Simplification of CBAM for importers and operators of installations outside the EU: part one

27/03/2025
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The European Commission has adopted a new Omnibus package of simplification proposals in the areas of sustainable financial reporting, sustainable development due diligence, the EU taxonomy, the Carbon Border Adjustment Mechanism (CBAM) and European investment programmes.

Conservatively estimated, the adoption and implementation of these proposals would deliver:

overall annual administrative cost savings of around €6.3 billion;
mobilise an additional €50 billion in public and private investment to support the policy priorities of the European Green Deal.

The proposals will now be submitted to the European Parliament and the Council for consideration and adoption.

Let us consider the proposed changes to the CBAM and their impact on operators of installations outside the EU. The material is quite large and will be divided into two parts. We are currently publishing the first part, and the second will be published later.

The main thing

Firstly, simplification is proposed for small importers of CBAM goods by introducing a new minimum threshold, (de minimis) 50 tonnes. Under the new rules, companies importing less than 50 tonnes of CBAM goods per year will be exempted from reporting and payments for CBAM. This approach will allow to keep around 99% of emissions within the CBAM, exempting around 90% of importers from reporting.

It should be noted that the minimum limit value by weight of imported CBAM goods will be reviewed annually in order to keep 99% of emissions within the CBAM. This change directly concerns importers in the EU but also affects operators of installations outside the EU that produce small batches of CBAM goods for export to the EU. During the transitional period (until the end of 2025), shipment of goods with corresponding Combined Nomenclature codes with a value of more than €150 is subject to CBAM.

In addition to removing the minimum weight threshold, several simplifications will be introduced that will benefit importers remaining subject to CBAM or operators in third countries. These measures can be grouped into four categories depending on their simplification focus:

authorisation of declarants;
emissions calculation;
reporting requirements;
financial liability.

Measures to simplify the authorisation of declarants

It is important to simplify the processing of applications for authorization and reduce the corresponding administrative burden for Member States and the European Commission.

Optional consultation procedure

Since the CBAM authorisation is valid in all Member States and importers can operate cross-border, the consultation procedure should still be part of the CBAM authorisation: it will allow the National Competent Authority (NCA) to monitor and control the information provided by other NCAs. However, it is the NCA that takes the authorisation decision that should decide whether it is necessary to initiate targeted consultations with other NCAs and/or the European Commission.

It is therefore proposed to make the consultation procedure optional.

Introduction of a CBAM representative

As authorised CBAM declarants may not be qualified or have the operational capacity to fulfil the obligations related to the submission of a correct CBAM declaration, including the calculation of the embedded emissions, they may delegate access and the right to submit the CBAM declaration to a third party, e.g. consultants and/or environmental experts.

The representative will not need to apply for authorisation; however, the representative will have to meet certain criteria to gain access to the CBAM registry (e.g. being the holder of an EORI number established in a Member State) and will have to follow the procedures to be laid down in an implementing act. Authorised CBAM declarants will remain responsible for fulfilling all CBAM obligations, including the purchase and transfer of the correct number of CBAM certificates, but the basis for the calculations will be carried out by a trusted third party. To implement this, the European Commission will need to be empowered to establish technical solutions to manage access to the CBAM registry.

Although the new CBAM de minimis will significantly reduce the administrative costs associated with authorisation procedures by reducing the number of requests from around 200,000 to around 20,000, the proposed measures will further simplify the authorisation process. This will ensure a more efficient authorisation process and reduce administrative costs for both the National Competent Authorities and the European Commission. A dedicated and targeted process makes it possible to focus on and monitor those applicants with a higher risk profile. In turn, this will allow declarants to obtain the status of “authorised CBAM declarants” promptly and to start importing CBAM goods as soon as possible. In addition, the simplified authorisation procedure – in particular for small and medium-sized enterprises that remain in the scope of CBAM even after the introduction of the new de minimal – will facilitate the application process. The creation of a formal role of “CBAM representative” to support the submission of the CBAM declaration is expected to reduce the corresponding administrative burden for importers.

Measures to simplify emission calculations

Exclusion of non-calcined clay

During the transition period, the CBAM reporting obligations also apply to non-calcined clays, which creates an unnecessary administrative burden. As a partial relief, Implementing Regulation (EU) 2023/1773 already provides for simplification, as the embedded emissions for non-calcinedclays are assumed to be zero without the need for their calculation.

Based on the above it is proposed to remove the non-calcined kaolinic clays from the CBAM scope.

Default values and conditions of their use

Article 7(7)(a) empowers the Commission to adopt implementing acts on the methodology to “specify the conditions under which it is deemed that actual emissions cannot be adequately determined”. This means that the Commission will have to set the conditions, meaning that importers will have to provide evidence as to why actual emissions cannot be determined and the Commission (and possibly also Member States) will have to assess this evidence. However, this would run counter to the aim of simplification. Furthermore, the implementation of CBAM has so far been based on the assumption that importers will be free to choose between reporting actual emissions data or default values provided by the Commission. The current provisions on the content of CBAM declarations do not require justification as to why actual emissions cannot be determined.

It is proposed to remove the requirement in Article 7(7)(a) to “specify conditions when actual emissions cannot be adequately determined”.

Data collection issues

Annex IV, Section 4 specifies that “The Commission shall publish guidance for the approach taken to correct for waste gases or greenhouse gases used as process input, before collecting the data required to determine the relevant default values for each type of goods listed in Annex I. …”. The approach used so far is to use publicly available databases of international organisations (such as the International Energy Agency) and international industry associations (such as the World Steel Association or the Global Cement and Concrete Association). These databases are publicly available (although sometimes with paid access), rely on a consistent approach across institutions/countries, are often based on actual data and are peer-reviewed.

