The European Union has proposed significant alterations to its Carbon Border Adjustment Mechanism (CBAM), aiming to ease compliance burdens and give businesses additional time to prepare. These proposed changes from the EU Commission include delaying the sale of CBAM certificates until February 2027 and introducing a new compliance threshold based on the weight tonnage equivalent of the carbon emissions of imported goods.

What is CBAM?

CBAM is the EU’s carbon border tariff and is designed to maintain a level playing field between domestic industries and international competitors by ensuring imported products bear the same carbon costs as those produced within the EU. This applies to industries such as steel, iron, aluminum, cement, hydrogen, electricity and fertilizers.

New Compliance Threshold: A Win for Small and Medium
Enterprises

While the CBAM will still enter into full force in 2026 and require EU importers to report and account for the embedded carbon in imports, some of the EU Commission’s proposed changes will alter the payment timeline.

The EU Commission has proposed a mass-based compliance threshold to reduce the administrative burden on small and medium-sized enterprises (SMEs). Under the new proposal, only importers bringing in more than 50 metric tons of CBAM-covered goods—equivalent to 100 metric tons of CO2 emissions—will be required to comply.

According to EU officials, this adjustment would exempt a vast majority of importers while still ensuring that over 99% of embedded emissions remain within CBAM’s regulatory scope. Additionally, the Commission retains the flexibility to adjust this threshold if trade patterns change significantly.

One-Year Delay in CBAM Certificate Requirements

Another key revision is the postponement of the CBAM certificate purchasing requirement. CBAM Certificates—which EU importers will have to pay to comply with the CBAM—were originally scheduled to go on sale in 2026, but the EU Commission has proposed delaying that timeline to February 2027. EU importers will still be responsible for the embedded emissions of their imports in 2026 but, under this proposed change, will only be able to purchase the CBAM Certificates starting in 2027.

CBAM Certificate prices are intended to be calculated using the weekly average auction price of EU carbon allowances (EUAs), but under the revised proposals for imports in 2026, the certificate prices will be based on the 2026 calendar year.

This delay is meant to provide businesses with additional time to prepare for compliance, though industry experts caution that it does not eliminate their obligations—it only shifts when companies must pay for the costs of their imported emissions.

Industry Reactions and Global Trade Considerations

Dan Maleski, CBAM advisor at Redshaw Advisors, told OPIS he views the threshold change as a “positive development” for smaller importers, reducing unnecessary regulatory complexities. However, he also warned that companies must still plan for their 2026 emissions obligations, despite the extended certificate purchase deadline.

Maleski also noted the geopolitical implications of CBAM, particularly regarding potential trade tensions with the United States. President Donald Trump’s recent and ongoing escalations of tariffs against the EU do not yet take into account carbon emissions, however, and the US also does not currently have a comparable pricing mechanism at the federal level.

“The proposal maintains a proportionate approach to internalizing the external cost of carbon pollution despite the threat of global border tariff escalations,” the CBAM advisor said.

Next Steps for Businesses

The EU Commission unveiled an omnibus bill on February 26, 2025, aimed at streamlining various regulations and reducing red tape for businesses. As CBAM continues to evolve, companies should stay informed and proactively plan for their compliance obligations.

For those affected, now is the time to assess your carbon exposure, consider pre-hedging strategies, and ensure your supply chain is prepared for these upcoming changes.

Stay tuned for potential updates if the EU further refines its approach to carbon border tariffs and global climate policies.