On Wednesday 26 February, the European Commission (EC) announced sweeping reforms to several key provisions within the EU Green Deal, referred to as the “omnibus” package.
The omnibus package has been announced to bolster competitiveness and growth within the EU and will focus on regulations that are deemed to create an unnecessary burden for EU businesses.
The omnibus package will be released in stages, with the first stage focusing on regulations tackling sustainability. Key policies which have been affected include the Corporate Sustainability Reporting Directive (CSRD) the Corporate Sustainability Due Diligence Directive (CSDDD) and the Carbon Adjustment Mechanism (CBAM).
CBAM had been in the final year of its transitional phase, with companies based in the EU as well as the UK struggling to adapt to some of the requirements previously set out. The announcement of the omnibus package has seen vast reforms to the regulation, meaning that many companies may no longer fall under the scope of CBAM.
Key points
The following points reflect the key changes made under the omnibus package:
- New 'de minimis' rule enforced. CBAM reporting does not have to be undertaken by the importer of record. if under 50 metric tonnes of CBAM products are imported into the EU.
- The EC estimates that 90% of importers will now not have to file CBAM declarations, leading to a net saving of €1189m in administration costs.
- Default figures can now be reported by CBAM declarants without need for further justification.
- Alternative default figures will be published for the ten countries with the highest emissions output.
- Certain finishing processes used in the steel and aluminium industries will not be included when attributing direct emissions.
- Zero-embedded emissions will now be attributed to EU-manufactured pre-cursors.
- The first CBAM certificates will go on sale from February 2027, rather than January 2026.
In-depth review
De minimis
A new de minimis has been introduced by the EC to reflect imports of goods by weight, rather than having a de minimis set by value. The previous value of €150 is now being replaced by 50-metric-tonne weight limits, aimed at reducing the number of CBAM declarants from over 200,000 companies to just 20,000, and an estimated reduction of over 90% of declarations lodged by companies each calendar year.
It will be the importers duty to self-declare they fall under the de minimis threshold when importing any goods covered by the scope of the CBAM. The EC, along with the National Competent Authorities, will closely monitor imports of CBAM-related goods to ensure compliance with these new measures.
Default figures
Default figures were not accepted during the transitional phase of the CBAM, however from today CBAM declarants will be able to use default figures without any further justification when submitting CBAM reports. Default figures will be revised and a new set of alternative default figures will be published, taking into account the ten countries with the highest emissions output, meaning the alternative figures are likely to be higher than the current set of default figures.
This will be crucial for the 20,000 companies that are still due to submit CBAM declarations, as there is a risk that they may surrender more CBAM certificates once the fiscal element of CBAM goes live in 2026. Companies that are able to prove their direct and indirect emissions will likely have much lower embedded emissions to report than companies which report default figures, so there is still some justification for taking the time and effort to work out the emissions which happen on site.
Emission calculations
Certain industries have seen changes in the way their emissions have been calculated.
“Other kaolinic clays”, under commodity code 2507 00 80, will no longer need to be reported on a CBAM declaration and has been removed from the scope of CBAM.
Any exports of electricity to the EU will now only need to report direct emissions, and no indirect emissions data is required for the sector.
Finishing processes, such as polishing, cutting and shaping are no longer within the scope of CBAM, meaning that many firms in the steel and aluminium industries may not need to report company data for the processes they undertake on site.
Reporting
There are big revisions to the way in which entities are required to report as part of the omnibus package. The introduction of CBAM representatives will mean that mean for the first time the party acting on behalf of the company will not have to act under indirect representation.
The changes will also see the introduction of accredited verifiers, who are able to check the validity of CBAM declarations prior to submission.
Revisions will also be made to the CBAM registry to simplify platform access for firms based outside of the EU, while also increasing security by introducing compulsory company identifiers before accepting them on the platform.
Fiscal rules
Finally, there have been large changes to the fiscal element of CBAM. Originally companies were asked to purchase CBAM certificates from January 2026, to surrender upon submission of the CBAM report. The date for this has now changed, and companies will first have the opportunity to buy CBAM certificates from February 2027, meaning that the payment for the 2026 report will only occur once the first batch of CBAM certificates have been surrendered upon purchase the year afterwards.
Previously it was stated that companies would have to purchase at least 80% of the CBAM certificates up-front, prior to submission of a CBAM declaration, however this rule has now been set to 50%, and will take place from 2027.
The yearly report will now be in line with the Emissions Trading Scheme (ETS), meaning that yearly reports will be submitted in September rather than May.
Summary
The sweeping reforms will be a lot to digest for companies based in the UK, as well as the EU Importers overseas, however many businesses may well breathe a sigh of relief that they fall under the new de minimis rules set out by the omnibus package. With that said, it is still imperative that manufacturers remain diligent by observing any upcoming changes to default figures, should they need to report figures to any EU business which does not qualify under the new rule.
Default figures now offer a route to compliance which was not previously available. However, this does come at a cost to the EU importer, which may eventually have to surrender more CBAM Certificates than is truly necessary, so compliance with the directive may still prove to be advantageous against competition when securing trade in Europe.
