CBAM – A Victim of the Omnibus Initiative?

The Omnibus Initiative is currently making headlines and is particularly affecting many companies in the sustainability sector. A draft regulation is expected by the end of February. Nevertheless, more and more information is becoming public, offering insights into what this could mean for businesses.

The Omnibus Initiative

This legislative proposal aims to provide significant relief for companies affected by sustainability regulations. The focus is particularly on the Corporate Sustainability Reporting Directive, the EU Supply Chain Directive, and the EU Taxonomy Regulation. However, adjustments to the Carbon Border Adjustment Mechanism are also expected to be part of this legislative package.

Two Regulations with Different Impacts

The European Commission plans to present the legislative proposals on February 26, alongside the Clean Industrial Deal. Two parallel drafts will be introduced:

Postponement of Regulations:

The first draft will focus on delaying the application dates for the CSRD, the Supply Chain Directive, and the EU Taxonomy Regulation by two years each. As discussed in the issue from two weeks ago, it is highly questionable whether CBAM would be part of this regulation, as it has already been in force for 15 months.

Material Relief for Businesses:

The second draft aims to provide substantial relief for companies affected by sustainability laws. This includes eliminating or simplifying overlapping reporting obligations from the mentioned regulations. Interestingly, this material easing is also expected to apply to CBAM.

The Current Status of CBAM

During a hearing of the Subcommittee on Tax Matters in the European Parliament on February 6, EU Commissioner Wopke Hoekstra—responsible for Climate, Net Zero, and Clean Growth—was present. In response to a Danish Member of Parliament’s question, he stated that data so far shows that only 20% of companies are responsible for 97% of "imported" emissions under CBAM. In his view, this means that 80% of currently affected companies could be exempted from CBAM without compromising the effectiveness of the measure.

Possible Implementation of the Relief Measures

For CBAM, there are various ways to define the group of companies that will no longer fall under the regulation in the future. An adjustment to the exemption provision seems likely. Currently, there is a customs value-based exemption for each shipment, which is set at €150. This value could, for example, be raised to €1,000. A quantitative threshold of around 150 kg per shipment or a minimum value of the emission intensity would also be conceivable.

Impact on Your Business

For the time being, companies will unfortunately have to cope with legal uncertainty. Since legislative processes are slow, it will likely take at least another year before there is clarity and the exemptions take effect. This situation significantly complicates strategic decisions and long-term investments for affected businesses.

Expansion of CBAM’s Scope

The announced exemptions should be treated with caution. While we await specific thresholds and limits, we also expect an announcement regarding the expansion of CBAM to additional goods and sectors. With this broader scope, the number of companies that would benefit from the exemptions will likely decrease significantly.

Support During Challenging Times

Regulatory uncertainty doesn’t make the challenges for affected businesses smaller—it makes them bigger. If you need support in making the right strategic decisions despite these uncertainties, feel free to reach out to us at helge@kolum.earth. We’re here to help you navigate these complex times! Best regards, Helge Wieggrefe