The collection of actual values from individual installations poses several challenges:

Contrary to the EU ETS, there is no obligation on operators in third countries to provide such information, which is often considered business-sensitive.
Even if individual installations provide actual data, there is currently no verification mechanism in place.
Such data may differ in terms of the underlying methodology.

Therefore, the Commission has not embarked on an exercise to collect data from individual installations and consequently no guidance has been published.

It is proposed to revise Annex IV, Section 4 concerning the determination of default values to match an approach that is technically feasible. The core principles of using actual and best available data should be kept.

Alternative default values based on worst EU ETS installations

Annex IV, Section 4.1 specifies that default values shall be set at the average emission intensity of each exporting country and for each of the goods under the CBAM scope, increased by a proportionately designed mark-up. When reliable data for the exporting country cannot be applied for a type of goods, then Section 4.1 provides for an alternative approach of setting default values which is based on the average emission intensity of the X% worst performing EU ETS installations for that type of goods.

The problem with this alternative approach is that even though the most relevant processes are covered by the EU-ETS, and emissions intensity data are available for those, this is not the case for some processes and goods.

It is proposed to set an alternative default value at the average emission intensity of the ten countries with the highest emission intensity for which reliable data are available.

This would provide a strong carbon leakage risk protection, while not being overly punitive. It would also ensure that the absence of data does not result in a more favourable treatment compared to countries where data are available. The possibility also exists for declarants to demonstrate that default values based on region-specific features should be lower, pursuant to point 7 of Annex IV to the CBAM Regulation.

Emission calculation for downstream processing

The embedded emissions of some aluminium and steel products currently covered by CBAM are mainly determined by the embedded emissions of the input materials. In other words, most of the embedded emissions result from the production of their precursors, while the emissions arising during the production stages of these goods are usually relatively low. Furthermore, these production processes are mostly not covered by the EU ETS. They consist of processing processes carried out by individual installations not covered by the EU ETS (with the exception of integrated installations). CBAM reporting currently requires monitoring and reporting of emissions from these processing processes as well as emissions arising from the production of their precursors.

To reduce the burden on operators in third countries from the additional monitoring of emissions of the final production steps – the latter typically not covered by EU ETS – it is proposed to exclude those manufacturing processes from the boundaries of the calculation of emissions for these aluminium and steel goods.

Such an exclusion would significantly simplify monitoring and calculation for these products. The simplification would improve the application of the CBAM methodology, in particular for complex products, which is a prerequisite for the potential future extension of the CBAM scope to more downstream products. Moreover, the simplification will have a positive impact on the manufacturers of those goods as they will be exempted from the obligation to monitor and report emissions happening at their own installation. The only data needed to calculate the embedded emissions of the final CBAM good would be the embedded emissions in the precursors purchased from external providers and the quantity of precursors needed per tonne of final CBAM good produced.

Exemption of precursors produced in the EU

Including precursors produced in the EU adds reporting and compliance burdens without any added environmental value (as emissions embedded in precursors are covered by the EU ETS and the ETS carbon price is deducted from the CBAM financial adjustment).

It is therefore proposed to attribute zero embedded emissions to precursors produced in the EU (or in countries or territories excluded from CBAM according to Annex III of the CBAM Regulation) that are already covered by the EU ETS and for which a carbon price has thus already been paid under the EU ETS when calculating the specific embedded emissions of CBAM goods. The volumes and origin of these precursors will remain part of the monitoring of the installation for verification purposes.

Emission verification

It is proposed to remove the verification of embedded emissions based on default values provided by the Commission for the reasons highlighted below:

Such verification does not provide a clear added value if default values are used. Embedded emissions based on default values will be calculated automatically in the CBAM Registry on the basis of the quantities of imported CBAM goods declared (and cross-checked with national customs data).
Verification of default values is redundant. For actual values, the accredited verifier, in principle, visits the installation and provides reasonable assurance that the methodology for the calculation of emissions (and its underlying assumptions) is correct. For default values, no visit to the premises of the installation would be relevant. The accredited verifier could verify the content of the CBAM declaration but there would be no added value in doing this (see point above). This would come at a cost for the declarant, and the lack of readily available accredited verifiers could make the verification difficult to obtain in practice.

Exclusion of indirect emissions of electricity

Annex II to the Regulation lists the goods for which only direct emissions have to be taken into account for the purpose of CBAM. The Annex includes goods in the iron and steel, aluminium, and chemical sectors. For goods not listed in this Annex, both direct and indirect emissions have to be taken into account for CBAM purposes. This is thus the case for goods in the cement and fertilisers sectors38, but also electricity based on the current text of Annex II. While the Regulation does not explicitly mention that indirect emissions of electricity are not relevant for CBAM, it is implied.

It is proposed to amend Annex II of the Regulation.

The publication was prepared within the framework of the project “Technical Assistance for CBAM good exports from UA to EU“, which is implemented with the support of the Ministry of Foreign Affairs of the Kingdom of the Netherlands and the Netherlands Enterprise Agency. Funding is provided by the Private Sector Development Program of the Netherlands Enterprise Agency/The Netherlands Enterprise Agency.

The project “Technical Assistance for CBAM good exports from UA to EU” began on November 25, 2024, and will last until February 28, 2026. This project is implemented with the support of the Ministry of Foreign Affairs of the Kingdom of the Netherlands and the Netherlands Enterprise Agency.