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The European Union has taken a significant step to facilitate compliance with the Carbon Border Adjustment Mechanism (CBAM) for importers. The European Council and Parliament have recently reached a political agreement to simplify CBAM requirements during its transitional phase, aiming to ease the administrative load on businesses, particularly smaller importers, while maintaining the EU’s strong climate commitments.

CBAM is a core part of the EU’s climate action plan under the "Fit for 55" package, which seeks to cut greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels. CBAM is designed to prevent “carbon leakage,” a situation where businesses move their production outside the EU to avoid strict climate regulations. To address this, CBAM applies a carbon cost on certain imported goods that mirrors the price EU companies pay under the Emissions Trading System (ETS).

Currently, CBAM covers goods such as cement, iron and steel, aluminum, fertilizers, hydrogen, and electricity. The regulation is in its transitional phase, during which importers must report emissions embedded in these goods without financial payments. The complete CBAM system, which will require importers to purchase carbon certificates, is set to take effect in 2026.

Key Simplification Measures

The new agreement introduces a 50-tonne de minimis threshold, which exempts small importers from the most complex reporting obligations. This threshold is a central part of the simplification package.

Key points of the new simplification deal include:

• 50-tonne threshold: Importers bringing in less than 50 tons of CBAM-covered goods per year will be exempt from full reporting and verification obligations.
• 90% of companies are expected to benefit from this exemption.
• Despite the high exemption rate, the regulation will still cover 99% of embedded emissions, ensuring the climate impact is preserved.

This approach helps smaller businesses by removing the need for complicated calculations and third-party verification, while still targeting the largest contributors to emissions. In addition to the exemption, the simplification package streamlines several CBAM processes:

• Authorization of importers: Making it easier and faster for companies to register and receive approval.
• Emissions calculation: Introducing simpler methods for calculating embedded emissions.
• Verification requirements: Reducing or removing verification burdens for small importers.
• Financial liability: Clearer and simpler rules on who is responsible for payments and penalties.

These changes are meant to be temporary and will apply throughout the transitional period of CBAM, which runs from 2023 to the end of 2025.

Poland’s Key Role

Poland played a key role in shaping the final agreement. It acted as a mediator between countries wanting stronger climate rules and those calling for more flexibility for businesses. Polish negotiators pushed for solutions that would maintain high environmental standards while also considering the challenges faced by small and medium-sized enterprises (SMEs).

Their efforts were essential in gaining broad support for the simplification package, especially among countries with large numbers of SMEs involved in imports of CBAM-covered goods.

Support from Industry and Environmental Groups

The response to the agreement has been generally positive. Business associations welcomed the move, especially the exemption for smaller importers, as it will significantly reduce the cost and complexity of compliance. Many small firms had expressed concern about the original reporting requirements, which they saw as too demanding.

At the same time, environmental organizations supported the deal because it keeps almost all emissions within the scope of the regulation. According to experts, the 50-tonne threshold still allows the EU to monitor and manage nearly all of the emissions from CBAM-covered imports. This balance between administrative simplicity and environmental effectiveness is seen as a success in policymaking.

Next Steps

The agreement is still in its political stage and must be formally approved before becoming law. The final text will undergo drafting, review, and formal adoption by both the European Parliament and the EU Council. After that, it will be published in the Official Journal of the European Union and will officially come into force. Once approved, the simplification measures will apply retroactively from the start of the CBAM transition period. This means companies that qualify under the new exemption rules will benefit from the simplified process immediately, even for past reporting periods. By 2026, CBAM will enter its full phase, where importers will need to buy and surrender CBAM certificates, reflecting the carbon emissions in their products. The simplified rules are expected to help companies prepare for this next stage more smoothly.