EU Parliament to Vote on Commission's CBAM Reforms on 22 May 2025

On 13 May 2025, the European Parliament's Committee on the Environment, Public Health and Food Safety (ENVI) voted overwhelmingly in favour of the European Commission's proposed reforms to simplify the Carbon Border Adjustment Mechanism (CBAM), with 85 votes in support, 1 against, and 1 abstention.

This follows earlier support from other parliamentary committees. On 24 April, the Industry, Research and Energy (ITRE) Committee endorsed the Commission's initiative, choosing not to table any amendments and instead focusing on refining specific elements of the proposal. A day earlier, on 23 April, the Committee on International Trade (INTA) also backed the reforms by a significant majority, rejecting additional proposed amendments.

These reforms are part of the Commission's "Omnibus I" simplification package, presented on 26 February 2025. A key feature is the replacement of the existing €150 per consignment de minimis threshold with a new mass-based threshold of 50 tonnes. This change is expected to exempt 90% of importers currently subject to CBAM obligations —primarily small and medium-sized enterprises (SMEs) and individuals importing minor volumes of CBAM goods— while still covering 99% of carbon emissions from imports of iron and steel, aluminium, cement, and fertilisers.

For importers that remain within scope, the proposal introduces a set of simplification measures designed to reduce the administrative burden. These include streamlining the CBAM authorisation process, simplifying emissions calculations, improving the management of CBAM-related financial obligations, and reinforcing anti-abuse provisions.

The full proposal will be put to a vote in the European Parliament's plenary session on 22 May 2025. If approved, it will proceed to the Council for final adoption before the reforms can enter into force.

For more information about the proposed reforms, visit our detailed explainer here.

UK and EU Agree to Work Toward Linking Emissions Trading Systems (ETSs)

Following Brexit, the United Kingdom withdrew from the EU Emissions Trading System (EU ETS) and established its own independent carbon market. However, during the first UK-EU Summit since the UK's departure from the EU, held in London on 19 May 2025, both sides agreed to begin working toward linking their respective ETSs.

Such a linkage would have significant implications. Notably, UK exporters would be exempt from the obligations associated with the EU CBAM, including the financial contributions set to apply during the definitive phase starting in January 2026. According to the UK Government, without a linkage, UK exporters would face CBAM-related costs of up to £800 million by 2030.

Reciprocally, EU exporters would also be exempt from the UK's own CBAM, which is scheduled to take effect in 2027.

While the political will to pursue a linkage has been signaled, discussions remain at an early stage, with numerous technical and regulatory details still to be addressed. The timeline for finalising an agreement is therefore uncertain. For reference, the ETS linkage agreement between the EU and Switzerland took approximately a decade, from the start of negotiations in December 2010 to its entry into force on 1 January 2020.

As with the EU, the UK government has committed to achieving economy-wide net zero emissions by 2050. The announcement of the UK-EU ETS linkage discussions comes shortly after the publication of the UK's draft CBAM legislation on 24 April 2025.

Russia Challenges EU CBAM at the WTO

On 19 May 2025, Russia formally requested dispute consultations with the European Union and its member states at the World Trade Organization (WTO), targeting Regulation (EU) 2023/956 (the EU CBAM Regulation), its delegated and implementing acts, other related documents, as well as Directive 2003/87/EC (the EU ETS Directive).

Russia argues that the EU measures violate the bloc's obligations under several WTO agreements, including:

The General Agreement on Tariffs and Trade (GATT) 1994
The Agreement on Import Licensing Procedures
The Agreement on Subsidies and Countervailing Measures
The WTO Accession Protocols of Bulgaria, Croatia, Estonia, Latvia, and Lithuania

The request for consultations marks the formal start of a WTO dispute. This phase offers the parties a chance to resolve the matter through dialogue before escalating to litigation. If no resolution is reached within 60 days, Russia may request the establishment of a panel to adjudicate the case.

The official WTO consultation request can be found here.

Planning Ahead: Becoming an Authorised CBAM Declarant

With these significant developments in the CBAM landscape, businesses importing CBAM goods into the EU should start preparing for the definitive phase. To help you navigate the authorization process, we've published a comprehensive guide on how to become an authorised CBAM declarant.