On December 17, 2025, the European Commission (“EC”) released a package of adopted draft implementing and delegated acts with the goal in mind to operationalize the Carbon Border Adjustment Mechanism (“CBAM”), starting 1 January 2026. In addition to this release, 11 legislative acts and 13 supplementary documents were provided to outline new rules on emissions calculations, customs procedures, verification standards and certificate pricing.
As of January 21, 2026, all 11 legal acts are officially published in the EU public journal. Key provisions include the enhanced anti-circumvention measures and extension of CBAM to include specific steel and aluminum downstream products. This new proposal comes as a major milestone following CBAM’s transition from a transitional phase to definitive one, highlighting the ambitious climate action initiative by EU.
Overall, the latest package seeks to address concerns raised by international partners, particularly calls for greater flexibility in the application of CBAM. However, it remains unclear how effective this proposal will be in practice and the extent it will meaningfully impact the Western Balkans.
The following text outlines the proposed package, listing each legislative act individually, followed by the relevant supplementary documents and providing a brief summary of the key points of each.
This proposal is the most consequential of the package, as it introduces amendments to the current CBAM Regulation (EU 2023/956). Substantively, the EC aims to introduce the following: extending CBAM to selected steel‑ and aluminium‑intensive downstream products, with the EC indicating an extension in 2028; creating anti‑circumvention measures to reduce avoidance through re‑routing or minimal transformation; making targeted adjustments to improve effectiveness (including electricity‑import treatment and default‑value rules). The result of its adoption would be the expansion of “CBAM‑relevant goods” beyond basic materials into downstream manufactured products, bringing more sectors into CBAM‑linked customs and emissions compliance.
These annexes set out the technical provisions underpinning the legislative proposal to extend the CBAM to downstream goods and to introduce anti-circumvention measures. The contents of the annexes are divided as follows:
There are two documents here:
The Executive Summary of the Impact Assessment Report, as per the title, deals with the impact assessment of the proposed amended CBAM Regulation. It identifies three main issues (downstream carbon leakage, CBAM avoidance and insufficient incentives for decarbonizing electricity imports) and evaluates policy options for each, with the preferred options delivering environmental benefits with minimal costs.
This document contains analysis’ that supports the proposed amendment and reaffirms why EU action is necessary, as the issues addressed cannot be handled by Member States alone. The document provides information pertaining to the legal basis, the consultation process, and the rationale for the proposed amendments to the CBAM.
The proposal establishes and sets the governance, financial rules, resources, and support scope of the Temporary Decarbonisation Fund (“TDF”). The TDF is an EU instrument that provides time‑limited financial support to energy‑intensive industries established in the EU that face a risk of carbon leakage as free allocations under the EU Emissions Trading System (EU ETS) are gradually withdrawn. The Fund will be financed through 25% of EU Member States’ revenues from the sale of CBAM certificates. This measure provides temporary decarbonisation support to EU producers of certain CBAM goods, with eligibility conditioned on decarbonisation efforts.
This annex contains an eligibility list, specifying which goods (with Combined Nomenclature codes) are eligible for Fund support, covering product lines in areas such as aluminium, fertilisers, iron and steel.
This act sets out rules on how national accreditation bodies grant accreditation for CBAM purposes, how accredited verifiers are controlled and overseen, how accreditation can be withdrawn, and mutual recognition peer evaluation mechanics across Member States. These rules aim to ensure oversight and information exchange between authorities, as well as the impartiality and competence of the verifiers themselves.
These annexes operationalize accreditation by setting out technical details for how verifiers are accredited and supervised. The first annex lists the types of goods and services for which verifiers can be accredited, while the second one details that qualifications required. They also include forward‑looking operational details about how verification outputs are handled in the registry environment.
This document provides the procedures for verifying the embedded emissions reported, requiring in person and online visits by verifiers and introducing a standardized electronic template for verification reports.
This annex standardizes what a CBAM verification report must look like, providing a template that contains mandatory structure and content, required data elements and verifier statements, and information relating to how verification was performed.
This amendment updates and corrects the registry rules to reflect the CBAM simplification changes, terminology and interoperability needs, and the registry’s integration with customs‑side systems.
