The CBAM applies to certain goods being imported into the EU. It is designed to apply the same carbon costs to those goods as would have been incurred had they been produced in the EU.

We looked at implementation of the CBAM in a post on Provisions applying from Q4 of 2024 and in our usual horizon scanner, where we noted that domestic regulations provide for offences and penalties additional to the mechanisms in the CBAM Regulation.

In early 2025, the European Commission published its proposal (COM(2025)87) to simplify the CBAM. We looked at the Commission’s proposal here: Omnibus Package: Revision of the Carbon Border Adjustment Mechanism – Arthur Cox LLP.

The proposal to simplify the CBAM has now been voted through by the European Parliament with few amendments, as indicated in the Parliament’s adopted text. The key amendment would take electricity generated entirely in an EEA Member State and imported to the EU out of the scope of the CBAM. As the UK is not a member of the EEA, this amendment would not apply to electricity imported to Ireland over interconnectors from the UK. However, the current legislative procedure may be an opportune time to consider this aspect, particularly given the outcome of the recent EU-UK negotiations (as outlined by the UK Government here), which included agreement to link Emissions Trading Systems and to increase efficiency of trading of electricity.

The adopted text has been referred back to the Parliament’s ENVI Committee to start informal trialogue negotiations with the Council, which is scheduled to adopt its general approach on 27 May 2025.