European Parliament committees approve CBAM simplification

Over the past week, two European Parliament committees representing diverse political groups adopted the European Commission’s proposed changes to CBAM by a large majority.

The proposal aims to simplify the CBAM reporting system, notably by raising the annual import threshold to 50 tonnes. The two committees, International Trade (INTA) and Industry, Research and Energy (ITRE), endorsed the changes with large majorities, brushing aside calls from the far-right camp to raise the threshold further.

Although procedural, the swift adoption of the text highlights the broad political consensus on simplifying CBAM. In February, all major parliamentary groups agreed to abstain from proposing major amendments, except for those already suggested by the Commission, to ensure business predictability.

The exact timing of the final vote in the Parliament remains unclear. But the fast pace of legislation seems to suggests that the CBAM simplification rules will be agreed well before the start of the Definitive Period in January 2026 – and may be enacted by the summer.

Despite the drama in global trade, then, the European Union remains fully on track to implement CBAM.

Netherlands accelerates CBAM rule changes, and exempts low-tonnage importers from reporting

The Dutch Emissions Authority (NEa) has jumped the gun on new CBAM rules, announcing that that low-tonnage importers no longer need to report on their emissions.

Companies that import less than 50 tonnes of CBAM goods are exempted from CBAM under the European Commission's Omnibus proposal. But while that law has yet to be enacted, the NEa has moved ahead and started to implement the simplifications already.

TThe NEa also said it would allow the use of default values in the coming quarters, even though this feature is only planned for the definitive CBAM system from January 2026.

Of all EU Member States, the Netherlands' NEa has frequently been at the forefront of CBAM implementation throughout the past two years. Other National Competent Authorities across the EU will be paying close attention to the latest moves.

Businesses should be aware that while default values simplify reporting, they are designed to be conservative. Once financial obligations take effect, relying on default values could prove significantly more costly than submitting verified emissions data.

With nine months remaining before obligations begin and penalties are fully enforced, now is the time for companies exceeding the threshold to start preparing accurate data.

UK unveils draft legislation for 2027 CBAM

The UK government published the draft legislation for the world's second CBAM, marking a major step towards full implementation by January 2027.

The early publication of the draft legislation, on 24 April, is a sign that the government is moving quickly to bring CBAM into force. This draft is now open for technical feedback until 3 July.

The proposed legislation is largely in line with previous consultations but includes key details businesses must note.

Most notably, the draft legislation allows HM Treasury to set default values for CBAM at a high rate, rather than in line with a global average emissions rate, as had been proposed in an earlier consultation document.

This is a positive step forward as it implies there will be a strong incentive for companies to secure actual emissions data from their suppliers.

Importantly, unlike the EU's CBAM, the UK will not have a transitional period. Instead, in 2027 importers will report emissions and pay charges annually. Then, from 2028, reporting will shift to a quarterly basis, with two months allowed after each quarter for tax payments to be completed.

The timeline offers limited scope for businesses to collect the necessary data. The next 18 months should be seen as a preparation phase for the 10,000 affected businesses to gather data and adjust their systems to meet the new requirements.

Read our blog article to understand better how to assess your company's exposure to UK's CBAM.

US Senators reintroduce a carbon tariff measure

Amid all the drama of President Trump's tariffs this month, it was easy to overlook another tariff story playing out on Capitol Hill.

But early in April, Republican Senators Bill Cassidy and Lindsey Graham reintroduced the Foreign Pollution Fee Act (FPFA) to the Senate – a bill that would impose an additional barrier to trade, over and above the Trump tariffs.

The updated FPFA aims to "boost U.S. manufacturers’ competitiveness in low-carbon goods" by imposing a levy on selected imports with higher greenhouse gas emissions compared to their U.S.-made counterparts. Covered goods include aluminium, cement, iron and steel, fertilisers, glass, hydrogen, and specific inputs for solar and battery manufacturing.

So the FPFA sounds similar to a CBAM. But CBAMs are designed to match up with carbon prices in domestic markets. The USA does not have a carbon price – and the FPFA makes no proposal to bring one forwards.

Furthermore, the FPFA mandates that "non-market" economies or "countries of concern" such as China would face escalated tariffs, ranging from two to four times the standard carbon-based rates for their respective categories.

A report by Shuting Pomerleau from the American Action Forum suggests that the current FPFA design would not achieve meaningful emissions reductions.

And the analyst Peter Sainsbury wrote on his Carbon Risk Substack that the FPFA "arguably has very little to do with combating climate change. Instead, it’s really a cover for weakening Chinese control over global supply chains deemed to be a threat to the US."

Unlike the EU’s CBAM, the FPFA lacks a direct link to factory-level emissions data, relying instead on arbitrary country-level values. This removes any incentive for manufacturers to invest in decarbonisation efforts. And without a domestic carbon pricing mechanism like the EU’s ETS, the FPFA risks functioning more as a protectionist tariff than as an effective carbon border adjustment.

The CBAM opportunity in a trade war

As trade tensions escalate, Canada is positioning CBAM as both an economic shield and an alternative to its consumer carbon tax.

Mark Carney, the Liberal Party leadership candidate and a former Governor of the Bank of Canada, has proposed a Canadian CBAM.

He argues that a CBAM will strengthen the economy, cut US fossil fuel reliance, and align with global climate leaders like the EU and UK to create mutual economic opportunities.

Carney’s proposal comes as the US reintroduced 25% tariffs on steel and aluminium imports. Retaliation could take the form of a carbon border tax protecting domestic low-carbon industries while penalising high-carbon US goods.

While US tariffs might hurt Canadian threaten Canadian steel and aluminium exporters, a new global CBAM regime offers a unique opportunity. Canada’s low-carbon producers could reposition themselves as key EU suppliers, shifting trade away from the US.

As the world’s fourth-largest aluminium producer, Canada relies heavily on the US, sending 90% of its aluminium exports there in 2023, compared to just 3% to the EU. Canadian steel also has the lowest carbon footprint among major producers, making it well-placed to benefit from carbon-based trade rules.

Canada’s proposal signals a shift towards a growing "carbon club"— a coalition of economies using carbon pricing at the border to drive competitiveness — making it harder for high-carbon producers like the US to maintain an advantage.