EU institutions unite behind CBAM as 2026 launch stays on track

In Brussels, Pauline Miquel, Policy & Research Lead, writes: European policymakers have closed ranks around CBAM, confirming that the system will start on 1 January 2026 despite some industry calls for a delay.

At the Business for CBAM coalition launch on 24 September, the European Commission reiterated its commitment to the timeline and promised that overdue benchmark and default values will be published within weeks.

Officials acknowledged that the system remains “far from perfect” but argued it is better to launch and refine it over time. They cited the EU ETS as a policy that overcame early flaws to become the world’s leading carbon market.

At the event in Brussels, the Commission noted that any change to the start date of CBAM would require a new legislative procedure lasting at least six months. The comment effectively locks in the January 2026 launch.

The Commission's robust comments followed the adoption of the “Omnibus” simplification package by the European Parliament on 10 September. The bill streamlines CBAM procedures for SMEs and occasional importers, while maintaining coverage of 99% of emissions. It introduces a 50-tonne annual import threshold (replacing the €150 value exemption) and delays the first CBAM certificate purchases to 2027.

MEPS also approved technical simplifications on authorisations, emissions reporting and verification. (See our blog post for more details.)

The Council is expected to fully endorse the package on 29 September, meaning that the new rules will be effective from early October.

Adoption of the simplification package is the first step in a broader CBAM reform agenda. Next come proposals on export measures, scope expansion to downstream products, and reinforced anti-circumvention rules, each requiring further legislative work beyond 2026.

Fact-checked: real emission values will remain at the core of CBAM methodology

Rumours of a major shift in CBAM’s emissions reporting rules have been swirling in recent weeks, but EU officials have dismissed them, Pauline writes from Brussels.

The comments from the European Commission came in response to a high profile claim that Brussels would replace supplier-specific emissions data in CBAM with average default values for each exporting country. The report argued that this switch could form part of anti-circumvention measures which are expected to be announced by the end of this year.

For many CBAM-watchers, the suggestion was alarming. It would mean that importers from countries that lack an EU-recognised carbon pricing system could no longer use verified supplier data. As a result, they would face higher average values – unfairly inflating CBAM bills, even for those low-carbon producers that have invested in data collection infrastructure.

On 24 September, senior Commission official Patrice Pillet rejected the claim that such an approach is imminent. Speaking at the Business for CBAM coalition launch attended by CBAMBOO, he stressed that real emissions data will remain central to the system.

“The policy should always reward producers in third countries who behave better than others,”

he said, noting also that CBAM is already driving behavioural change abroad.

Pillet underlined the need for proportionate anti-circumvention measures and warned against “drawing the cursor on the opposite side” with a system based solely on country-level averages. He also made clear that changing the methodology in such a fundamental way would require new legislation.

The CBAM regulation is now law, and any major design change could only happen through a formal legislative process. Any new proposal would therefore need to be adopted by both the European Parliament and the Council.

Meanwhile, the official also confirmed that default values will be published in the coming weeks. He commented that most importers will continue to rely on the supplier-specific data they have spent the past two years preparing.

EU stands firm on CBAM exemption despite Indian headlines

Recent headlines claimed a breakthrough on CBAM exemptions for India, suggesting that Brussels had agreed to integrate its carbon credit scheme into the EU’s carbon border tax and grant rebates to Indian exporters. The story, which followed the EU-India Strategic Agenda announcement on 17 September, quickly made waves.

But as so often is the case with CBAM, concessions are not quite what they seem.

On closer inspection, the supposed “alignment of carbon markets” turned out to be nothing more than what the original Regulation already provides to any country with an effective carbon pricing system or a linked ETS.

Under Article 9 of the CBAM Regulation, importers can claim a reduction in CBAM certificates if a carbon price has been "effectively paid" in the country of origin. Any rebates, tax relief, or compensation mechanism that reduce the carbon price must also be taken into account. This provision applies equally to all trading partners and is not negotiable through bilateral deals.

