EU Eases CBAM Rules for Small Importers

Climate change has become a global consensus, with the European Union at the forefront of implementing policy tools to address it. The Carbon Border Adjustment Mechanism (CBAM), commonly referred to as the "carbon tariff," stands out as one of the most significant components of the "Fit for 55" package. This mechanism aims to prevent "carbon leakage" and ensure that the EU's emission reduction efforts aren't undermined by carbon emissions from other regions.

For small and medium-sized importers, complying with CBAM's complex regulations has presented considerable challenges. However, the Dutch Emissions Authority (NEa) recently introduced two major adjustments to CBAM requirements during the transitional period (until December 31, 2025), offering significant compliance relief for small-scale importers.

Understanding CBAM: The Trade Instrument Against Carbon Leakage

CBAM, or Carbon Border Adjustment Mechanism, is essentially a tariff on imported goods based on their carbon emissions. Unlike traditional tariffs, CBAM specifically targets the carbon footprint of products.

Why CBAM Matters

The mechanism addresses "carbon leakage," where carbon-intensive production shifts from regions with strict climate policies (like the EU) to those with more lenient regulations. This transfer undermines global emission reduction efforts as it merely relocates rather than reduces emissions.

CBAM ensures that both domestic and foreign producers face similar carbon costs. Without it, EU producers paying for emissions through the Emissions Trading System (ETS) would face unfair competition against imports that don't bear equivalent carbon costs.

CBAM's Objectives:

• Prevent carbon leakage: By equalizing carbon costs between domestic and imported goods.
• Level the playing field: Protect EU producers from competitive disadvantages due to higher carbon costs.
• Encourage global emission reductions: Signal the EU's commitment to climate action and motivate other regions to enhance their efforts.

Affected Industries

CBAM currently targets several key sectors:

• Iron and steel: Including primary products like pig iron, steel ingots, and some steel products.
• Aluminum: Covering raw aluminum and aluminum alloys.
• Cement: Including clinker and cement products.
• Fertilizers: Such as ammonia, nitric acid, and phosphoric acid.
• Electricity: Initially included but may see adjustments due to market complexities.
• Hydrogen: As an emerging clean energy carrier with potential carbon-intensive production methods.

The scope of CBAM is expected to expand over time, potentially covering more industries and products. Importers should stay informed about these developments to adjust their strategies accordingly.

NEa's Recent Adjustments: Relief for Small Importers

On April 15, 2025, the Dutch Emissions Authority announced two significant changes to CBAM requirements during the transitional period:

• Exemption for imports under 50 tons: Previously, CBAM reporting was triggered by import value thresholds (€150). The new regulation replaces this with a volume-based threshold. Importers bringing in less than 50 tons of CBAM-regulated goods annually are exempt from reporting obligations.
• Use of EU default emission values: For importers exceeding the 50-ton threshold, the new rules permit the use of EU-provided default emission values instead of requiring actual emission data collection and verification.

Implications of These Changes

These adjustments significantly reduce the compliance burden for small-scale importers who previously faced complex reporting and data collection requirements. The changes allow businesses to focus resources on operations rather than regulatory processes.

Impact by importer size:

• Small importers: Those below the 50-ton threshold can avoid CBAM reporting entirely, saving time and resources.
• Medium importers: Those above the threshold benefit from simplified compliance through default values, making CBAM adaptation more manageable.
• Large importers: While less affected, they can use default values to cross-check supplier-provided data for accuracy.

Strategies for Importers: Navigating CBAM Compliance

To successfully adapt to CBAM implementation, importers should consider these approaches:

• Assess import volumes: Determine whether CBAM reporting applies based on annual import quantities.
• Collect emission data: For those opting against default values, collaborate with suppliers to gather production emission data, ensuring accuracy and compliance.
• Utilize default values: Simplify compliance by using EU-provided figures, though this may result in higher tariff costs if defaults exceed actual emissions.
• Optimize supply chains: Consider partnering with lower-emission suppliers to reduce CBAM costs and enhance sustainability.
• Seek professional guidance: Engage compliance experts to navigate CBAM's complexities and develop tailored strategies.
• Invest in emission reduction: Long-term investments in cleaner technologies can lower both CBAM costs and environmental impact.

CBAM's Future: From Transition to Full Implementation

CBAM is currently in a transitional phase leading to full implementation:

Transitional Period (October 1, 2023 - December 31, 2025)

• Importers must collect and report emissions data but aren't required to purchase CBAM certificates.
• Designed to familiarize businesses with CBAM processes before full enforcement.

Full Implementation (Starting January 1, 2026)

• Mandatory purchase of CBAM certificates to offset imported goods' emissions.
• Aims to equalize carbon costs between domestic and imported products.

Anticipated Developments

• Expanded coverage: More industries and products may be included.
• Regulatory refinements: Rules may evolve to enhance fairness and effectiveness.
• International cooperation: Potential collaboration with other regions on global carbon pricing mechanisms.

Compliance Roadmap: Step-by-Step Guidance

Importers can follow this structured approach to CBAM compliance:

1. Evaluate import quantities: Determine if goods fall under CBAM regulation and whether reporting is required based on annual volume.
2. Gather emission data (optional): For those seeking to minimize costs, collect actual emission data from suppliers.
3. Register a CBAM account: Create an account on the CBAM portal for reporting and certificate purchases.
4. Submit CBAM reports: File periodic reports detailing imported goods' carbon emissions.
5. Purchase CBAM certificates: Required during full implementation to offset import emissions.
6. Consult experts: Seek professional advice for complex compliance questions.
7. Prepare for transition: These measures apply immediately through 2025, with mandatory carbon cost payments beginning in 2026.

Conclusion: Addressing Challenges for a Sustainable Future

The Dutch Emissions Authority's CBAM adjustments provide meaningful compliance relief for small importers by exempting minor shipments and simplifying reporting. While these changes ease transitional burdens, businesses should remain proactive in understanding CBAM's long-term implications and preparing for full implementation.

CBAM represents more than regulation—it's a commitment to sustainable development. By embracing these changes and contributing to global emission reduction efforts, importers can position themselves for success in an increasingly climate-conscious marketplace.