Council approves simplification of EU carbon leakage instrument

The Council adopted on 29 September, as part of the so-called “Omnibus I” legislative package, a regulation simplifying and strengthening the EU’s Border Carbon Adjustment Mechanism (BAM).

This Regulation aims to simplify the EU’s EU-ETS and introduce improvements to make compliance economically efficient. The main objective is to reduce the regulatory and administrative burden and compliance costs for EU companies, especially SMEs. Nothing changes with regard to the climate ambitions of the mechanism, as approximately 99% of the emissions implied by imported goods subject to the EU ETS will continue to be covered.

Main elements of the Regulation

Replacing the current threshold exempting goods of no dutiable value from the CBTF, the amendments establish a new de minimis mass threshold whereby imports of up to 50 tonnes per importer per year will not be subject to the CBTF rules. The measure is expected to exempt from the CBTF mainly SMEs and individuals importing small or negligible quantities of goods covered by the CBTF Regulation.

Another important change is that the amended Regulation will also prevent importers from suffering disruptions in early 2026 while awaiting registration under the mechanism: imports of goods subject to the CBTF will be allowed, under certain conditions, pending the completion of the importer’s registration.

In addition, the amended Regulation contains many other simplification measures for all importers of goods subject to the EU ETS, e.g. measures relating to the authorisation procedure, data collection processes, calculation of emissions, verification rules and the calculation of the financial liability of authorised EU ETS registrants. Finally, the amended Regulation contains adaptations to the provisions on penalties and to the rules with regard to indirect customs representatives.

Next steps

The legislative act will be published in the Official Journal of the EU in the next few days and will enter into force three days after publication.

Context

In October 2024, the European Council called on all EU institutions, Member States and stakeholders to take work forward as a matter of priority, notably to respond to the challenges identified in the reports by Enrico Letta (“Much more than a market”) and Mario Draghi (“The future of European competitiveness”). Subsequently, the Budapest Declaration of 8 November 2024 called for launching “a simplification revolution”, ensuring a clear, simple and smart regulatory framework for business and drastically reducing administrative and regulatory burdens and reporting burdens, especially for SMEs. On 26 February 2025, following up on the EU leaders’ call, the Commission presented two omnibus packages aimed at simplifying existing legislation in the areas of sustainability and investment respectively.

More information: Council of the EU