The EU's Carbon Border Adjustment Mechanism (CBAM) is a tool designed to ensure a fair price for carbon emissions associated with the production of carbon-intensive goods entering the EU. Its goal is to encourage cleaner industrial production in non-EU countries and maintain fairness between domestic and imported goods in terms of carbon pricing.

CBAM will verify that a price is paid for the embedded carbon emissions in certain imported goods. This ensures that the carbon price for imports is aligned with the carbon price for domestically produced goods, helping the EU meet its climate goals. The mechanism is designed to comply with WTO rules.

The CBAM will be fully implemented in 2026, with a transitional phase running from 2023 to 2025. This gradual roll-out coincides with the phase-out of free allowances under the EU Emissions Trading System (ETS), supporting the decarbonisation of EU industry.

Latest Developments: Simplification Package

On 26 February 2025, the European Commission proposed changes to simplify the CBAM and reduce administrative burdens, as part of the first Omnibus package. Key proposals include:

• CBAM De Minimis Threshold: A new exemption for importers of small quantities (50 tonnes or less) of carbon-intensive goods. This would keep around 99% of emissions under CBAM’s scope while exempting approximately 90% of importers from obligations.
• Simplified Compliance for Importers: For those who will remain within the CBAM framework, the Commission proposes easing compliance by simplifying the authorisation process for declarants, streamlining emissions calculation, and easing the management of CBAM-related financial liabilities.
• Strengthening Anti-Abuse Measures: The changes aim to improve the overall effectiveness of CBAM by reinforcing anti-abuse provisions and developing a joint anti-circumvention strategy in collaboration with national authorities.

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For further information: https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en