CARBON BORDER ADJUSTMENT MECHANISM

COMMUNICATION FROM THE EUROPEAN UNION

The following communication, dated 10 September 2025, is being circulated at the request of the delegation of the European Union.

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1._    As part of the European Green Deal, the EU introduced in 2023 a carbon border adjustment mechanism (CBAM). The CBAM is a climate instrument to prevent carbon leakage. Carbon leakage occurs if, due to carbon costs, EU industry transfers production to third countries with less stringent emission constraints, or imports from these countries replace equivalent products with a lower greenhouse gas emission intensity due to the difference in climate policy. The CBAM currently covers cement, iron and steel, aluminium, fertilisers, electricity and hydrogen. It is designed to ensure that imports face an equivalent carbon cost as EU production under the EU Emissions Trading System (EU ETS).

2._    In line with the EU's ongoing efforts to engage with Members on and to facilitate the transparent and inclusive development of the EU's climate policy, the EU would like to inform Members that on 28 August 2025, the EU published a call for evidence for three upcoming implementing acts, which will govern the definitive period of the EU's CBAM. The European Commission is consulting on the following: (1) the calculation of embedded emissions (Article 7); (2) adjustments of the CBAM obligation taking into account a carbon price effectively paid in a third country (Article 9); and (3) adjustments of the CBAM obligation taking into account the EU ETS free allocation between 2026 and 2034 (Article 31).

3._    The call for evidence will run for four weeks between 28 August 2025 until 25 September 2025 and comments can be submitted under the links below. These acts are essential to ensure the proper functioning of CBAM Regulation in its definitive regime, starting from 1 January 2026 and in view of the first CBAM declarations to be submitted by 30 September 2027. 

4._    The input collected by the call for evidence will be taken into account as the Commission further develops and fine tunes the implementation of CBAM for its definitive period. Stakeholders can provide feedback on the Commission's understanding of the problem and possible solutions and give any relevant information they may have, including their own experiences with the Regulation during its transitional phase. The EU is sharing this Communication with Members of the Committee on Trade and Environment to ensure that the final CBAM design is fully informed by the views of stakeholders, including trading partners and their respective industries.

5._    This call for evidence is in line with the Commission's efforts to simplify the CBAM Regulation and make it more cost-efficient.

6._    Members are encouraged to provide their input via the following links to the Call for Evidence:

·_        Methodology for the definitive period starting on 1 January 2026

·_        Adjustment of obligation to surrender them to take account of free ETS allowances

·_        Carbon price paid in a third country

7._    CBAM is being introduced gradually: from October 2023 until the end of 2025 only the reporting obligations under the Regulation will apply. The definitive period will start as of 1 January 2026 with a gradual introduction of the CBAM charge until 2034 when the CBAM will be fully operational.

8._    The EU will continue to inform Members in a timely manner about any upcoming development regarding the implementation of the EU's Carbon Border Adjustment Mechanism.

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