The European Parliament voted with a decisive majority to endorse a proposal to streamline the EU’s carbon border adjustment mechanism, or CBAM, by moving to a mass-based threshold and tweaking the timeline for the sale of carbon pricing certificates.
The simplification measures, part of the European Commission’s Omnibus package presented in February 2025, passed with 564 votes in favor, 20 against and 12 abstentions, clearing the way for negotiations with the European Council on the final shape of the legislation.
“The CBAM is a crucial instrument to help the EU prevent carbon leakage and incentivize climate action outside the EU. I am therefore glad that Parliament decided not to reopen other provisions of the CBAM legislation,” Antonio Decaro, a member of the European Parliament, who is the chair of the Committee on the Environment, Climate Change and Food Safety, said.
“This approach enables us to simplify matters for companies without dismantling or weakening the CBAM,” he said. “We will continue to work quickly to bring legal clarity and certainty to all CBAM stakeholders.”
CBAM tweaks
Under the changes, importers will be able to purchase CBAM certificates starting in February 2027 rather than from Jan. 1, 2026, to cover the emissions embedded in their imports for 2026, giving businesses more time to adapt to the new carbon pricing mechanism.
The proposal also includes a 50 mt de minimis threshold that would exempt 90% of importers while still covering 99% of CO2 emissions from key industrial imports.
Efforts to simplify the EU’s CBAM reflect a broader struggle within the bloc to balance environmental goals with economic realities, particularly as European industries face competitive pressures from regions with less stringent climate policies.
The European Commission had said the changes to CBAM were being made to enhance the competitiveness of the bloc’s industry by exempting small importers and reducing the administrative burden for many companies.
In early 2026, the Commission will assess whether to extend the scope of the CBAM to other ETS sectors at risk of carbon leakage.
“The bigger CBAM issues like export rebates and expansion to downstream products are still unresolved,” Ingvild Sorhus, manager of EU carbon analysis at Veyt, said. “The upcoming report on CBAM scheduled for the [Q3 2025] will be forward-looking and policy-design oriented. The report is expected to lead to a legislative proposal in Q4 2025, with exports, circumvention protection, and downstream products likely on the docket.”
CBAM essentially imposes a carbon tariff on emissions-intensive commodities imported by the EU, including aluminum, cement, electricity, fertilizers, hydrogen, and iron and steel. The aim is to level the playing field for EU companies, as most exporting countries do not have a carbon price as high as the EU Emissions Trading System or lack a price on emissions altogether.
Carbon prices vary significantly globally. Platts, part of S&P Global Commodity Insights, assessed EU Allowances for December 2025 at Eur72.69/mtCO2e ($82.24/mtCO2e) May 21.
This compares with China’s compliance emission allowance, which was valued at Yuan 70.42/mtCO2e ($9.79/mtCO2e) May 16, according to the Shanghai Environment and Energy Exchange.
