Council of the EU | Carbon border adjustment mechanism (CBAM): Council and Parliament strike a deal on its simplification

The Council presidency and European Parliament’s negotiators reached a provisional agreement today on one of the proposals of the so-called ‘Omnibus I’ legislative package: a regulation, which simplifies and strengthens the EU’s carbon border adjustment mechanism (CBAM).

The proposal seeks to provide simplification and cost-efficient compliance improvements to the CBAM regulation, without compromising its climate goals, as about 99% of embedded emissions in the imported CBAM goods would remain covered. The overall aim is to reduce the regulatory and administrative burden, as well as compliance costs for EU companies, especially SMEs.

Main elements of the agreement

The co-legislators retained the key components of the Commission proposal to simplify CBAM rules: a broader ‘de minimis’ exemption from CBAM obligations applicable to importers, which do not exceed a single mass-based threshold set at a level of 50 tonnes of imported goods per importer per year. This new threshold will replace the current and much narrower provisions of the CBAM regulation exempting goods of negligible value. The measure is expected, in most cases, to exempt from CBAM obligations SMEs and individuals, which import small or negligible quantities of goods covered by the CBAM regulation. The revised regulation will also permit to avoid any disruptions for importers in the beginning of 2026, as they will be able to continue importing CBAM goods while awaiting CBAM registration.

Furthermore, the provisional agreement contains several other simplification measures for all importers of CBAM goods above the threshold. This concerns particularly the authorisation procedure, the data collection processes, the calculation of embedded emissions, the emission verification rules, the calculation of the CBAM declarants’ financial liability during the year of imports, and the claim by CBAM declarants for carbon prices paid in third countries where goods are produced. An agreement was also reached between the co-legislators on penalties and on the rules regarding indirect customs representatives.

Finally, the text contains further specifications deemed both useful and necessary for the purposes of certainty and clarity regarding the arrangement on financing of the costs incurred in connection with the establishment, operation and management of the common central CBAM platform, which will be used to sell CBAM certificates to CBAM declarants.

Next steps

Today’s provisional agreement must be now endorsed by the Council and the European Parliament before formal adoption, expected by September 2025.

Background

In October 2024, the European Council called on all EU institutions, member states and stakeholders, as a matter of priority, to take work forward, notably in response to the challenges identified in the reports by Enrico Letta (‘Much more than a market’) and Mario Draghi (‘The future of European competitiveness’).  The Budapest declaration of 8 November 2024 subsequently called for ‘launching a simplification revolution’, by ensuring a clear, simple and smart regulatory framework for businesses and drastically reducing administrative, regulatory and reporting burdens, in particular for SMEs. On 26 February 2025, as a follow-up to EU leaders’ call, the Commission put forward two ‘Omnibus’ packages, aiming to simplify existing legislation in the fields of sustainability and investment, respectively.

Compliments of the Council of the European Union