In a major move aimed at balancing environmental integrity with economic practicality, the European Union is moving forward with changes to the Carbon Border Adjustment Mechanism (CBAM) that will ease compliance burdens on small and medium-sized enterprises (SMEs) while continuing to cover 99% of import-related CO₂ emissions.
The European Parliament’s Environment Committee has endorsed the proposal as part of the broader “Omnibus I” legislative simplification package. The measure passed overwhelmingly with 85 votes in favor, one against, and one abstention. A full plenary vote in Parliament is scheduled for 22 May 2025.
Key Reforms Introduced
90% of Importers Exempted
A new 50-tonne annual threshold will exempt small and occasional importers—including many SMEs and individuals—from CBAM reporting requirements. This exemption is expected to apply to roughly 90% of current CBAM declarants.
Environmental Integrity Preserved
Despite these exemptions, the EU confirmed that 99% of CO₂ emissions associated with imported goods—such as iron, steel, aluminium, cement, and fertilizers—will remain under CBAM regulation, ensuring the mechanism’s environmental credibility is not compromised.
Simplified Compliance
The revisions also include streamlined rules for emissions reporting, clearer procedures for authorisation, and simplified financial liability management, reducing administrative burdens without weakening the regulation’s enforcement.
A Delicate Balance: Competitiveness and Climate Action
“We’re cutting red tape, not climate ambition,” said Antonio Decaro, CBAM rapporteur.
“This approach enables us to simplify matters for companies without dismantling or weakening the CBAM.”
The reform is seen as a step toward making climate policy more inclusive, particularly for smaller market actors who previously struggled with complex reporting obligations. Meanwhile, the structural foundation of CBAM remains intact, reinforcing the EU’s global leadership in climate-focused trade policy.
Why It Matters
CBAM is a cornerstone of the EU’s climate strategy. By placing a carbon price on imports of certain goods from outside the EU, it ensures that domestic producers aren’t undercut by cheaper, high-emission alternatives—effectively addressing the risk of carbon leakage.
As implementation progresses, the European Commission is expected to assess by early 2026 whether other high-risk sectors should be brought under CBAM’s scope.
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