EU Adopts CBAM Simplification Regulation: 10 Key Amendments and Challenges Ahead

On 17 October 2025, Regulation (EU) 2025/2083 of the European Parliament and of the Council of 8 October 2025 amending Regulation (EU) 2023/956 as regards simplifying and strengthening the carbon border adjustment mechanism ("CBAM") was published in the Official Journal of the European Union (the "CBAM Simplification Regulation"). This is the first instrument to amend Regulation (EU) 2023/956 establishing a CBAM (the "CBAM Regulation"), reflecting the European Commission's recent commitment to reduce the regulatory burden on businesses.

Background

The CBAM Regulation entered into force in 2023 to address the risk of carbon leakage. It is currently operating in a transitional phase and will apply definitively as of January 2026.

In November 2024, the European Council called for "launching a simplification revolution" to ensure "a clear, simple and smart regulatory framework for businesses and drastically reducing administrative, regulatory and reporting burdens".

On 26 February 2025, the European Commission put forward the Omnibus I package, which included a dedicated proposal to simplify the existing CBAM legislation. A political agreement between the European Parliament and the Council on the proposal for the CBAM Simplification Regulation was reached on 18 June. The European Parliament approved the text on 10 September, followed by Council approval on 29 September.

The CBAM Simplification Regulation enters into force on the third day following its publication in the Official Journal of the European Union, i.e., on Monday, 20 October 2025.

Key Amendments

1. New De Minimis Exemption Based on the Single Mass-Based Threshold

• The previous exemption for goods listed in Annex I of the CBAM Regulation ("CBAM Goods") of negligible value (EUR 150 per consignment) is replaced by a de minimis exemption based on the cumulative net mass of imported CBAM Goods per importer per calendar year, referred to as "the single mass-based threshold."
• The single mass-based threshold is set at 50 tonnes and applies cumulatively to all CBAM Goods in the iron and steel, aluminium, fertilisers, and cement sectors.
• The single mass-based threshold does not apply to imports of electricity or hydrogen due to sector-specific implementation challenges.
• The exception applies to all importers, including those with authorised CBAM declarant status.
• Importers whose total annual imports do not exceed the single mass-based threshold are exempt from CBAM obligations, including reporting, declaration, and certificate surrender requirements.
• If the threshold is exceeded, all emissions embedded in all the CBAM Goods imported during the relevant calendar year—including in those below the single mass-based threshold—are subject to CBAM obligations.

2. Annual Review and Adjustment of the Single Mass-Based Threshold

• The European Commission is tasked with annually reviewing the threshold to ensure that at least 99% of embedded emissions in the imported CBAM Goods remain within the scope of CBAM.
• The Commission may adjust the threshold by delegated act if the 99% target is not met; any changes will apply beginning the following calendar year.

3. Monitoring and Enforcement of the Single Mass-Based Threshold

• The Commission and national authorities are empowered to monitor compliance with the single mass-based threshold and will exchange, via the CBAM registry, a list of importers exceeding 90% of the single mass-based threshold.
• Non-genuine practices or arrangements intended to artificially split imports to remain below the single mass-based threshold are expressly prohibited and subject to penalties.
• If an importer exceeds the single mass-based threshold without authorised CBAM declarant status, penalties apply amounting to three-to-five times the standard penalty of EUR 100 per tonne of embedded emissions. Such penalty may be reduced where an importer exceeded the single mass-based threshold by no more than 10% of that threshold.
• Payment of the penalty releases the importer from any subsequent CBAM declaration and certificate surrender obligations for those imports.

4. Authorised CBAM Declarants

• Importers expecting to exceed the single mass-based threshold must apply for authorised CBAM declarant status before exceeding the limit.
• As an exception, importers and indirect customs representatives who submit their application by 31 March 2026 may continue importing provisionally the CBAM Goods until a decision is made.
• Authorised CBAM declarants may delegate the submission of CBAM declarations to third parties, provided the third party is established in an EU Member State and holds an Economic Operators Registration and Identification number. The authorised CBAM declarant remains nonetheless responsible for compliance with the CBAM obligations.

