Recent Developments Regarding the Carbon Border Adjustment Mechanism
Introduction
The Carbon Border Adjustment Mechanism (“CBAM”), adopted by the European Union (“EU”) through Regulation (EU) 2023/956[1] published in the Official Journal of the EU on 10.05.2023, constitutes one of the key regulatory instruments intensifying the impact of the EU’s climate policies on global trade.[2]
CBAM aims to extend the carbon costs applied under the EU Emissions Trading System (“EU ETS”) to certain carbon-intensive products imported from third countries. In this context, the primary objectives of CBAM include (i) preventing carbon leakage, (ii) safeguarding the competitiveness of EU industry and (iii) promoting low-carbon production on a global scale.
Although the CBAM is shaped within the framework of environmental, social and governance (“ESG”) and sustainability policies, its effects entail significant structural impacts across international trade, customs and transnational regulatory regimes. These effects are particularly evident for countries with close trading relationships with the EU, where CBAM introduces new layers of compliance and reporting obligations for economic operators.
Pursuant to Regulation (EU) 2023/956, CBAM has been applied as of 01.10.2023 exclusively in the form of a reporting obligation. During the transitional period covering 01.10.2023–31.12.2025, no financial obligations are imposed.[3]
This newsletter article focuses on the period after 31.12.2025 and outlines the key amendments introduced to CBAM by Regulation (EU) 2025/2083[4] , published in the Official Journal of the EU on 17.10.2025. It also highlights the practical implications of these changes for implementation, reporting obligations and the affected economic operators.
Amendments Introduced by Regulation (EU) 2025/2083
Regulation (EU) 2025/2083 introduces a set of amendments aimed at simplifying, streamlining and strengthening the CBAM framework. These amendments address (i) the de minimis exemption applicable to small-scale importers, (ii) authorization and declaration procedures under CBAM, (iii) obligations relating to the acquisition and submission of certificates, (iv) the methodology for determining default carbon prices, (v) the alignment of emission calculation methods with the EU ETS and (vi) the penalty and enforcement regime.
De Minimis Exemption
The exemption of EUR 150 per consignment provided under Regulation (EU) 2023/956 has been replaced by Regulation (EU) 2025/2083. Accordingly, pursuant to Article 1 (2) of Regulation (EU) 2025/2083, a “single mass-based threshold” system has been introduced.
Under this single mass-based threshold, importers who import CBAM-covered goods into the EU with a total net weight not exceeding 50 tonnes are exempt from reporting, declaration and certificate submission obligations.[5] Where the threshold of 50 tonnes is exceeded within a given calendar year, all imports carried out during that year become subject to CBAM obligations.
While this exemption applies to the iron and steel, aluminum, cement and fertiliser sectors, imports of electricity and hydrogen are expressly excluded from the scope of the de minimis exemption.[6]
Authorization and Declaration Procedures
Regarding authorization, Regulation (EU) 2025/2083 introduces a requirement for importers to be authorized as an authorized CBAM declarant where their annual import volume exceeds the single mass-based threshold of 50 tonnes.
As regards declaration procedures[7], Regulation (EU) 2025/2083 revises the deadline for the annual declaration and the submission of certificates, setting it as 30 September of the year following the calendar year in which the imports were carried out. In addition, the Regulation updates the rate applicable to the certificate-holding requirement designed to ensure transparency in carbon emissions reporting. In this context, the proportion of CBAM certificates that importers must hold to cover the embedded emissions of CBAM-covered goods imported from the beginning of the calendar year has been reduced from 80% to 50% .[8]
Pursuant to Article 1 (4) (f) of Regulation (EU) 2025/2083, authorized CBAM declarants may delegate the submission of CBAM declarations to a third party acting in their name and on their behalf. Nevertheless, the authorized CBAM declarant remains fully responsible for compliance with the obligations set out under Regulation (EU) 2025/2083.
Emission Calculation Method
Pursuant to Regulation (EU) 2025/2083, default emission values are applied under CBAM where reliable and country-specific verifiable emission data cannot be obtained. These default values are determined based on the best available data. Where reliable country-level data is not available, the default value is calculated as the average emission intensity of the ten exporting countries with the highest emission intensity for the relevant product category, taking regional factors into account where necessary.
For the purposes of declarations, importers may use either the default emission values published by the European Commission or verified actual emission data. Where actual emission data are used, such data must be verified by an accredited verifier.
With respect to aluminum, iron and steel products, embedded emissions from precursors are, as a rule, included in the calculation, whereas emissions arising from finishing processes are excluded from the scope in line with the EU ETS.
Deduction Mechanism
Article 1 (8) of Regulation (EU) 2025/2083 grants authorized CBAM declarants the right to claim a deduction based on carbon prices paid in third countries. Accordingly, where a carbon price has been paid in a third country, the authorized CBAM declarant may request a deduction in the number of CBAM certificates required to be submitted by taking that payment into account. However, the deduction may be applied only where the carbon price has been effectively paid. Any refund, rebate or compensation mechanisms applicable in the relevant third country are also considered in the calculation.
The basis on which the deduction is calculated depends on the emission data used. Where actual emission data are applied, the deduction is calculated on the basis of the carbon price effectively paid. Where default emission values are used, the deduction is applied solely on the basis of the default carbon prices.
Penalty and Enforcement Regime
During the CBAM transitional period covering 01.10.2023–31.12.2025, the approach adopted by the regulatory authorities focused primarily on guidance and capacity building rather than the imposition of penalties. The aim during this phase was to establish a compliance framework enabling obligated parties to fulfill their reporting obligations accurately and in a timely manner. With the transition to the definitive regime, however, Member State authorities are expected to strengthen their supervisory mechanisms and to monitor compliance with CBAM obligations in a more stringent and systematic manner.
