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European Commission seeks one-year delay for CBAM in leaked draft

eu european commission cbam delay leaked document

The European Commission (photo: Dušan Cvetanović from Pixabay)

Published

February 24, 2025

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Published:

February 24, 2025

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The European Commission intends to propose a delay in the implementation of the Carbon Border Adjustment Mechanism (CBAM) by one year, and to exempt small importers from paying it, according to a leaked draft.

Redshaw Advisors has reviewed a leaked European Commission draft legislative proposal detailing some significant potential changes to how CBAM will operate, the consultancy’s lead CBAM advisor Dan Maleski said in a post on LinkedIn.

Payments under CBAM of the European Union’s tax on imported cement, iron and steel, aluminum, fertilizers, hydrogen, and electricity are scheduled to begin on January 1, 2026. The European Commission is expected to present a package of legislation proposals on February 26 including changes to CBAM.

Dan Maleski said there are three key takeaways.

⁠The start of CBAM certificate sales would be delayed. The obligation to purchase CBAM certificates would be postponed from 2026 to 2027, providing importers with additional time to prepare.

An exemption threshold would be introduced for small importers

Such a change was indicated a month ago. The European People’s Party (EPP), the strongest group in the European Parliament, said the EU should put the CBAM on hold for at least two years and review it. The suggestion is from a document issued after its leaders met in Berlin, and one of them was European Commission President Ursula von der Leyen.

The leaked draft includes an exemption threshold for small importers. They are defined as firms annually importing less than 50 tonnes of covered goods or goods with 100 tonnes of embedded CO2.

The outcome would be the exemption of around 90% of importers from CBAM obligations, Redshaw said.

Other drafted changes are predominantly aimed at simplifying compliance and adjusting CBAM’s scope

The modification was floated by European Commissioner Wopke Hoekstra, in charge of climate policy and taxation. He said that over 80% of companies could be exempted, because the remaining ones account for 97% of greenhouse gas emissions.

The commission will apparently seek tougher penalties for deliberate non-compliance. Minor infractions may see reduced fines, but deliberate avoidance tactics such as import splitting would draw three to five times higher penalties, the leaked draft reads.

Other important changes in the draft are predominantly aimed at simplifying compliance and adjusting CBAM’s scope. Among them are a reduction of quarterly certificate holding requirements, exemption for some sub-products and the simplification of the emissions calculations.

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