The European Commission has confirmed that although the bulk of the implementing rules for the EU’s Carbon Border Adjustment Mechanism (CBAM) will be adopted before the end of 2025, the finalised benchmarks — which determine how many free ETS allowances are deducted from importers’ CBAM obligations — will only be published in early 2026. This decoupling of the schedule injects uncertainty into how importers and industries will plan for the transition toward binding CBAM liability starting 2026.
At the same time, a senior European Commission official stressed that there will not be a delay in CBAM’s full roll-out; the remaining implementing measures are expected to be unveiled “within weeks.” Meanwhile, the EU Council recently approved a CBAM simplification bill, which aims to streamline administrative burdens — particularly for smaller importers — and is expected to be published soon in the Official Journal.
Beyond procedural timing, the benchmark delay raises deeper questions about how the Commission will calibrate the balance between fairness (ensuring importers aren’t overcharged) and the EU’s emissions goals. Many stakeholders are awaiting clarity on how emission intensities for various product categories (steel, cement, aluminium, fertilisers, electricity, hydrogen) will be benchmarked relative to domestic producers under the ETS.
Why the Timing Matters and What It Implies
Impacts on Importers and Compliance Readiness
Importers of goods covered by CBAM must already prepare for the transition from a reporting regime (2023–2025) to the full mechanism where they will surrender CBAM certificates. The delayed publication of benchmarks complicates projection of liabilities, allocation of capital, and supply chain adjustments.
Pressure on EU Industry
Domestic industries in sectors impacted by CBAM will see their free ETS allowances phased down over time. The precise benchmark values matter greatly for the level playing field — if benchmarks favor too strict or conservative assumptions, they could tilt costs toward importers, or conversely protect domestic firms too generously.
Political & Trade Sensitivities
The timing and details of benchmark rules will be watched closely by trading partners. Countries exporting to the EU may challenge benchmark designs on fairness grounds, and calls for recognition of existing carbon pricing in exporting nations are gaining momentum (e.g. Singapore’s suggestion to credit Article 6 carbon credits under CBAM).
Simplification Efforts and Administrative Relief
The recently approved simplification legislation (clearing its final hurdle at the EU Council) offers reliefs aimed especially at smaller importers. While the full text is not yet public, the intent is to reduce compliance costs so smaller actors are not disproportionately burdened.
Key Concepts Clarified
CBAM Benchmarks
Benchmarks are reference emission intensities per unit of product (e.g. kg CO₂ per ton of steel) used to standardise how much CBAM liability importers must bear. They also underpin deductions of emissions equivalents that EU producers would have obtained via free ETS allowances.
Implementing Rules
These are the detailed regulations, methodologies, and procedures that flesh out CBAM’s operation — how to measure, report, verify, deduct, and enforce. The Commission plans to adopt them by year’s end.
Simplification Measures
These are legal and administrative adjustments to lighten the burden of CBAM compliance for smaller traders. The newly approved simplification bill aims at reducing complexity and easing threshold requirements.
Transitional vs. Binding Phase
From 2023 through 2025, CBAM operates under a reporting-only regime (no financial obligations). From 2026 onward, full obligations — buying and surrendering certificates — begin.
Where Things Stand and What to Watch
The delayed benchmark publication is a pivotal twist. On one hand, it provides the Commission more time to calibrate methodologies and address stakeholder feedback. On the other, it means importers and domestic industries must operate amid uncertainty for longer. The approved simplification law helps reduce short-term pressure, but the effect depends on final details.
In the coming months, three elements will be crucial:
- Benchmark designs and values — how strict or generous they are will shape liabilities.
- Implementation rules adopted by year end — these will guide operational readiness.
- Reaction from trade partners and possible disputes — benchmark fairness could become a trade issue.
Overall, the EU is pushing ahead with CBAM, but the benchmark delay underscores just how delicate the balancing act is: environmental stringency versus trade fairness, regulatory clarity versus flexibility. How well that balance is struck will likely determine whether CBAM becomes an effective tool for carbon accountability — or a source of friction for importers and partners.
