European Commission's CBAM Updates
The European Commission has proposed significant updates to the Carbon Border Adjustment Mechanism (CBAM) and two other sustainability directives. These updates aim to streamline processes, improve enforcement of carbon regulations, and promote a more sustainable future. Here’s an overview of the key changes and their implications for businesses.
CBAM Updates: Main points
The European Commission’s latest CBAM proposal focuses on enhancing carbon regulation enforcement while simplifying compliance. Here are the key updates:
- New Exemption Threshold: The updated proposal replaces the €150 threshold with a 50-tonne mass-based threshold. Consequently, imports under this limit are exempt from CBAM, relieving 90% of importers while still impacting over 99% of emissions.
- Delayed Certificate Purchases: The timeline for purchasing CBAM certificates has been postponed to 2027 for imports made in 2026. Thus, businesses have additional time to adjust.
- Lowered Certificate Purchase Requirements: The required purchase ratio for CBAM certificates has been reduced from 80% to 50% of emissions per quarter. This change provides businesses with a smoother transition.
- Exclusion of Certain Goods: Non-calcined kaolinic clays are now excluded from the CBAM, focusing the mechanism on goods with higher carbon footprints.
- Penalties and Enforcement: Penalties for non-compliance will now account for intent and negligence, ensuring fair enforcement and more accurate reporting.
CBAM updates: Simplified Compliance Measures
In addition to the core updates, the proposal also includes measures to ease compliance:
- Reduced Certificate Holding Requirements: Quarterly certificate holding requirements have been lowered to reduce administrative burdens for businesses.
- Extended Declaration Deadlines: Deadlines for submitting CBAM declarations have been extended from May to October, giving businesses more time for compliance.
- Exemptions & Simplified Emissions Calculations: Some sub-products may become exempt, and emissions calculations for certain goods have been simplified to streamline reporting.
New Sustainability Directives
The European Commission has also introduced two important directives that complement the CBAM updates:
- Corporate Sustainability Reporting Directive (CSRD): This directive enhances transparency in Environmental, Social, and Governance (ESG) reporting. Firms with over 1,000 employees must adhere to the CSRD and the EU’s taxonomy standards. Additionally, small and medium-sized companies can refuse to provide data for larger firms’ CSRD compliance.
- Corporate Sustainability Due Diligence Directive (CSDDD): Large companies must assess and address human rights and environmental risks across their supply chains. The start date for this directive has been delayed to mid-2028. Furthermore, obligations to address supply chain issues will now focus on direct suppliers, with assessments every five years instead of annually.
The European Commission’s CBAM updates on sustainability create a clearer, more accountable business environment. These changes streamline processes and enhance transparency, helping businesses meet carbon regulations and sustainability goals more effectively.
How Carbon Complete can help
At Carbon Complete, we support businesses with CBAM compliance through training and reporting services. Our team will help your business meet new requirements and implement best practices. Contact us to see how we can assist with CBAM compliance and sustainability.
