AEGIS Europe Position on the European Commission’s proposal for CBAM simplification
/Brussels, 8 May 2025. On February 26th, the European Commission adopted the Omnibus package, a series of proposals to simplify EU rules and boost competitiveness in several legislative fields, among which the Carbon Border Adjustment Mechanism (CBAM). Further to that, the European Commission announced a comprehensive CBAM review for Q3 2025, assessing the feasibility of extending CBAM scope to other EU ETS sectors at risk of carbon leakage, to downstream sectors and to indirect emissions, and to evaluate support for exporters. The steel and metals action plan (March 19) announced that a communication on options for an export adjustment might already be published by the EC in Q2 2025. Another interesting announcement concerns the release of an anti-circumvention strategy in Q4 2025 together with the legislative proposal on the extension of the scope of CBAM.
We welcome the European Commission’s commitment to simplify the CBAM to foster fair trade. While simplification is essential and a step in the right direction, allowing to significantly reduce the administrative burden for declarants – especially SMEs, AEGIS Europe members agree on the ultimate importance of finding a balance between simplification, accuracy and effectiveness of the mechanism in preventing carbon leakage. Moreover, simplification should not facilitate or lead to circumvention, and any effort in this sense should be subject to a comprehensive evaluation. A thorough consultation of the industry, including both CBAM sectors and sectors which might be covered by CBAM, should be conducted.
AEGIS Europe would like to express its position on some of the key proposals outlined in the Omnibus package on CBAM simplification:
Exemption threshold for small importers at 50 tonnes of CBAM goods per year. This proposal would allow to exempt around 90% of importers from CBAM obligations, while keeping 99% of embedded emissions in the scope, thus reducing administrative burden and maintaining the environmental objective of CBAM. However, as noted above, effective enforcement, for example through establishing robust and comprehensive risk assessment mechanisms, is necessary to prevent circumvention, as economic operators could try and avoid CBAM obligations by artificially importing through multiple entities as subsidiaries, falling below the threshold, or by splitting EORI numbers. Furthermore, the same logic of simplification applied here to importers under the CBAM should apply to EU producing small emitters under the EU ETS (Art. 27 of the ETS Directive) by increasing from 25Kt to 50KtCO2/year the threshold below which EU producers can opt out and be subject to national equivalent measures, thereby decreasing the administrative burden without lowering the decarbonisation ambition and efforts of EU producers.
Simplification for EU precursors is also welcomed. As AEGIS Europe stated on other occasions, it is important to avoid double reporting for EU ETS installations in order to reduce the administrative burden. However, for legal coherence, the sentiment expressed in Recital (14)1 which creates a derogation for reporting EU-produced precursors should be materialised in an Article. The European Commission should update its existing guidance document to avoid double reporting already during the transitional period.
Amendment of art. 26 of the CBAM regulation with the inclusion of a paragraph 1(a) stating that competent authorities can, under certain conditions, decrease the amount of the penalty imposed for the failure to surrender a given number of CBAM certificates. AEGIS Europe believes that the proposal creates an uneven playing field and legal uncertainty and inconsistencies across Member States, as the derogation is not predicted under EU ETS. This could open the door for non compliance and failing to follow the conditions set out in art. 16(1) of the EU ETS directive, stating that penalties should be “effective, proportionate and dissuasive”. Finally, CBAM penalties should always be equivalent to ETS penalties.
Entry into force of CBAM financial obligations in 2027. The kicking in of financial obligations should be maintained in 2026, as its delay undermines the effectiveness of the tool because goods enter the EU market in 2026 without any certainty that declarants will be able to fulfil the surrendering obligation in late 2027.
Default values for countries where there is not enough available data. The Commission’s proposal suggests using an average of the ten high emitting countries to calculate default values for countries where there is not enough reliable data. Using such a wide sample could result in default values lower than the actual emissions of the country, thus failing to encourage reporting of actual emissions. We recommend the use of a smaller sample, such as the top three-highest emission exporting countries where there is enough reliable data.
Overall, the Omnibus proposal seems to go in the right direction, although there are still further steps that can be taken to strengthen CBAM effectiveness and prevent circumvention while simplifying the system:
Foreign operators should be able and strongly encouraged to provide their emission data directly through a submission in the CBAM registry. This would enhance the quality of the data as the same operators would be subject to a third-party verifier scrutiny and to the verification of the EU CBAM Authorities. If this cannot be guaranteed, CBAM declarants should use default values. This would allow the simplification of the reporting system of emission data by CBAM declarants, as they would be able to refer to the submissions made by the foreign installation and tie it to the specific imports they have made.
The same level of transparency of the ETS should apply to CBAM: the information in the CBAM Registry will be confidential, while the EU ETS Registry Regulation provides public access to most of the relevant information included in the registry.
Background
AEGIS Europe supports a CBAM that is efficient in addressing carbon leakage risks while ensuring a level playing field for European and foreign producers. To achieve these goals, we believe it is imperative to assess CBAM effectiveness before any extension of its scope to other goods: this assessment should have as a departing point a consultation of the industry. To do so, it is important to define the assessment criteria which will be used and to conduct a prior, thorough impact assessment by consulting the industries concerned. Moreover, for some ETS sectors with very specific value chains, products, and global trade flows, a CBAM cannot effectively address carbon leakage and reduce emissions. For these sectors a stronger carbon leakage protection is needed.
Secondly, anti-circumvention rules must be strengthened to ensure the effectiveness of the measure and avoid practices such as resource shuffling which allows the exporting third country producers to only export to the EU products with lower carbon footprint while deviating more carbon-intensive products to other markets, or cost absorption, where producers could absorb partially or totally the cost of the CBAM by reducing the price of the products at the EU border and/or by spreading the levy across his entire production. The risk of circumvention must be monitored at customs level, and the authorisation process for CBAM declarants should ensure that they are sufficiently skilled to detect this. Effective enforcement of the new proposed exemption threshold for small importers at 50 tonnes of CBAM goods per year as introduced by the Omnibus package is necessary to prevent circumvention, as economic operators could try to avoid CBAM obligations by artificially importing through multiple entities falling below the threshold.
Finally, AEGIS Europe has been advocating for the adoption of an export adjustment for several years: CBAM needs a WTO-compatible export solution for CBAM sectors to avoid carbon leakage and the replacement of EU low-carbon products with high-carbon alternatives on global markets. European producers already face several challenges in export market, including high production costs (especially energy costs), global overcapacities, and aggressive industrial and trade policies by third-country competitors. An ERCST report stressed that failing to adequately address export issue could lead to a diminished competitiveness, suboptimal capacity utilization, reduced profitability, and eventual plant closures, further exacerbating the financial pressure within the sectors concerned and impacting substantial investment decisions in the near future. We are pleased to see that the need to support EU exporters is gaining increasing prominence in the European Commission’s legislative agenda and industrial discussions, and we eagerly wait for the presentation of the EC’s proposals to solve the exports loophole in CBAM coming in Q2 2025.
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AEGIS Europe is an industry alliance that brings together more than 30 European manufacturing associations representative of the whole value chain, from commodities down to consumer end products. Our Members account for more than €500 billion in annual turnover, as well as for millions of jobs across the EU.