2025-04-23
On 10 May 2023, the European Parliament and the Council adopted Regulation 2023/956 establishing the Carbon Border Adjustment Mechanism (CBAM). During the transitional period from 1 October 2023 to 31 December 2025, the regulation requested quarterly reporting on the import of certain iron, steel, and aluminum products, as well as cement, fertilizers, hydrogen and electricity.
In light of the upcoming launch of the definitive CBAM system and in response to the challenges caused by the CBAM Regulation, the European Commission is planning to introduce simplifications to CBAM obligations as part of the omnibus proposal package.
The purpose of these changes is to help the EU streamline the obligations set out in the regulation and to reduce the administrative burden on businesses, while still keeping environmental objectives in focus.
A proposed alteration concerns CBAM-obligated entities. The EU is looking to exempt importers who bring into the European Union less than 50 tonnes per year of products within CBAM's scope from CBAM obligations.
However, if the imported volume exceeds this threshold, the obligation also applies retroactively to all relevant products imported from the beginning of the year. This threshold does not apply to the import of electricity and hydrogen. According to the Commission, this change could affect approximately 90% of importers. Despite the reduction in the number of obligated entities, over 99% of embedded emissions would still remain within the scope of CBAM.
Another important change relates to the deadlines. The Commission proposes postponing the submission deadline for annual CBAM declarations from 31 May to 31 August. As a result, the first declaration, covering the year 2026, would be due by 31 August 2027.
In addition, the sale of CBAM certificates would begin not on 1 January 2026 but in February 2027, allowing affected parties more time to prepare accordingly. Similar to the change in the CBAM declaration deadline, the deadline for the surrender of CBAM certificates would also be shifted to 31 August, while the deadline for submitting buy-back requests would be moved from 30 June to 30 November.
Another proposed amendment regarding CBAM certificates is that the EU would reduce the required proportion of CBAM certificates to be held at the end of each quarter from 80% to 50% of the embedded emissions. This change would ease the initial financial burden on businesses and reduce compliance-related pressure.
The main objective of the proposal package is to simplify the CBAM obligations, while also introducing stricter and more effective measures against those who fail to comply with the obligations set out in the regulation.
KPMG’s experts are happy to support you in preparing for compliance with this definitive system of CBAM obligations.
