The aim is to reduce regulatory burden and costs for companies, especially small and medium-sized enterprises and occasional importers. The CBAM will still cover 99% of total CO2 emissions, thereby maintaining the EU’s environmental ambitions and remaining fully committed to achieving climate neutrality by 2050.
A recent agreement has been reached between lawmakers in the European Parliament and the Council regarding amendments to the Carbon Border Adjustment Mechanism (CBAM). This EU carbon tax on imported goods will now include a new threshold, exempting 90% of importers, primarily smaller businesses.
The EU has recently taken significant steps to refine its sustainability framework through the Omnibus Simplification Package, which aims to streamline compliance obligations and reduce administrative burdens, including the ones imposed by the EU carbon tax at the border. The lawmakers noted that the changes would leave the impact of the regulation largely intact, with 99% of emissions from carbon-intensive imports such as iron, steel, aluminum, cement, hydrogen and fertilizers remaining in the CBAM scope.
How the EU Carbon Tax Works
Introduced as a key pillar of the EU’s “Fit for 55” package, CBAM is a novel policy tool that imposes a carbon tax on certain imported goods, mirroring the carbon price paid by EU manufacturers under the EU Emissions Trading System (ETS). This mechanism ensures that the carbon price of imports is equivalent to that of domestic production, fostering fair competition and encouraging cleaner industrial practices globally.
From its full implementation in 2026, importers of specified goods into the EU will be required to calculate the greenhouse gas emissions generated during the production of each imported product, submit annual CBAM declarations reporting on these emissions to national authorities, and purchase CBAM certificates corresponding to the declared emissions, with the price linked to the weekly average auction price of EU ETS allowances. (The sale of CBAM certificates, originally slated for 2026, has been postponed to February 2027.) Importantly, if a carbon price has already been paid in the country of origin, this amount can be deducted, avoiding double taxation.
The Omnibus Deal
To address concerns about the administrative burden of its ambitious sustainability agenda, particularly for small and medium-sized enterprises (SMEs), the European Commission introduced the Omnibus Simplification Package in February 2025. This initiative aims to streamline existing legislation across various fields, including sustainability reporting and investment.
The recent agreement on changes to CBAM, finalized by the EU Parliament and Council on June 18, 2025, is only a part of this package to be agreed upon. Earlier this year, the EU co-legislators agreed to delay the application of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Due Diligence Directive (CSDDD) until 2028, giving ample time to renegotiate the scope of both directives. (Negotiations likely won’t conclude before October this year.)
Key Changes to CBAM
The new agreement supports the Commission’s original proposal to introduce a new threshold into the CBAM. Imports up to 50 tonnes per importer per year will not be subject to carbon tax at the border. This change will mainly exempt SMEs and individuals who import minimal quantities of goods from CBAM compliance obligations. Crucially, even with this broad exemption, the mechanism will still cover 99% of total CO2 emissions from imports of the targeted goods, preserving its environmental impact.
Companies exceeding the 50-tonne de minimis threshold may also benefit from certain CBAM-related simplification measures to make the mechanism more manageable:
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Streamlined Procedures: For importers above the 50-tonne threshold, the agreement includes simplifications to procedures for CBAM-covered imports. This encompasses a simplified authorization process, easier calculation of emissions and verification rules, and a clarified financial liability of authorized CBAM declarants.
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Extended Timelines: The actual purchase of certificates will not be mandatory until 2027. During 2026, importers will still be responsible for reporting embedded emissions and potentially paying a carbon price in the country of origin. The reporting deadlines are being extended to align with the certificate surrender process, shifting the annual declaration deadline from the end of May to the last day of August.
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Strengthening Anti-Abuse Provisions: While simplifying compliance, the revised regulation also reinforces anti-abuse measures, ensuring that companies cannot exploit loopholes to circumvent their obligations. This provides greater operational clarity and prevents disruptions, allowing importers to continue their activities while awaiting CBAM registration.
What This Means for Supply Chains and Procurement
Regardless of whether a company will benefit from simplifications or be subject to full CBAM obligations, it is worth considering the following imperatives:
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Better Data Collection and Transparency: CBAM mandates detailed emissions reporting for imported goods. This means procurement teams must now deepen their collaboration with non-EU suppliers to obtain accurate, granular data on embedded emissions. While this amendment allows importers to use default values if supplier-specific data cannot be obtained, CBAM introduces a direct financial incentive to source from suppliers who demonstrate strong carbon performance and can provide verified emissions data. Expect a need for enhanced digital tools to streamline data collection, management, and verification across complex, multi-tiered supply chains.
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Strategic Supplier Engagement and Selection: The emphasis on supply chain transparency and carbon performance will likely lead to a re-evaluation of existing procurement practices. This could include integrating sustainability criteria more deeply into supplier selection processes, incentivizing emission reductions within supplier contracts, and fostering a culture of continuous improvement in environmental performance across the entire value chain.
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Anticipating Cost Impacts and Price Adjustments: From 2027, the cost of CBAM certificates will directly impact the landed cost of goods. Procurement teams must model these potential price increases and factor them into their budgeting and sourcing decisions. This includes not only the direct cost of certificates but also the potential for increased administrative overhead. Understanding how these EU carbon tax implications flow through the supply chain will be critical for maintaining profitability and competitiveness.
CBAM – How Can We Help?
CBAM represents one of the key regulatory challenges for importers in the years to come. Compliance with the new obligations requires a thorough supply chain analysis and close cooperation with business partners to gather the necessary data.
EcoVadis offers comprehensive tools and platforms designed to help supply chain and procurement professionals efficiently assess supplier sustainability performance and manage critical carbon data. Our solutions empower you to gain transparency into your value chain, identify carbon hotspots, engage suppliers on decarbonization, and streamline your reporting processes to meet CBAM requirements.
Ready to build carbon capabilities across your supply chain and confidently navigate the evolving regulatory landscape?
Learn more about how EcoVadis' carbon solutions can support your CBAM compliance efforts and drive measurable impact: Visit EcoVadis Carbon Solutions.
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