CBAM simplified: 90% of Companies Exempt from CO2 Border Adjustment | Umweltbundesamt

Carsten Schneider, the Federal Environment Minister, said: “The CO₂ border adjustment protects energy-intensive sectors such as the aluminium or steel industries from imports originating in countries with weaker climate regulations, provides greater planning security, and encourages investment in climate-friendly technologies – an area in which German and European companies are well ahead. We will therefore implement the mechanism consistently and see to it that it both safeguards the German economy in international competition and promotes fair trading conditions. We are also continuously reviewing where the instrument may need further development, including the question of how long free ⁠ CO₂ ⁠allowances should continue to be granted. My position: As long as the ⁠CBAM⁠ does not function satisfactorily, the allocation of free allowances for exporters should be extended.”

⁠UBA President Dirk Messner added: “We welcome the simplification of the CBAM and the reduction in bureaucracy, which we have supported and assisted with our expert input. Introducing this threshold significantly eases the burden on both the private sector and enforcement authorities, without undermining climate targets or the protection of the European industry against unfair competition. Thus, the reform clearly demonstrates that targeted simplifications and effective ⁠ climate protection ⁠ can go hand in hand.”

Since October 2023, the CBAM has been in a trial phase (known as the transitional period) to prepare for the introduction of the new mechanism, without financial obligations and with simplified reporting requirements. From 1 January 2026, CBAM will take effect for importers bringing in basic materials not produced in the EU (the definitive period). These include iron, steel, aluminium, cement, fertilisers, electricity and hydrogen.

According to the European Commission, the new regulations will exempt about 90 percent of the companies previously affected (including numerous small- scale importers and individuals) from CBAM obligations in the definitive period, starting in 2026. At the same time, around 99 percent of the emissions concerned will remain covered by the CBAM, because these are associated with large volumes of basic materials imported by only a few major importers, as shown by the current CBAM trial phase. Imports of CBAM goods below the new threshold account for only a fraction of total emissions.

Further simplifications

In addition, there are further simplifications for importers that exceed the quantity threshold. These relate to the authorisation procedure, the purchase and sale of CBAM certificates, and the calculation and verification of embedded emissions, along with other things. For example, once the CBAM actually takes effect in 2026, CBAM declarants will be free to choose between reporting actual embedded emissions and using default values. In the latter case, the verification requirement is waived.

Furthermore, CBAM declarants who submit an application for authorisation via the authorisation module in the CBAM registry before 31 March 2026 may, until the competent authority has made its decision, continue importing CBAM goods provisionally without holding the status of an authorised CBAM declarant. This exception only applies to applications received by 31 March 2026. As of 1 January 2026, only authorised CBAM declarants may import CBAM goods into the customs territory of the European Union. After that date, such imports are only permitted with authorisation. Importing companies can see whether their goods are subject to CBAM from the note “CBAM goods” in their customs declaration.

Overview of the Legislative Procedure within the Omnibus Package I

On 26 February 2025 the European Commission published, as part of the Omnibus Package I, its proposal to simplify and reinforce the CO₂ border adjustment system. The proposal (Omnibus I – COM (2025) 87) includes adaptations to the CBAM Regulation and was subject to approval by the European Parliament and the Council. The changes to the CBAM Regulation have now come into force.

The CBAM was introduced in late 2023 as a complement to the EU Emissions Trading System 1 (EU ETS 1). Its purpose is to ensure that imported products bear the same CO₂ costs as products from the EU. This protects internationally competing EU companies from competitive disadvantages and promotes climate-friendly production and green lead markets worldwide. In Germany, the German Emissions Trading Authority (DEHSt) at the German Environment Agency is responsible for implementing and enforcing the CBAM.

Further information:

CBAM in detail:

In the definitive period, the CBAM covers direct greenhouse gas emissions in the iron and steel, aluminium, cement, fertilisers, electricity and hydrogen sectors, as well as indirect (i.e. electricity-based) emissions from industrial sectors that cannot receive compensation for indirect emission costs in Germany (e.g. cement, fertilisers). This primarily concerns basic materials, as well as intermediate products and a small number of further processed products.  The Commission is examining whether to extend the CBAM to additional sectors and products.

The list of CBAM-covered goods can be found in Annex I to Regulation (EU) 2023/956 from 10 May 2023 (the CBAM Regulation).  

Since October 2023, importers of these products have had to submit quarterly reports to the European Commission on the direct and indirect emissions of their CBAM-covered products.

In 2026, the definitive period will begin, during which the purchase and surrender of CO₂ certificates and the submission of annual CBAM declarations will become mandatory for importers (authorised CBAM declarants). For the import year 2026, certificates must be surrendered for the first time in 2027.

As of 1 January 2026, CBAM goods may only be imported into the customs territory of the European Union by authorised CBAM declarants. The number of CO₂ certificates to be surrendered will be based on the reported emissions, taking into account CO₂ prices already paid in third countries, as well as free allocations for comparable products under the EU Emissions Trading System for industry and the energy sector (EU ETS 1).

In the future, the CBAM will become the EU’s central instrument for protecting against carbon leakage, gradually replacing the free allocation of emission allowances under the EU ETS 1. 

German Emissions Trading Authority (DEHSt):

Since the end of 2023, the DEHSt at the German Environment Agency has been the national authority responsible for the CO₂ border adjustment mechanism introduced in October 2023. DEHSt is also responsible for implementing the EU ETS 1, the national emissions trading scheme for fuels (nEHS), and the EU Emissions Trading System 2 for fuels (EU ETS 2). In addition, it is entrusted with enforcement tasks related to project-based mechanisms and the payment of aid to electricity-intensive companies to compensate for indirect CO₂ costs (electricity price compensation).