EU Parliament Moves to Simplify Carbon Border Tax Without Compromising Climate Goals

https://www.europarl.europa.eu/news/en/press-room/20250515IPR28461/parliament-supports-proposals-to-simplify-eu-carbon-leakage-instrument

In a significant step toward streamlining Europe’s green transition, the European Parliament has voted overwhelmingly to support proposals simplifying the EU’s Carbon Border Adjustment Mechanism (CBAM). The changes are designed to reduce the administrative burden on small and occasional importers, while maintaining the environmental integrity of the system — a delicate balance that lawmakers say is essential for both climate and economic policy.

A Smarter Approach to Carbon Leakage

At the heart of the revision is a new de minimis mass threshold of 50 tonnes, which will exempt around 90% of importers — mostly small and medium-sized enterprises (SMEs) and individuals — from CBAM reporting obligations. Despite this broad exemption, the core environmental objective of the mechanism remains intact. According to EU estimates, 99% of total CO₂ emissions from the import of high-impact materials like iron, steel, aluminium, cement, and fertilisers will still be covered.

The CBAM is Europe’s innovative solution to the problem of carbon leakage — when companies relocate production to countries with laxer climate laws, undermining global emissions goals. By equalising the price of carbon between EU and non-EU products, the CBAM helps protect EU industries from unfair competition while encouraging higher climate ambition beyond its borders.

Simplification Without Dilution

The endorsed changes form part of the European Commission’s broader “Omnibus I” simplification package, presented in February 2025. These measures go beyond the de minimis threshold: they include simplified processes for authorising importers, calculating embedded emissions, and managing CBAM certificates. Additionally, anti-abuse measures are being reinforced to prevent loopholes.

Following the vote, rapporteur Antonio Decaro (S&D, Italy) praised the balanced outcome:

“The CBAM is a crucial instrument to help the EU prevent carbon leakage and incentivise climate action outside the EU. I am therefore glad that Parliament decided not to reopen other provisions of the CBAM legislation. This approach enables us to simplify matters for companies without dismantling or weakening the CBAM.”

A Strong Mandate for Negotiations

The text passed with strong political backing: 564 votes in favour, 20 against, and 12 abstentions. With this mandate, the European Parliament is now ready to enter negotiations with the Council on finalising the legislation.

Looking ahead, the European Commission will assess in 2026 whether the CBAM’s scope should be expanded to cover other emissions-intensive sectors currently regulated under the EU Emissions Trading System (ETS).

Why It Matters

This development reflects a broader shift in EU policy: embracing flexibility and pragmatism without losing sight of long-term climate goals. By removing excessive red tape for SMEs — which form the backbone of the EU economy — while keeping the pressure on major polluters, the revised CBAM offers a model for effective, equitable climate governance.

As Europe races to meet its Green Deal targets, the simplification of complex regulatory mechanisms like the CBAM will be key. The message from Brussels is clear: climate ambition can go hand in hand with economic sensibility.