Briefing

Simplified EU CBAM comes into force, alongside new implementing and delegated acts

The EU Carbon Border Adjustment Mechanism under Regulation (EU) 2023/956 (EU CBAM) finally came into force on 1 January 2026, after the end of a transition period which started in 2023. This regulation establishes a carbon border adjustment mechanism to address embedded emissions in iron, steel, cement, aluminium, fertilisers, electricity, and hydrogen, upon their importation into the EU customs territory.

Various pieces of implementing and delegated legislation have also been adopted in recent weeks, to support the implementation of EU CBAM. These include rules regarding the calculation of embedded emissions in goods, the publication of default values for embedded emissions, the calculation of pricing for CBAM certificates and relating to the free allocation adjustments to be surrendered to reflect the extent to which EU ETS allowances are allocated free of charge (since the phase-out of free allowances under the EU ETS will occur in conjunction with the phase-in of EU CBAM).

In this article, we focus on some of the practical implications and key points to note for importers seeking to implement the necessary changes to their business.

What are the practical implications for importers under EU CBAM?

Importers established in the EU must apply for the status of authorised CBAM declarant. Importers not established in the EU may appoint an indirect customs representative to act as authorised CBAM declarant on their behalf. Indirect customs representatives must be appointed and agree to act and shall be subject to all the obligations applicable to the importer under EU CBAM.

The obligations of an authorised CBAM declarant include:

Procuring the calculation of embedded emissions in imported goods which are subject to EU CBAM, pursuant to methods in Annex IV (and retaining records of such information which is required to calculate embedded emissions); and procuring the verification of embedded emissions, where these are determined on the basis of actual emissions.
Annual submission of a CBAM declaration. This may be delegated under new rules introduced by the Omnibus Simplification Package (see below). The CBAM declaration must contain:
- information on the total quantity of each type of CBAM goods imported in the preceding calendar year.
- information on the total embedded emissions for these goods.
- calculation of the total number of CBAM certificates to be surrendered, accounting for any reductions based on carbon prices paid in third countries (if applicable) and adjustments necessary to reflect the extent to which EU ETS allowances are allocated free of charge.
- verification reports where applicable (if using actual emissions values rather than default values for embedded emissions).
Annual surrender of CBAM certificates covering the embedded emissions of CBAM goods imported in the calendar year preceding the surrender. This must be done by 30 September of each year. The first surrender will be in 2027 for the year 2026. Penalties apply if the incorrect number of CBAM certificates is surrendered.

Other key points relating to the import of CBAM goods into the EU:

Verification

Verification of embedded emissions must only be carried out in relation to actual emissions values used. The use of default values does not require verification (see below).

Sale and pricing of CBAM certificates

Sales of CBAM certificates will begin from February 2027. This will be in respect of emissions for the year 2026.
The price of CBAM certificates shall be calculated on a weekly basis (except for CBAM certificates which correspond to the embedded emissions declared in respect of 2026, for which the relevant price of CBAM certificates will be the quarterly average of the closing price of EU ETS allowances, of the quarter of importation in which those emissions are embedded).

Anti-circumvention measures

Much like in other EU legislation, EU CBAM contains provisions allowing for the EU Commission to monitor and take action to address any frequently seen practices of circumvention. By way of example, if it is found that importers are modifying products slightly so as not to be caught under EU CBAM, there are provisions allowing the EU to adopt delegated acts adding such products to the list of goods caught by EU CBAM.

What is the impact of the Omnibus Simplification Package on EU CBAM?

Some of the key amendments to EU CBAM introduced by the Omnibus Simplification Package include:

A de minimis exemption threshold. This was the most significant of the changes. Where the total net mass of CBAM goods (aggregated per importer and per calendar year) imported into the EU by an importer – whether an authorised CBAM declarant or not – is below 50 tonnes, then the importer shall be exempt from obligations under CBAM, and it shall declare that exemption in the relevant customs documentation. The de minimis exemption threshold does not, however, apply to imports of electricity or hydrogen. The de minimis exemption threshold may be reviewed and changed, and there are also review provisions relating to the possible introduction of a supplementary consignment-based threshold.
Rules allowing the submission of a CBAM declaration to be delegated by an authorised CBAM declarant to a person acting on their behalf and in their name. However if this is delegated, all CBAM obligations would remain the responsibility of the authorised CBAM declarant.
The deadlines for the submissions of the CBAM declaration and the surrender of CBAM certificates have been extended to 30 September of each year (previously the end of May of each year).
The removal of the requirement for the verification of the calculation of embedded emissions using default values. This means that verification is only required for actual embedded emissions.
The consultation procedure for the revocation of CBAM authorised declarant status has been simplified.
From 2027, authorised CBAM declarants will be required to hold a number of CBAM certificates on account at the end of each quarter. The amount has been reduced from 80% to at least 50% of the embedded emissions in all CBAM goods it has imported since beginning of the calendar year.
Changes to the rules around the repurchasing and cancellation of CBAM certificates purchased in respect of embedded emissions for the year 2026 (such that these may only be repurchased in 2027 and will be cancelled on 1 November 2027 without compensation (if certificates remain on account)).
Changes to the rules on penalties, including a potential reduction in penalties where an incorrect number of CBAM certificates is submitted as a result of incorrect information provided by a third party.
The possibility to claim a reduction in certificates to be surrendered in relation to eligible third countries where a carbon price was paid in relation to CBAM goods (previously this was only possible in respect of the country of origin).

What is the impact of recently-published EU CBAM implementing and delegated legislation?

The key clarifications introduced by this legislation include:

For calculations of actual values of embedded emissions, the relevant reporting period shall be a calendar year.
In relation to embedded emissions calculations, the default presumption will be that goods were produced during the calendar year of import, unless this presumption is rebutted by evidence of the actual period in which the goods were produced.
The reporting period for the calculation of EU ETS free allocation adjustment should correspond to the reporting period used for the determination of embedded emissions based on actual values.
Verifiers already accredited for verification in relation to a relevant group of activities under the EU ETS should be able to apply for an extension to the scope of their accreditation, in order to be accredited for CBAM verification.

HFW comment

CBAM will have implications not only for importers bringing CBAM goods into the EU, but also for parties within their wider supply chains – both upstream and downstream. These parties may be affected indirectly -for example, by contractual obligations to provide information/emissions data on CBAM goods. The HFW Regulatory Team is advising clients on managing the various implications of EU CBAM.

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