The Commission has announced the outcomes of its review and proposed further changes to the Carbon Border Adjustment Mechanism (CBAM) before it becomes fully implementable on 1 January. The key updates and simplifications on its calculation will shape the compliance of companies that export carbon-intensive goods into the EU. 

The announcement of the review comes at the end of the transitional phase, during which, the Commission noted that it gathered feedback from third countries, EU importers, and national authorities, and also conducted extensive studies on the regulation of carbon emissions.

Key Dates:

• The transitional phase is currently underway until 31 December 2025.
• The start of the definitive CBAM period is 01 January 2026.
• Purchase of CBAM certificates begins in February 2027 for goods imported in 2026.
• The deadline for submitting the annual CBAM declaration has been moved to September 30 of the following year, instead of May 31.

A significant change is the introduction of a new mass-based de minimis threshold of 50 tonnes per importer for cumulative annual imports, which means that importers that bring 50 tons or less of goods into the EU are exempt from the requirements of CBAM reporting and purchase of certificates.

As to the calculation methodology of emissions, the European Commission confirmed that default values remain available and will be expanded to cover more countries and products, with mark-ups added to prevent over-benefitting of high-emission producers. These values shall also be revised periodically as more data becomes available. Verification rules are also expected to be released by the end of December 2025, with the aim of avoiding unnecessary duplication of verification to ease the compliance burden of importers.

As for the controversial usage of CBAM revenue to subsidise European exporting firms, a temporary decarbonisation fund has been launched to “address competitiveness loss in third-country markets”. Under this fund, part of the revenues generated from CBAM will subsidise EU exporters trying to compete in other markets, essentially turning the CBAM into a subsidy for EU companies. Such a subsidy scheme was not included in the initial proposal, as there were concerns of its compatibility with WTO rules. 

Beyond this, another important development is how CBAM will evolve after 2026. The European Commission has confirmed its plans to make further review adjustment proposals under Article 30 to expand the CBAM to more sectors and products based on the risk of carbon leakages, such as refineries and chemical sectors, as well as to downstream products such as washing machines, industrial radiators and garden tools, which will add another 20 to 25 percent additional revenue. The Commission’s review also expands the scope of CBAM to indirect emissions, specifically for iron and steel, and looks to better assess the policy’s impact on developing countries. 

 

Impact on ASEAN

For ASEAN countries that have large chemical and refinery sectors, the potentially expanded sectors may see significant exposure to these exports, especially with the conclusion of the Indonesian-EU CEPA and removal of steel tariffs. The wide scope of CBAM has the potential to dampen trade, despite the various FTA that the EU is negotiating or concluded. 

On a more positive note, plans are made for the recognition of third party carbon systems in 2027. This is key for countries like Malaysia, Singapore, and Indonesia who either have carbon trading schemes in place or in development. 

Annex: Presentation by the European Commission (DG TAXUD) on 13 November 2025