5. CBAM Declaration

• The deadline for annual CBAM declarations and surrender of certificates is set at 30 September of the year following importation, providing additional time for compliance.
• CBAM declarations must include total quantities, embedded emissions, certificates to be surrendered (with adjustments for carbon price paid in third countries and free allocation of EU Emissions Trading System (ETS) allowances), and verification reports where applicable.
• The minimum quarterly purchase requirement for CBAM certificates is reduced from 80% to 50% of embedded emissions in all CBAM Goods imported since the beginning of the calendar year, with adjustments for free allocation.

6. Calculation of Embedded Emissions

• Embedded emissions may be determined using either default values or actual values verified by accredited verifiers; verification is only required for actual values.
• Default values are to be based on the average emission intensity of the ten highest-emitting exporting countries when reliable data is unavailable.

7. Carbon Price Deductions

• Authorised CBAM declarants may claim reductions in the number of CBAM certificates to be surrendered for carbon prices effectively paid in third countries, including by using default carbon prices set by third countries or established by the European Commission.
• From 2027, the European Commission may determine and publish in the CBAM registry default carbon prices for third countries where carbon pricing rules are in place, using reliable, publicly available information and information provided by those third countries.
• Carbon prices paid in a third country other than the country of origin of the imported goods are also eligible for deduction.

8. CBAM Certificates

• Sales of CBAM certificates via a centralised platform to authorised CBAM declarants, covering emissions embedded in goods imported in 2026, will start from 1 February 2027.
• Certificates purchased in 2027 for 2026 imports will be priced using the quarterly average of 2026 EU ETS allowance prices. Thereafter, CBAM certificate prices will equal the weekly average of EU ETS auction closing prices.
• The authorised CBAM declarant must submit any repurchase request by 31 October of each year during which CBAM certificates were surrendered. However, CBAM certificates purchased in 2027 for 2026 imports may only be repurchased in 2027.
• The repurchase limit for excess CBAM certificates is aligned with the actual purchase obligation for the year (50% of embedded emissions in all CBAM Goods imported).
• If an authorised CBAM declarant who has been purchasing CBAM certificates in anticipation of exceeding the single mass-based threshold does not exceed it, all those CBAM certificates shall be repurchased upon request of the authorised CBAM declarant.
• On 1 November of each year, the Commission will cancel, without compensation, any CBAM certificates purchased during the year before the previous calendar year and that remain in the account of an authorised CBAM declarant. However, on 1 November 2027, the Commission will cancel any CBAM certificates purchased in respect of embedded emissions for the year 2026 without any compensation.

9. Penalties

• Penalties for non-compliance are harmonised with the EU ETS excess emissions penalty regime (EUR 100 for each tonne of embedded emissions), with reductions possible for minor or unintentional errors.
• Indirect customs representatives are liable for penalties when acting as authorised CBAM declarants, except where they act on behalf of an importer established in a Member State and have not agreed to act in that capacity.

10. Sectoral and Technical Clarifications

• Non-calcined kaolinic clays are excluded from the scope of the CBAM Goods, reflecting their lower carbon intensity.
• Electricity is added to the list of goods for which only direct emissions are considered in the calculation of embedded emissions since indirect emissions are irrelevant for this sector.
• Operators of installations in third countries seeking registration in the CBAM Registry must provide information on their controlling entities, including the parent company, with supporting documents.
• Accredited verifiers must request registration in the CBAM registry from the competent authority of the Member State where their national accreditation body is established. The request must be submitted within two months of accreditation being granted, but not before 1 September 2026. The competent authority is responsible for registering the verifier’s information in the CBAM registry.
• The costs incurred in connection with the establishment, operation, and management of the common central platform will be financed by fees payable by authorised CBAM declarants.

Next Steps

In addition to the newly adopted CBAM Simplification Regulation amending the CBAM Regulation, further legislative adjustments to the CBAM framework are expected in 2025:

Finally, a full review of the CBAM is planned before the end of 2025, in accordance with Article 30 of the CBAM Regulation, which requires the European Commission to present a report assessing the potential extension of the CBAM scope to additional products (e.g., organic chemicals and polymers, other precursors) and services (e.g., transportation services).