The Carbon Border Adjustment Mechanism (CBAM) was published by the European Parliament and the Council, through the European Commission in May 2023. CBAM is implemented in two phases: a transitional period (October 1, 2023 – December 31, 2025) and a definitive regime (starting January 1, 2026).
Through the transitional period CBAM reporting, the European Commission has received extensive feedback from industry stakeholders, small and medium-sized enterprises (SMEs), and national authorities, who raised concerns about the administrative complexity, data burdens and readiness challenges associated with CBAM’s full implementation. In response, the European Commission released the “Omnibus Simplification Package” on February 26, 2025, aiming to streamline and simplify CBAM implementation during the definitive regime by reducing administrative burdens, especially for SMEs, and enhancing system efficiency.
The proposed updates from the Omnibus Simplification Package are currently a legislative proposal and must be reviewed, amended and adopted by both the European Parliament and the Council before they can be adopted. If adopted, the proposed amendments would significantly reduce compliance burdens for importers, especially SMEs, by simplifying reporting, verification, and administrative requirements and consequently allowing greater flexibility in managing CBAM obligations. The proposed updates to the emission calculation methodology will also significantly impact affected installations and operators in the upstream supply chain.
Key Proposed Changes to CBAM Under the Omnibus Simplification Package
In the Omnibus I package, key proposed amendments to Regulation (EU) 2023/956 establishing the CBAM Regulation include:
Scope Updates:
1. New De Minimis Exemption. Importers bringing in less than 50 tonnes per year of certain CBAM-covered goods (iron and steel, aluminum, cement, fertilizers) would be exempt from CBAM obligations. Currently, the de minimis exemption is €150 per consignment. The new mass-based threshold aligns better with the climate objective of the CBAM and will exempt vast majority of importers while maintaining more than 99% of embedded emissions in the scope of the CBAM.
2. Exclusion of Non-Calcined Kaolinic Clays. Their inclusion was deemed unnecessary and does not align with CBAM’s objective to target emission-intensive goods.
Emission Calculation Methodology Updates:
1. Exclusion of Certain Downstream Emissions. The proposal suggests excluding emissions from downstream finishing processes for certain aluminum and steel goods to simplify compliance.
2. Default Values Clarification. During the definitive regime, CBAM declarants have the option to report using actual values or default values set by the European Commission. The European Commission clarifies that the default values would be set using the average emission intensity of the ten exporting countries with the highest emission intensities, to incentivize the use of actual values.
CBAM Reporting Updates:
1. Delegation of Submission. Authorized CBAM declarants would be allowed to delegate submission of CBAM declarations to qualified third parties, while still remaining liable for the submission. These third parties include custom declaration agents, consultants, or environmental service providers who shall be established within the EU and qualified to perform CBAM reporting.
2. Extension of Annual Declaration. The deadline for submitting the annual CBAM declaration is proposed to be extended from May 31 to August 31.
3. Access for Accredited Verifiers. Accredited verifiers would be granted access to the CBAM registry to facilitate the verification process and ensure transparency.
Carbon Certificates Updates:
1. Recognition of Carbon Prices Paid in Third Countries. The EU would recognize and provide conservative estimates for the carbon prices paid in third countries, including countries other than the country of origin. These amounts would be deducted from the number of CBAM certificates required to be surrendered, preventing double taxation.
2. Delay of CBAM Certificates Sale by Member States. The sale of CBAM certificates was scheduled to start in 2026 but would be delayed to 2027 for emissions embedded in goods imported during the year 2026.
3. Adjustment of Certificate Holding Requirements. The requirement for authorized CBAM declarants to hold CBAM certificates in their accounts at the end of each quarter would be reduced from 80% to 50% of the emissions embedded in the goods imported since the start of the year, easing financial and administrative burdens.
CBAM importers, installations and operators should begin assessing how these updates affect their operations to stay ahead of the definitive regime beginning in 2026.
Interested parties can read and access the Omnibus Simplification Package here. If you would like to discuss the regulation, how it may impact your facility or company, and how we can support you in meeting your CBAM requirements, please contact McKay Quinn or Jessica Evangelista.
