The European Commission has proposed to tweak the timeline for the sale of carbon pricing certificates under its Carbon Border Adjustment Mechanism and move to a mass-based threshold to make the tax more streamlined and effective.
Analysts have noted that these changes, released as part of the EU’s Omnibus Package, could enhance the competitiveness of the bloc’s industry by exempting small importers and reducing the administrative burden for many companies.
Under the new proposal released on Feb. 26, importers will be able to purchase CBAM certificates starting in February 2027 rather than from January 1, 2026, to cover the emissions embedded in their imports for 2026.
“The calculation method for the certificate prices will not be affected, and certificates bought in a given week in 2027 to cover 2026 emissions will reflect the applicable weekly EU Emissions Trading System (ETS) price,” as calculated by the Commission, the document stated.
Another significant change proposed by Brussels is the adjustment of the exemption threshold, which critics have deemed too low as it is based on monetary value and applied on a consignment basis.
“A mass-based threshold of 50 mt is proposed to ensure that more than 99% of emissions remain within scope,” the document added.
This change would eliminate CBAM obligations for approximately 182,000 importers, or 90% of total importers, while still covering over 99% of emissions in scope, according to the Commission.
Simplify and strengthen
These proposals, which include several adjustments aimed at preventing unintended consequences, illustrate the complexity of the CBAM, according to Coralie Laurencin, senior director in the power and climate policy team at S&P Global Commodity Insights,
“The EU is committed to easing the paperwork for small businesses while still supporting CBAM,” she added.
“This mechanism is key to helping European industry, and the EU plans to improve and expand it to make sure it works well.”
The Commission clarified that the calculation method for the certificate prices will remain unchanged, with certificates purchased in 2027 reflecting the applicable weekly ETS price.
The price of CBAM certificates will be based on the quarterly average of the closing prices of EU ETS allowances, which will be calculated by the Commission to determine the applicable EUA price.
Raising the threshold
Importers below the 50 mt threshold will be exempt from the CBAM authorization and declaration obligations, as well as from the requirement to purchase CBAM certificates.
The primary reason for raising the exemption threshold is to reduce the impact of CBAM on small importers while simplifying the carbon tax, all while maintaining its environmental effectiveness.
“These updates emphasize the importance of a benchmark that considers not only the quantity of embedded emissions but also product terms,” a policy analyst with expertise on CBAM told Platts.
“If 99% of emissions are still covered, it confirms the environmental effectiveness of CBAM,” he added. “Although the postponement of certificate purchases is relevant, this adjustment affects only the purchasing timeline, not the surrender timeline.”
The Commission acknowledged that it considered setting a threshold based on carbon intensity but ultimately discarded that option to simplify the application process for importers.
Currently, CBAM is operational in the EU’s “transitional phase,” where importers must report emissions embedded in relevant products they bring into the bloc. However, starting Jan. 1, 2026, under its “definitive phase,” importers were expected to be obligated to purchase CBAM certificates. This proposal means these certificates will now only need to be purchased a year later.
Boost competitiveness
This represents a strategic reshaping of CBAM to support the reindustrialization of the EU, the policy analyst added.
“This potentially gives CBAM a dual role that includes enhancing competitiveness alongside its environmental objectives,” he noted.
This announcement comes amid growing calls from policymakers, politicians, and industry leaders to simplify the EU’s carbon border tax as the Commission seeks to balance industrial growth with environmental goals.
The sectors covered by the legislation include iron and steel, aluminum, fertilizers, cement, electricity, and hydrogen. The levy is designed to reflect the difference between EU carbon prices and carbon costs in exporting countries.
The price of CBAM certificates is based on the weekly average auction price of EU ETS allowances.
European carbon prices have fallen steadily in the past two weeks due to a weaker gas complex and muted demand, following a rise to 15-month highs of around Eur83/mtCO2e in late January.
Platts, part of Commodity Insights, assessed EU Allowances for December 2025 at Eur71.40/mtCO2e ($74.89/mtCO2e) on Feb. 25.
Authors: Eklavya Gupte, Irina Breilean
