European Parliament Approves Key Carbon Border Changes to CBAM

CBAM

90% of Importers to Be Exempt Under Revised CBAM

The European Parliament has approved significant revisions to the Carbon Border Adjustment Mechanism (CBAM), introducing a 50-ton de minimis threshold that is expected to exempt around 90% of importers. This adjustment aims to streamline implementation by alleviating the compliance burden on smaller importers while keeping the focus on bulk emissions from high-carbon goods like steel, aluminum, cement, and fertilizers.

The parliament also pushed back the start date for CBAM certificate sales to 1 February 2027, citing continued uncertainty around the original 2026 implementation timeline. Another clarification confirms that electricity imported from Iceland, Liechtenstein, and Norway—European Economic Area (EEA) members covered under the EU Emissions Trading System (ETS)—will not fall under CBAM’s scope, avoiding double regulation for intra-European electricity trade.

Meanwhile, bulk fertilizer shipments and other high-emission imports will remain fully subject to CBAM compliance. The European Commission emphasized that the changes preserve the mechanism’s core function: to ensure imported goods face a comparable carbon price as EU-produced products, thus preventing carbon leakage and supporting the EU’s decarbonization goals.

WTO Challenge Raises Trade Policy Stakes

The CBAM reform arrives amid rising international scrutiny, as Russia has launched a formal World Trade Organization (WTO) dispute process, claiming the policy constitutes an "alleged export subsidy." Despite this challenge, the EU maintains that CBAM is a climate-focused mechanism and not a form of protectionism, reinforcing its commitment to aligning trade with environmental policy.

The exemption for low-volume imports will likely ease trade tensions with smaller exporters while ensuring that larger, carbon-intensive producers prepare for full compliance. As a result, CBAM may set a precedent for similar carbon pricing measures in other jurisdictions, potentially reshaping global trade dynamics around emissions accountability.

The Metalnomist Commentary

The revised CBAM rules reflect a pragmatic approach by the EU to balance environmental ambition with trade flexibility. By exempting small importers while maintaining strict oversight on bulk emissions, the EU is strengthening its green trade infrastructure. The outcome of the WTO dispute may ultimately determine whether CBAM becomes a global blueprint or a contested policy outlier.