Article 27a was in the amendment to the EU’s Regulation 2023/956 which was published by the EC on December 17 but is yet to be adopted by the co-legislators (Parliament and Council). After significant pushback from the fertilizer industry over the detrimental impacts of CBAM, combined with preexisting tariffs, the EC began to vocalize the use of Article 27a for the first time.
Wednesday’s announcement was also accompanied by “guidance on the CBAM mechanism,” marking the first time the EC has ever publicly discussed Article 27a and its implications.
Article 27a states that when the inclusion of a good in CBAM “causes severe harm to the Union internal market due to serious and unforeseen circumstances related to the impact on the prices of goods” it is empowered to “remove this good from Annex 1 until those serious and unforeseeable circumstances have passed.”
“This introduces more uncertainty around CBAM’s implementation, and some traders may adjust prices (or not fully price CBAM in) to account for the possibility of Article 27a being triggered for their product,” Fastmarkets’ senior economist Ben Crick said.
The CBAM regulation does not currently allow for the suspension or removal of goods from the scope of application of CBAM. Therefore, the EC has “included, as part of the proposal adopted last December 17, a new Article 27a would allow the Commission to remove goods temporarily.”
Crucially, Article 27a can apply retrospectively. Once it has been adopted by the co-legislators, affected goods can be removed from the scope of CBAM with retroactive effect.
This means, in a worst-case scenario, the EC has the power to remove any CBAM good from CBAM’s scope, retroactive to any date from January 1, 2026, the “serious and unforeseen circumstances” were deemed to have begun.
Providing there has been no objection from the European Parliament or Council, the EC can invoke Article 27a for up to five years and it can also be “tacitly extended for further periods of an identical duration,” the article read.
From 2027 onward — when CBAM certificates can be purchased — CBAM declarants will be reimbursed of the price they paid for the certificates when Article 27a did not apply, this was outlined in a Q&A published by the EC on Thursday January 8.
However, this does not negate the broader financial risk involved for many market participants if Article 27a is applied retrospectively.