This act updates the operational rulebook for who may import CBAM goods in the definitive phase and how authorization is obtained and managed. It simplifies procedures, adjusts deadline and allows authorities to use digital tools to obtain necessary information.
This act is the data‑pipe that makes CBAM enforceable at scale. It specifies what information customs authorities must transmit into the CBAM system so the Commission and Member States can cross‑check what was declared at import, and what is later declared in CBAM emissions/certificate reporting.
This regulation is the “math engine” of the CBAM regime, replacing the transition‑period flexibility with a definitive methodology for determining the embedded emissions of CBAM goods from 2026 onward. It details which products are covered and how to define and measure emissions.
These 5 annexes represent a technical guide for the EU’s CBAM. They explain how importers must calculate and report the greenhouse gas emissions, providing step‑by‑step methods for measuring emissions, and which products are covered.
This implementing regulation sets how default values must be determined using the methodology in Annex IV of the CBAM Regulation and most up‑to‑date and reliable information, and how the system stays conservative when robust data are missing. The rules contemplate alternative construction methods to avoid underpricing carbon.
This implementing act sets the rule for how an importer’s certificate surrender obligation is adjusted to reflect that phase‑out, so imports are not treated more harshly than EU production and so that EU goods are not treated more favorably than imports. It operationalizes the core CBAM concept that, until free allowances are fully phased out, CBAM applies only to the proportion of emissions not covered by free allocation. It gives a calculation framework that importers (and their advisors) can use to translate “embedded emissions” into “certificates to surrender,” after accounting for the ETS free allocation factor. Furthermore, it clarifies that no free allocation adjustment applies to electricity imports and that the rules will apply from 1 January 2026.
This annex is the technical layer: it supplies the formulas, benchmarks and production‑route methodologies needed to compute the adjustment in a consistent way across goods and import patterns.
Thid Regulation defines the methodology for calculating the price of CBAM certificates, ensuring it mirrors the average auction clearing price of EU ETS allowances. For 2026, the price will be determined on a quarterly basis, while from 2027 onwards, it will be calculated weekly.
This document is the main review report on the implementation and effectiveness of the EU CBAM during the transitional period, covering topics such as transitional period results, international impact, governance and simplification, stakeholder engagement and policy outlook.
These four annexes support the main CBAM review report and deal with the following:
These 5 annexes provide country and product‑specific default emissions values and instructions on which default to select. For example, if a country/territory is not listed explicitly, the annex directs users to apply an “Other countries and territories” default for the relevant good.
If the proposal is passed into law, its positive effects are unlikely to be felt immediately. Until then, markets will face significant uncertainties that need to be acknowledged, particularly in trade and cross‑border industries. Even though the Commission has provided clarifications, it remains unclear how costs and obligations for third countries will be equitably calculated, especially in complex supply chains that involve multiple non‑EU countries. Unaddressed practical barriers create legal and financial uncertainty, discouraging third‑country participation in trade and transit with EU.
On the other hand, some changes in the proposal, such as more nuanced calculations that account for the full production mix rather than individual emission‑intensive products, significantly reduce costs for third countries that partake in renewable production. This indicates that there is potential for more equitable treatment if the methodology is implemented carefully.
One of the key points in the proposal is that changes to the electricity sector would apply retroactively from January 2026. For third countries, especially Serbia, Bosnia and Herzegovina, and North Macedonia, this creates a clear exclusionary effect. Their electricity exports rely heavily on lignite and are sold on thin margins through long‑term contracts. Under the current CBAM rules, the carbon fee can be as high as, or higher than, the electricity price itself. Because the rules are retroactive, exporters cannot adjust production, prices, or contracts beforehand, turning previously profitable exports into losses. Without support mechanisms available to EU producers, such as free allowances or state aid, high retroactive CBAM fees make exports from third countries uneconomical and discourage trade with the EU.
Overall, the package proposal will have a significant impact on market integration, trade disruptions, and investment in third countries. Although the prices of CBAM remain uncertain and planning for the future is highly speculative, the Western Balkans will most likely continue to import electricity from EU member states, even if many uncertainties remain unanswered by the latest package.
Authors: Anastasija Radanović, Luka Džordeski