The European Commission has repeatedly stressed that CBAM is not a bargaining chip in trade talks. The only way to reduce exposure is to implement a domestic carbon pricing system.

The situation has a direct parallel in the EU's recent Joint Statement with the United States on reciprocal trade. Even though the statement makes mention of “additional flexibilities” , there have in fact been no changes at all to the CBAM rules for goods coming from the USA.

In India’s case, the government is developing a national cap-and-trade emission trading system which could, in theory, meet the supposed standards of the EU. Additionally, the EU has offered technical support and knowledge sharing with third countries intending to develop such a system.

However, the Indian system only allows businesses to generate carbon credits if their emissions fall below a threshold. This approach differs significantly from the EU ETS and is unlikely to make prices converge with EU current price of €75 per tonne of CO₂ in the near term.

It is therefore uncertain how much credit Indian or other exporters will be able to claim as precise rules have yet to be released by European authorities.

Brazil launches global carbon pricing initiative ahead of COP30

Brazil is stepping forward to shape the global carbon pricing agenda ahead of COP30 taking place in Belem this November. Its proposed Trade and Climate forum underscores CBAM’s role in driving international dialogue.

The announcement came during a speech at the WTO Public Forum this month, where Brazil outlined its vision for a platform allowing developing and reluctant economies to contribute to global carbon pricing discussions, as part of the so-called "Coalition of the unwilling".

Trade and climate issues have always been addressed distinctively in global frameworks such as UNFCC and WTO. The new forum therefore aims to explore harmonisation of methodologies, recognition of diverse decarbonisation pathways, and approaches to link carbon pricing systems globally, ensuring trade fairness alongside climate ambition. One of the concrete measures proposed would be a carbon price floor.

CBAM has long been contested by developing countries, viewed as a unilateral trade measure and a contentious topic in global negotiations. Yet this narrative is fading, as it has so far failed to become an official agenda item at COP. Instead, the EU’s flagship policy is increasingly seen as a catalyst for global dialogue rather than a purely punitive measure.

While the forum is an early step, it signals the emergence of a new era in trade-related climate policy worldwide. Coordinated international action on carbon pricing could eventually provide a foundation for globally aligned systems, reduce trade friction, and support developing countries in integrating into evolving climate-trade frameworks.

China prepares its ETS for future carbon- tariffed global trade

China is accelerating its carbon market reforms to create an effective carbon price for heavy industries, align with climate targets, and prepare for carbon border expanding globally.

In 2025, China extended its national emissions trading system beyond the power sector to include steel, cement, and aluminium, three of the most carbon-intensive industries and central to the EU CBAM. The expansion increased ETS coverage to around 60% of China’s total emissions, significantly raising its relevance as a tool for industrial decarbonisation.

The government has since announced plans to overhaul the system’s design, shifting from intensity-based quotas to absolute caps for major sectors from 2027. This structural change would bring the Chinese system closer to the EU model and higher domestic carbon prices would reinforce incentives for Chinese producers to cut emissions.

Beijing is also addressing structural inefficiencies in heavy industry. On 22 September, the Ministry of Industry and Information Technology unveiled a plan to curb chronic overcapacity in the steel sector, a major barrier to stable pricing and profitability. Measures include the phase-out of outdated, high-emission equipment, such as blast furnaces that still account for a large share of capacity. The plan targets ultra-low emission upgrades across more than 80% of steel production capacity by the end of 2025.

These shifts have clear trade implications. As the European Commission finalises rules on carbon price deductions and explores whether the use of supplier-specific data might be conditional on recognised ETS systems, China is accelerating its carbon pricing reforms to safeguard market access and reduce frictions. For EU importers, a stronger Chinese carbon market could translate into lower CBAM costs over time, as exporters face mounting pressure, both at home and abroad, to decarbonise their production.