In this context, the penalty regime under CBAM has been designed to mirror the structure of the EU ETS. Failure to comply with CBAM obligations may result in an administrative fine of EUR 100 per tonne of embedded emissions that should have been declared. This penalty framework, however, extends beyond standard fines. Where imports are carried out after the authorization threshold has been exceeded and without holding the status of an authorized CBAM declarant, authorities may impose aggravated administrative fines of up to five times the base fine amount. At the same time, in line with the principle of proportionality, fine amounts may be reduced in cases involving minor infringements or where no intentional conduct is identified.
The CBAM regime also clearly regulates the liability of indirect customs representatives. Where an indirect customs representative acts as an authorized CBAM declarant, it bears direct responsibility for administrative fines arising from non-compliance. Conversely, where the representative acts on behalf of an importer established in an EU Member State and does not assume authorized declarant status, liability for any administrative fines rests with the importer concerned.
Timeline of Implementation
Regulation (EU) 2025/2083 entered into force three days after its publication in the Official Journal of the EU. However, under the mentioned Regulation, different entry-into-force dates were established for the various obligations introduced therein.
Accordingly, the core obligations under CBAM, including the application of the de minimis exemption, the recognition of carbon prices effectively paid in third countries and the authorization and registration of accredited verifiers, shall apply as of 01.01.2026. From that date onward, the key elements of the CBAM regime shall be implemented in practice and obligated parties shall be required to fully comply with the new rules governing both emission calculations and verification processes.
By contrast, the provisions relating to the sale of CBAM certificates shall be deferred to a later stage, with the relevant mechanism expected to become operational as of 2027. This phased implementation approach is intended to allow market participants sufficient time to adapt and to ensure the gradual yet effective rollout of the CBAM framework.
Conclusion
The amendments introduced by Regulation (EU) 2025/2083 aim to enhance the operational effectiveness of CBAM, to alleviate administrative burdens to a certain extent and to align the system more closely with the EU ETS.
In particular, the introduction of the de minimis exemption, the simplification of emission calculation methodologies, the possibility to deduct carbon prices paid in third countries and the recalibration of the penalty regime within a more proportionate framework contribute to a more predictable transition from the transitional phase to the definitive CBAM regime. At the same time, the digitalization of customs controls and the aggravated sanctions foreseen where the authorization threshold is exceeded clearly demonstrate that CBAM is not a framework limited to reporting obligations alone.
In this context, economic operators trading with the EU should evaluate their CBAM-related obligations not only as an environmental compliance matter but also within a broader framework that also considers customs procedures, enforcement exposure and commercial risk. In advance of the definitive application phase beginning on 01.01.2026, this process requires a focused effort to enhance the reliability of emission data, to establish robust verification arrangements and to reinforce internal compliance structures.
- Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 Establishing a Carbon Border Adjustment Mechanism. For the English text, see: (https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32023R0956, Access Date: 17.12.2025); For the unofficial Turkish translation of the Regulation, see: (https://ab.gov.tr/53575.html, Access Date: 17.12.2025).
- “Carbon Border Adjustment Mechanism (CBAM)”, (https://www.ab.gov.tr/test_53490.html, Access Date: 18.12.2025); For the reporting obligations introduced by CBAM, see also: Süsoy Uygun, Ecem / Erdem, Orhan Emin: “The Reporting Obligation Under the European Union Carbon Border Adjustment Mechanism and Developments in Türkiye", Energy Law Journal, Year: 12, Number: 2024/1, p. 71-90.
- “EU CBAM Information Note”, (https://ticaret.gov.tr/dis-iliskiler/yesil-mutabakat/ab-sinirda-karbon-duzenleme-mekanizmasi/ab-skdm-bilgi-notu, Access Date: 18.12.2025).
- Regulation (EU) 2025/2083 of the European Parliament and of the Council amending Regulation (EU) 2023/956 as Regards Simplifying and Strengthening The Carbon Border Adjustment Mechanism. For the English text, see: (https://eur-lex.europa.eu/eli/reg/2025/2083/oj/eng, Access Date: 17.12.2025).
- “CBAM: Council signs off simplification to the EU carbon leakage instrument” (https://www.consilium.europa.eu/en/press/press-releases/2025/09/29/cbam-council-signs-off-simplification-to-the-eu-carbon-leakage-instrument/, Access Date: 20.12.2025).
- “EU adopts simplifications of CBAM rules ahead of the compliance phase starting in 2026” (https://icapcarbonaction.com/en/news/eu-adopts-simplifications-cbam-rules-ahead-compliance-phase-starting-2026#:~:text=Scope%20and%20%E2%80%9Cde%20minimis%E2%80%9D%20threshold,this%20%E2%80%9Cde%20minimis%E2%80%9D%20exemption, Access Date: 18.12.2025).
- For declaration procedures under Regulation (EU) 2023/956, see: Süsoy Uygun / Erdem, p. 78 et seq.
- “EU adopts simplifications of CBAM rules ahead of the compliance phase starting in 2026” (https://icapcarbonaction.com/en/news/eu-adopts-simplifications-cbam-rules-ahead-compliance-phase-starting-2026#:~:text=Scope%20and%20%E2%80%9Cde%20minimis%E2%80%9D%20threshold,this%20%E2%80%9Cde%20minimis%E2%80%9D%20exemption, Access Date: 18.12.2025).
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