The European Commission has proposed changes to the scope of its Carbon Border Adjustment Mechanism (CBAM) that will set a threshold for embedded carbon dioxide emissions by volume in imported goods, rather than a minimum monetary value.
Legislation announced this week changed the threshold for compliance to a minimum of 50 tonnes of eligible imported materials, rather than the original monetary threshold of €150 of goods.
What does this mean in practical terms?
The Commission said that the adjustment to the threshold will remove CBAM obligations for as many as 182,000 companies but will nevertheless still cover 99% of emissions originally targeted in the regulation.
The EU’s regulator also proposed that the first deadline for financial compliance with the carbon border tariff should be delayed until 2027.
This means that importers who have brought regulated products into the EU in 2026 will be required to buy and retire CBAM certificates covering the embedded emissions in February 2027.
The Commission also proposed to shift the annual compliance deadline for importers from 2027 onwards from May to August.
CBAM’s mandatory application starts in 2026, when it will levy import tariffs based on the carbon content of iron and steel, cement, fertilisers, aluminium, electricity and hydrogen. Importers into Europe are already required to report on the carbon content of their imports under the mechanism’s transitional phase, which began last year.
There remains a considerable amount of work to do in order to implement the CBAM, including detailed regulations governing the pricing of CBAM certificates, that companies will need to buy and surrender to the EU quarterly.
Considerable interest also surrounds how the EU will assess domestic carbon pricing systems in exporting countries. The CBAM legislation allows the EU to exempt from CBAM obligations any products that are produced subject to “equivalent effective” carbon pricing systems.
This has led to speculation that the numerous compliance carbon markets being set up around the world are targeting CBAM compliance, but it’s still not clear whether the EU will consider the legal existence of carbon markets as being equivalent, or whether it will focus on the carbon price being paid in those markets.
Most of the new markets being set up are intended to require emitters to buy carbon credits matching their emissions, rather than creating a cap-and-trade market equivalent to the EU’s system, and this is likely to lead to considerable price differences.
Indeed, the Commission is expected to decide that it will not consider the purchase and retirement of international carbon credits to be counted against CBAM obligations.
A Commission official told a conference earlier this month that international credits – such as voluntary carbon market credits or even UN Article 6 credits – “should not be considered” as eligible for CBAM compliance, though this has yet to be officially confirmed.
Carbon credit prices in the international voluntary market typically range from as little as $0.30/tonne to as much as $20.00/tonne depending on the project type, location and vintage, while the price of benchmark EU allowances is presently around €74.00/tonne.
The Commission has also postponed the publication of a study on extending the CBAM to target the indirect emissions embedded in imported products, as well as broadening the scope of CBAM to include polymers and inorganic chemicals. This report will now appear early in 2026, the Commission said.
