EU enhances CBAM through new legislative measures

The European Union recently published three important legislative documents that further develop the Carbon Border Adjustment Mechanism (CBAM), a core element of its wider climate and trade policy.

These updates–the omnibus package, the Conditions & Procedure for Authorized CBAM Declarants and the Steel and Metals Action Plan–signal a shift from conceptual design to practical delivery, reflecting the EU’s intent to embed carbon accountability into global trade without creating unnecessary complexity for compliant businesses.

Published Feb. 26, the omnibus package proposes targeted refinements to CBAM to make the framework more practical for businesses, particularly small and midsized importers, while maintaining environmental ambition. It also aims to create better alignment between CBAM and other EU sustainability laws.

Key developments include:

• Simplification and scope reduction: The proposal introduces a 50-ton net mass threshold per importer, per type of imported good, per year. This move would exempt around 90 percent of current EU importers from CBAM obligations while still capturing approximately 99 percent of embedded emissions under the mechanism. In effect, it preserves the environmental integrity of the policy while directing compliance pressure where its most impactful.
• Delayed implementation: Although the start date of the definitive period remains unchanged, the omnibus package proposes an extra three months to comply with initial obligations. This extension provides businesses with a few additional weeks to purchase CBAM certificates, submit CBAM declarations and verification reports and surrender the corresponding number of certificates.
• Alignment with other directives: The omnibus package aims to bring together CBAM with other EU sustainability initiatives, such as the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). This alignment aims to establish a cohesive regulatory framework that advances the goals of the EU's Green Deal.

This table provides a detailed view of the changes and their implications for businesses:

On March 18, the European Commission adopted an implementing regulation that sets out the requirements and procedures for becoming an authorized CBAM declarant.

This latest development marks a critical transition in CBAM’s rollout: from voluntary reporting to enforced compliance. Starting Jan. 1, 2026, only importers with this authorization will be allowed to bring covered goods into the EU, placing significant operational importance on understanding and preparing for the requirements now.

Businesses need to know:

• Eligibility criteria: Importers must demonstrate compliance with customs and tax laws, financial stability and the capability to meet CBAM obligations. These requirements ensure only trustworthy entities are permitted to import CBAM-covered goods into the EU.
• Application process: Applicants must submit detailed documentation to their competent national authority, which will assess their compliance history and financial soundness. This rigorous review process helps uphold the credibility and robustness of the CBAM framework.
• Noncompliance consequences: Importers who either fail to secure authorization or breach CBAM reporting requirements risk losing their authorized status. This strict approach reinforces adherence to EU carbon emissions regulations for all covered imports.

Without this authorization in place by Jan. 1, 2026, imports of CBAM-regulated goods will be prohibited–a hard stop for any business not yet compliant.

Key provisions of the new implementing act include:

Finally, published March 19, the European Commission’s Steel and Metals Action Plan marks another important step in aligning EU industrial policy with its decarbonization goals. CBAM is a key instrument in strengthening the competitiveness and sustainability of Europe’s steel and metals sector.

Rather than treating climate policy and industrial strength as opposing forces, this plan positions them as mutually reinforcing, with CBAM acting as the policy bridge between fair trade and climate accountability.

• Combating carbon leakage: The plan emphasizes the importance of CBAM in preventing carbon leakage by ensuring that imported metals reflect their true carbon footprint. New measures are being introduced to prevent non-EU industries from “greenwashing” their products–appearing low-carbon while relying on high-emission energy sources. In the second quarter of this year, the European Commission will publish a communication addressing carbon leakage risks for CBAM goods exported from the EU to third countries. Additionally, a comprehensive CBAM review is planned, with a first legislative proposal due by the end of this year. This will extend CBAM to include certain downstream steel and aluminum products and introduce further anticircumvention provisions.  
• Driving decarbonization: The action plan also outlines initiatives to support the steel and metals industry in transitioning to low-carbon production. These include promoting renewable energy and low-carbon hydrogen. CBAM reinforces these efforts by incentivizing cleaner manufacturing practices and reducing the EU’s reliance on carbon-intensive imports.

For exporters into the EU, the direction is clear. CBAM compliance is not optional. The revised framework will demand greater transparency, traceability and carbon accuracy. Therefore, producers outside the EU must prepare to align products with EU carbon standards, accurately report embedded emissions and monitor and apply default third-country carbon prices where needed.

Noncompliance can result in increased costs to reduced access to the EU market. But there’s also an upside to this. The drive to meet EU expectations can serve as a catalyst for investment in cleaner technologies, opening up new competitive advantages in a low-carbon global economy.

As CBAM requirements evolve, early action is critical. Firms like Norway-based DNV, for example, offer end-to-end CBAM support to help navigate complex reporting, verify emissions data and maintain seamless EU market access. Learn more about future-proofing your compliance strategy.

Jonathan Leclercq is a global senior manager at Norway-based DNV Supply Chain & Product Assurance, specializing in sustainability solutions and CBAM. To learn more, visit www.dnv.com.