THE CARBON BORDER ADJUSTMENT MECHANISM (CBAM)

A KEY TOOL IN THE EU'S CLIMATE ACTION

Climate action within the EUClimate action within the EU

Objective of the CBAM

The European Green Deal is a comprehensive strategy aimed at making the EU climate-neutral by 2050. As part of this plan, the EU Emissions Trading System (EU ETS) was created to incentivize low-carbon production through a carbon pricing system.

To prevent carbon leakage—where production shifts to countries with less stringent climate rules—the EU introduced the Carbon Border Adjustment Mechanism (CBAM). CBAM ensures imported goods are subject to equivalent carbon pricing, creating a level playing field for EU and non-EU producers.

In February 2025, the European Commission introduced a CBAM Simplification Package (COM(2025) 87 final), aiming to:

  • Reduce administrative burden, particularly for SMEs.
  • Simplify emissions reporting and certificate obligations.
  • Maintain environmental integrity while improving implementation efficiency.

CBAM Scope: Current and Future

CBAM currently applies to carbon-intensive goods in the following sectors:

  • Iron and steel
  • Aluminium
  • Cement
  • Fertilisers
  • Electricity
  • Hydrogen

The European Commission will publish a comprehensive CBAM review report in late 2025 (Article 30 of the CBAM Regulation), which will explore:

  • Adding other sectors at risk of carbon leakage
  • Expanding to products further down the value chain
  • Including indirect emissions across all sectors

This phased approach ensures that today’s simplifications also support future CBAM expansion.

The Authorised CBAM Declarant

Goods falling under CBAM must be imported by a registered CBAM declarant. This can be:

  • A company established in an EU Member State, or
  • An indirect customs representative, acting on behalf of a non-EU-based importer.

Importers below the 50-tonne threshold per year are fully exempt from CBAM obligations. Approximately 90% of importers fall under this exemption, while still covering 99% of emissions. Importers exceeding the threshold must register as authorised CBAM declarants.

At ALS, we can act as your indirect customs representative, helping non-EU businesses comply with CBAM. Contact us for support.

 

 

The Reporting Declarant

The reporting declarant is responsible for submitting CBAM data. This can include:

  • Importer: Submitting declarations on their own behalf.
  • Authorised Person: Approved to submit declarations (per Article 182(1) of Regulation (EU) No. 952/2013).
  • Indirect Customs Representative: Acts on behalf of an importer under Article 18 of Regulation (EU) No. 952/2013.

Authorised CBAM declarants may now delegate reporting duties to third parties. Verification is only required for actual emissions; default values provided by the EU do not need independent verification.

 

 

CBAM TRANSITIONAL REGISTRY

The CBAM Transitional Registry is a secure, EU-managed digital platform for submitting emissions data during the transitional period.

 

It enables coordination between:

  • Reporting declarants
  • The European Commission
  • National competent authorities
  • Customs authorities

 

 

The registry will be enhanced to include:

  • Operator and installation registration tools
  • Access for accredited verifiers
  • Risk analysis and monitoring features

 

 

CBAM Transitional Registry Flow Diagram

Submission and Reporting Timeline

From 1 October 2023 to 31 December 2025, CBAM operates in a transitional phase with no financial obligations—only quarterly emissions reporting is required.

The implementation timeline has been revised:

Period

Activity

Oct 2023 – Dec 2025Quarterly reporting only (transitional period)
From Dec 31, 2024Registration of authorised CBAM declarants begins
Jan 1, 2026Full CBAM enforcement begins – threshold exemptions apply
Feb 2027First CBAM certificate purchases; payments for 2026 imports begin
Aug 31, 2027First annual CBAM declaration deadline (extended from 31 May)

 

Financial Obligations and Certificate Management

From February 2027, importers above the exemption threshold must begin purchasing CBAM certificates to cover embedded emissions in their imported goods.

To improve financial flexibility:

  • Certificate coverage is reduced from 80% to 50%
  • Standard carbon prices will be published for simplified cost estimation
  • Importers can deduct carbon prices paid anywhere in the supply chain
  • Financial liability calculations are simplified and repurchase rules updated

To reduce complexity:

  • Finishing operations may be excluded from emissions totals
  • If EU-origin materials are used abroad, only the foreign manufacturing emissions are counted
  • Only actual emissions need verification—EU default values do not
  • Materials already covered by the EU ETS or a fully linked pricing system are excluded from additional CBAM obligations

To refine scope:

  • Non-calcined kaolinic clays are removed from CBAM scope
  • More granular product categories can be created under existing CN codes
  • For electricity, only direct emissions are considered

Impact by Importer Type

  • Fully exempt from registration, reporting, and purchasing certificates
  • No verification costs
  • Reduced administrative burden
  • Must register as Authorised CBAM Declarants
  • Gain simplified emissions calculations and reduced certificate coverage (50%)
  • Benefit from extended declaration deadlines (to 31 August 2027)
  • Can claim carbon costs paid in any country of the supply chain

Next Steps in the CBAM Legislative Process

The European Commission’s simplification proposal now moves through:

  • Stakeholder consultations
  • Final impact assessment
  • Review by the European Parliament and Council
  • Expected adoption by late 2025

A comprehensive CBAM review report will also be published in late 2025, guiding potential expansions to:

  • New sectors
  • Downstream products
  • Indirect emissions coverage

Summary: A More Balanced, Business-Friendly CBAM

The 2025 simplification package makes CBAM more accessible, predictable, and cost-effective—especially for smaller businesses. It preserves climate goals while reducing the administrative burden on EU and non-EU traders alike.

How ALS Customs Services Can Help

CONTACT US

Represent your business as an Authorised or Indirect CBAM Declarant

Guide you through exemption thresholds, emissions reporting, and registry access

Help you prepare for 2026 financial obligations with confidence

Need help applying CBAM to your import flows? Let’s talk.

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Tackling climate change with CBAMTackling climate change with CBAM