The European Commission has announced significant changes to the Carbon Border Adjustment Mechanism (CBAM), simplifying compliance requirements and adjusting financial obligations for businesses importing goods into the EU. These reforms aim to ease the administrative and financial burden on lower-emission importers while reinforcing compliance for those still within CBAM’s scope.
Key Updates to CBAM
1. Higher Exemption Threshold
To reduce the impact on smaller importers, a new minimum threshold has been introduced. Businesses importing less than 50 tonnes of CBAM goods (or approximately 100t CO2e) will now be exempt from CBAM declarations. This adjustment ensures the focus remains on high-emission industries while providing relief to companies with minimal carbon footprints.2. Extended Payment Deadlines
To offer businesses greater flexibility, the deadline for purchasing 2026 CBAM certificates has been extended to February–August 2027. This allows importers more time to align their financial planning with the evolving CBAM framework.3. Reduced Certificate Holding Requirements
Previously, companies were required to hold CBAM certificates covering 80% of their quarterly emissions. This has now been lowered to 50% per quarter, easing pressure on working capital and improving liquidity for affected businesses.4. Stricter Non-Compliance Penalties
For businesses that remain within CBAM’s scope, fines for non-compliance will be tripled, reinforcing the importance of accurate reporting and adherence to regulations.Sector-Specific Changes
- Emissions accounting: Default values will now reflect the emissions of the top ten highest-emitting countries, ensuring they remain an effective deterrent.
- Steel and aluminium imports: Reporting requirements for downstream finishing processes will be removed, with compliance now focusing solely on raw material inputs.
- EU-made precursors: Emissions from EU-produced precursors will be set to zero, simplifying reporting obligations for businesses.
CBAM Authorisation Becomes Mandatory
The European Commission has also announced the process for importers to obtain CBAM authorised status, which will be required from 1 January 2026. Failure to obtain this status will result in an import ban for CBAM goods.
How to Apply for CBAM Authorisation
- Applications open: 28 March 2025 via the CBAM Registry.
- Approval timeframe: Up to 120 days from submission.
- Required documents:
- EORI number
- Proof of establishment in the EU
- Declaration of compliance with legal obligations
CBAM Expansion & Impact on the Metal Industry
As part of its Action Plan for Steel and Metals, the European Commission confirmed its intention to expand CBAM to include certain finished aluminium and steel products. Details of the affected product categories are expected in Q4 2025.
Additionally, the Commission has pledged to strengthen anti-circumvention measures, ensuring businesses cannot bypass CBAM obligations. A formal proposal to address competitiveness risks for European metal exports is expected by June 2025.
Fastener Industry Faces New CBAM Challenges
The fastener industry—a high-volume sector within the metals market—will be significantly affected by CBAM. With large amounts of raw materials required for production, compliance costs and reporting obligations will rise from January 2026. Companies that fail to prepare could face higher costs, supply chain disruptions, and competitive disadvantages.
Preparing for CBAM Compliance
With these regulatory changes on the horizon, businesses must act now to assess their exposure, streamline reporting, and optimise supply chains. Companies that proactively manage their CBAM obligations will gain a strategic advantage in the evolving EU market.
For further details on CBAM compliance and its impact on your business, please get in touch.
Written by Miles