EU proposes delays, smaller scope for CBAM, sustainability reporting

The European Commission outlined measures that would save EUR 6.3 billion in administrative costs by streamlining the carbon border adjustment mechanism (CBAM) and making other changes benefitting the corporate sector and public authorities. It intends to exempt four fifths of companies from both the CO2 import tax and the Corporate Sustainability Reporting Directive (CSRD).

While it appeared that the European Union could even suspend and revise a string of rules on sustainability and investments, today the European Commission published a broad package for simplification. Nevertheless, the measures would ease doing business for hundreds of thousands of firms if the European Parliament and the Council of the EU agree to implement them.

Among the proposals in the so-called omnibus package are delays for payments and reporting within the carbon border adjustment mechanism (CBAM) for the taxation of the carbon dioxide emissions. It affects importers of a selection of imported commodities, goods and electricity. Much of the impact would spill over, though, to their suppliers in third countries, such as the Western Balkans.

Streamlining reporting rules opens up EUR 50 billion for investments

The European Commission laid out the plans alongside its Clean Industrial Deal platform including the Action Plan for Affordable Energy. The omnibus would bring savings in administrative expenses of EUR 6.3 billion, the EU’s executive arm estimated. In addition, it claimed it would mobilize a public and private investment capacity of EUR 50 billion.

Large companies won’t need to burden smaller ones in their value chains with CSRD reporting

In the regulations segment, the new Corporate Sustainability Reporting Directive (CSRD) would remove 80% of companies from its current scope. Large companies wouldn’t need to burden smaller ones in their value chains with such obligations.

The proposed changes to the EU Taxonomy limit reporting to the largest companies. It would correspond to the scope of the Corporate Sustainability Due Diligence Directive (CSDDD or CS3D).

Importers of less than 50 tons of goods per year would get exemption

Formally launching a CBAM review, the European Commission determined a de minimis threshold for importers. The ones that buy less than 50 tons per year from abroad would be exempted. Most are small and medium-sized companies.

It would exempt an estimated 91% of entities – 182,000 of them – that are now in the CBAM sectors of iron and steel, aluminum, cement and fertilizers. The remaining ones are electricity and hydrogen.

The other importers would get simpler authorization of declarants, the calculation of emissions, reporting requirements and compliance with the financial liability.

The changes are expected to bring cost savings for public authorities as well, the plan adds.

EU vows to cut obligatory share of certificates required to be bought in advance

One notable measure is to delay the obligation for declarants to purchase CBAM certificates. They would be able to start buying in February 2027 to cover the emissions embedded in the CBAM goods imported in 2026.

The CBAM Regulation obliges declarants to have a number of CBAM certificates on their account in the CBAM registry which currently corresponds, at the end of each quarter, to at least 80% of the embedded emissions. The proposal includes cutting the level to 50%.

Otherwise, declarants may need to buy many more certificates than what they will be required to surrender, resulting in a disproportionate financial burden. It would particularly affect ones that import from countries that have carbon pricing schemes, such as the United Kingdom. In such cases, EU declarants are eligible for deductions. The proposal to tackle the issue is an option to buy the number of CBAM certificates surrendered in the previous year for the same goods.

CBAM plan brings relief for third-country operators as well

Conversely, due to the low carbon prices in some third countries compared to the prices in the EU Emissions Trading System (EU ETS), the calculation and certification costs associated with obtaining the deduction currently outweigh its benefits. Therefore the European Commission proposed default carbon prices per country for the carbon price paid on average over a year in euros per ton of CO2 equivalent.

The proposed simplification primarily reduces the administrative burden on third-country operators to prove that a carbon price was effectively paid, according to an accompanying document.

The European Commission intends to determine default CO2 prices per country for the carbon price paid on average over a year in euros per ton of CO2 equivalent

“Considering that the costs for this calculation and certification are largely fixed, many more small installations and installations that only export a small share of their production to the EU would become able to declare a carbon price insofar as they are located in a country where an effective carbon pricing instrument applies with respect to CBAM goods. In turn, the deduction of the carbon price by CBAM declarants would become more widely accessible,” it reads.

The European Parliament and the Council of the EU are getting the legislative proposals for consideration. The Clean Industrial Deal involves a full review of CBAM to assess its potential extension to other ETS sectors, downstream goods and indirect emissions. The commission is due to present it in the second half of the year, followed by a legislative proposal in early 2026.