Conference: Carbon Border Adjustment Mechanism for Climate

On February 12, the French government hosted a conference under the theme Carbon Border Adjustment Mechanism for Climate. The discussions focused on the insights gained during the transition phase as well as the future development of the regulation. I would like to summarize the key takeaways at a glance.

CBAM will not be delayed

As part of the Omnibus Initiative, various laws such as the CSRD and the CSDDD are expected to be postponed. CBAM was also under consideration for a delay. However, unlike the laws likely to be affected, CBAM has already been in force since 2023. It has now been clarified that CBAM will be implemented as planned. The obligation to purchase certificates will therefore begin in 2026. The regulation will not be postponed.

2025 is a crucial year

This year is of significant importance for CBAM. Firstly, many essential implementing regulations have yet to be issued. We are still waiting for details on the purchase and sale of certificates, the approval process for CBAM declarants, and the verification of actual emissions data. Secondly, the European Commission has commissioned several studies, the results of which are expected this year and will influence the regulation. These studies focus, for example, on expanding the scope to include additional intermediate and finished products or entirely new industrial sectors.

Exemptions for the smallest businesses

The European Commission will introduce an exemption for companies that import only the smallest amounts on an irregular basis. This is expected to be announced on February 26. Unlike the customs value threshold currently being considered, the Commission will establish a lower threshold based on the gray emissions associated with imports. Unlike the proposal from the conservative faction in the European Parliament, this approach correctly aligns with the law’s objectives. The exact threshold is expected to be announced by the end of the month. However, it is already clear that highly emission-intensive sectors, such as aluminum, will benefit less from this exemption than sectors where imports contribute only minimally to emissions. While this approach makes sense overall, it will likely be disappointing for small businesses in these more carbon-intensive sectors.

Expansion of the regulation

It also appears clear that the European Commission intends to extend the regulation to additional intermediate and finished products. Although the release of recommendations has been delayed, the Commission prioritized finalizing exemptions for the smallest businesses before addressing this more complex issue. Nevertheless, it remains committed to expanding the regulation’s scope. The sectors identified for inclusion are organic chemistry, petrochemicals, and paper and cardboard. An announcement is expected early next year.

Dynamic adjustments

This expansion of the regulation is primarily driven by concerns about circumvention risks. However, it has also been made clear that both the scope of the regulation and its exemptions will be subject to regular review by the European Commission. As a result, companies must continue to operate within a dynamically evolving regulatory framework.

Support with CBAM implementation

If you need assistance navigating CBAM and the upcoming or evolving regulations, feel free to contact us directly at (helge@kolum.earth). We are happy to support you! Best regards, Helge Wieggrefe