The European Commission has launched three public consultations to gather input on critical aspects of the Carbon Border Adjustment Mechanism (CBAM), now entering its definitive phase starting 1 January 2026. These consultations are designed to clarify key technical details, enhance legal certainty, and streamline implementation for businesses and authorities alike.
CBAM: A Quick Recap
CBAM is a cornerstone of the EU’s climate strategy under the European Green Deal, aimed at preventing carbon leakage, the risk that heavy industries shift production to countries with less stringent emission policies. Currently covering sectors such as cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen, CBAM operates by aligning importers’ carbon costs with those under the EU Emissions Trading System (EU ETS).
Since its entry into force in May 2023, CBAM has been in a transitional phase (2023–2025), focusing on emissions reporting. The full-fledged requirement to purchase CBAM certificates will begin in 2026, completing its transition from reporting to pricing and securing the mechanism’s operational impact.
What Are the Consultations About?
1. Carbon Price Paid in Third Countries
This implementing act seeks to define how carbon pricing already paid in non-EU countries will be accounted for in CBAM obligations. It will specify:
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- The conversion of foreign carbon prices into euros,
- Necessary documentation and eligible carbon pricing schemes, and
- Rules around rebates, such as free allowances.
2. Free Allocation Adjustment (EU ETS)
The second act will establish how free allowances granted under the EU ETS will affect CBAM obligations. This ensures parity between EU-based producers and importers. Calculations will be based on CBAM benchmark values, aligned with EU ETS benchmarks though these will likely be published no earlier than 2026, along with their CBAM-specific derivations.
3. CBAM Methodology for the Definitive Period
The third act will streamline the transition from the 2023–2025 methodology to a simplified, more flexible system for 2026 onward. It will clarify procedures for calculating:
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- Direct embedded emissions,
- Emissions from electricity (indirect),
- Embedded indirect emissions, and
- Default emission values
Who Should Participate?
Stakeholders invited to contribute include:
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- Businesses—both in the EU and international partners affected by CBAM,
- National competent authorities and customs officials involved in enforcement,
- Third-country authorities with carbon pricing frameworks, and
- Researchers and academic institutions, encouraged to share relevant publications and data to inform policy-making
Timeline & Next Steps
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- Consultation Period: Open from 28 August to 25 September 2025.
- Expected Adoption: The European Commission plans to adopt the implementing acts in Q4 2025, solidifying the regulatory details ahead of CBAM’s 2026 compliance period.
These consultations mark a pivotal step toward providing legal clarity, cost-efficient processes, and robust enforcement of the CBAM in its operational phase.
