competitiveness Compass, which seeks to bolster economic growth while ensuring progress toward broader decarbonisation objectives. Read our initial briefing on the Omnibus Simplification Package from 28 February 2025. Specifically, for CBAM (EU Regulation 2023/956), which addresses embedded emissions from carbon-intensive products imported into the EU market, the proposed simplification measures include a draft regulation and supporting documents focused on preventing carbon leakage and tightening anti-circumvention measures.
A key proposal is the increase of the de minimis compliance threshold, shifting from a financial trigger of €150 per shipment to a physical threshold of 50 tonnes of CBAM goods per year (net mass). The Commission asserts that this change will exempt 91% of importers while still ensuring that the new threshold will cover 99% of embedded emissions from imported goods. This change is consistent with the proposed elimination of the de minimis duty threshold for low-value consignments under the EU Customs Reform.
Several other proposed changes are primarily administrative in nature, including:
- Introduction of a self-identification system for “occasional importers” of aluminium, cement, fertilisers, iron and steel.
- Extension of the deadline for surrendering CBAM certificates (and submitting required declarations) to 31 August each year, up from 31 May. Member states are advised to ensure that the price of CBAM certificates purchased in 2027 (corresponding to embedded emissions in goods imported into the EU in 2026) reflects the prices of EU Emissions Trading System (ETS) allowances in 2026.
- Delegation of CBAM registry access and declaration submissions to a third party, although the CBAM “declarant” will remain the relevant importer.
- Reduction of the number of CBAM certificates required to be purchased and held for each quarter to 50% of the total liability for that quarter, down from the current requirement of 80%, which industry had indicated as being too high, especially given the limited validity period of CBAM certificates for trading purposes.
- Inclusion of a placeholder for extending CBAM’s scope to encompass additional products and sectors covered by the EU ETS, ensuring a smooth transition and minimising the risk of carbon leakage. A final report on a potential scope extension is expected later in 2025. The recently adopted Clean Industrial Deal already indicated that the Commission will assess extending CBAM’s scope to additional EU ETS sectors and downstream products.
It is important to note that the implementation dates for CBAM will remain unchanged under the proposed amendments. The current transitional period spans 2023-2025 for data gathering and reporting, with the definitive period – when financial obligations take effect (e.g., the requirement to purchase certificates) – commencing on 1 January 2026. Although CBAM directly affects importers, relevant data from exporters and producers along the supply chain will also be required, making it essential for indirect participants to keep up to date with the proposed regulatory amendments and their impact on supply chain reporting and due diligence obligations.
Next steps for proposed amendments
The proposed CBAM amendments are now moving into the review phase. The two EU co-legislators are now set to review the Commission’s proposals with the Commission having suggested that a fast-track procedure should be applied. However, this remains subject to the co-legislators’ review and, ultimately, negotiations in the event of any changes to the proposals or further amendments. The final outcome could range from further changes to a blanket approval of the proposals.
The uncertainty as to timing and the review process may impact timelines for release of pending implementing and delegated acts on CBAM, which are currently anticipated in 2025. Moreover, the aspiration to enhance European competitiveness while maintaining environmental commitments remains subject to geopolitical dynamics. Other jurisdictions are also exploring their own carbon border adjustment mechanisms, suggesting that establishing a level playing field may be a prolonged and iterative endeavour.
For companies operating in the EU market, it is crucial to continue monitoring and engaging with the evolving landscape of the EU’s Competitiveness Compass to effectively align financial and operational priorities in the months and, potentially, years ahead. As Commission President Ursula von der Leyen stated, “More simplification is on the way.”
Client Alert 2025-088
