The European Council has formally adopted its negotiating position on the European Commission’s proposal to amend Regulation (EU) 2023/956, better known as the Carbon Border Adjustment Mechanism (CBAM). This marks a significant step in the EU’s legislative process as the Council prepares to enter interinstitutional negotiations with the European Parliament. The aim is to simplify the CBAM framework, alleviate burdens on importers—especially SMEs—without compromising its climate integrity.
The move follows a strong political mandate expressed in key EU strategic documents, such as the Letta and Draghi reports and the Budapest Declaration, calling for a “simplification revolution” across EU legislation. The main elements of the European Council’s negotiating position are outlined below.
At the heart of the proposal lies the introduction of a single, cumulative mass-based exemption threshold of 50 tonnes per importer per calendar year. This replaces the current narrower provisions based on negligible value exemptions.
This exemption will eliminate CBAM obligations for small importers and virtually all SMEs, estimated to cover only ~1% of embedded emissions.
Sectors covered include iron and steel, aluminium, cement, and fertilisers, with hydrogen and electricity excluded from the de minimis exemption due to their distinct characteristics and data complexity.
The measure intends to drastically reduce the number of reporting declarants, streamline administrative oversight, and prevent circumvention tactics like import splitting.
For importers exceeding the 50-tonne threshold, several procedural streamlinings are proposed:
Eased authorisation requirements for CBAM declarants, especially indirect customs representatives.
Delegated submissions allowed for CBAM declarations, increasing flexibility.
Simplified verification of actual embedded emissions and clearer use of default values.
Standardised deductions for carbon prices paid in third countries, with default carbon prices published by the Commission starting 2027.
Harmonised data collection and reporting protocols, coordinated via the CBAM registry.
CBAM certificates for 2026 emissions to be surrendered by 30 September 2027.
The required stock of certificates throughout the year is reduced from 80% to 50% of estimated emissions, easing capital lock-in for importers.
Importers exceeding the de minimis threshold without authorisation will incur penalties, scaled to the volume of emissions and subject to reduced penalties for minor infractions.
Indirect customs representatives now bear primary liability if acting on behalf of a non-compliant importer.
The simplification package also envisions improved digital infrastructure:
Enhanced CBAM registry access for verifiers and parent companies of foreign installations.
Transparency tools for monitoring and enforcement, including real-time trade surveillance and harmonised communication between customs and environmental authorities.
Public disclosure options for operators, albeit limited to non-sensitive data.
Furthermore, financing the common central platform will transition to fee-based contributions by CBAM declarants, shifting operational costs away from the EU budget over time.
This reform is not merely technical—it reflects a broader political commitment to make climate compliance compatible with competitiveness. The Council’s swift consensus signals an intent to rapidly finalize the file in 2025, aligning with the transition to CBAM’s definitive phase in 2026.
The European Parliament adopted its first-reading position on May 22, 2025, paving the way for trilogues to begin immediately. If consensus is achieved promptly, the revised CBAM regulation could enter into force before the end of the year.
Click the link to access a PDF version of the European Council’s General Approach document
