April 2025 CBAM Update: New Thresholds, New Rules, New Reality

CBAM keeps evolving, and 2025 has brought a wave of updates that are reshaping how manufacturers and importers handle carbon reporting. Some changes bring relief, others add complexity, but all of them matter if you're moving high-carbon goods into the EU.

Let's walk through what's new as of April 2025 and what it means for your operations.

From 200,000 to 20,000 Companies: The Threshold Revolution

The most significant update this year? The reporting threshold has shifted from EUR 150 per consignment to 50 tonnes or 100 tCO2e per annum, per EORI.

Here's the thing though—this is based on default values, which tend to be pretty punitive. For steel and aluminium in particular, you'll likely hit the emissions threshold well before you reach 50 tonnes of actual product.

What does this mean for CBAM as a carbon mechanism? While the number of companies in scope has dropped dramatically (from an estimated 200,000 to just 20,000), 99% of emissions are still captured. So the environmental impact remains intact, but the administrative burden has been concentrated on larger players.

EU Materials Get a Pass: No Double Carbon Taxation

Here's some good news if you're working with EU-origin materials: there's now no requirement to prepare EU CBAM data for EU-based businesses. Since an ETS charge has already been applied to EU-origin precursors, you don't need to account for them again under CBAM.

The catch? It's still unclear how CBAM benchmarks will be applied for these products. Plus, if you're dealing with the UK CBAM, EU installations will still need to prepare product-level information for reporting.

For non-EU businesses that only purchase EU-origin materials, your CBAM emissions intensity will be considered zero. That's a significant simplification.

Default Values: The Expensive Trap You Must Avoid

The maximum cost of CBAM applied to goods entering the EU next year will be based on:

• Default values at the CN Code level
• The CBAM benchmark
• Whether a carbon price is paid in the country of origin

If you're still relying on default CBAM data, consider this your wake-up call. Default values are defined by the average intensity of the 10 worst-emitting countries producing these products (where data is available). That means they're likely to be highly punitive.

At a certain volume, it makes far more financial sense to invest in getting actual data rather than paying the premium that comes with defaults.

Downstream Processing Exemption: Simplified Carbon Accounting

Downstream processing emissions of aluminium and steel products are now excluded from EU CBAM scope. The threshold for what counts as "downstream processing" isn't crystal clear yet, but here's a good rule of thumb: if your operations wouldn't be captured by the EU ETS, you're likely out of scope for calculating your own emissions contribution.

What does this mean practically? Many manufacturers will now have a simpler carbon accounting exercise. You'll only need to allocate precursor emissions to finished goods and can effectively ignore your operational emissions.

It's still unclear whether this allocation exercise will require verification, but it's safer to assume it will.

Understanding the Two Variables That Determine Your CBAM Bill

Your final CBAM cost will be determined by two main factors:

Variable 1: The EUA Market Price (Hedgeable Risk)

The European Union Allowance (EUA) is a tradable permit under the EU Emissions Trading System that allows the holder to emit one metric ton of CO₂ or its equivalent in other greenhouse gases.

The EUA price reflects the market cost of emitting carbon in the EU. CBAM Certificates will be priced based on EUA prices on a quarterly basis for 2026. The good news? This can be hedged via EUA hedges, so companies that want to manage risk can do so.

Variable 2: Installation Intensity Data (The Unknown Factor)

This is where it gets tricky. The emissions intensity figure you'll use to calculate CBAM cost for 2026 imports is the 2026 calendar year intensity from the installation—which you'll only learn in 2027 when their accounting is complete.

Plus, in early 2027, this figure will need to be verified. So while you might have 2025 figures to work with, you're heavily reliant on trusting that:

• The installation did their calculation correctly
• The calculation will pass verification without issues

Forecasting Your 2026 Certificate Needs: Managing Uncertainty

While businesses can purchase certificates from February 1, 2027, you may not know your actual certificate exposure until Q2 at the earliest—once you receive verified emissions data from suppliers.

This uncertainty is understandably a concern for importers. To reduce risk, we suggest partnering with experts who can help with high-quality carbon forecasting for installations.

August 2027: Your First Declaration Deadline

Here's some breathing room: the deadline for the first annual CBAM declaration has been pushed back to August 31, 2027.

This means that for many companies, reporting will take a back seat to emissions data collection and EUA hedging considerations during 2026.

Before you can submit that declaration though, you'll need to register as a CBAM Authorised Declarant.

Your Immediate Action Items

With all these changes, here's your action plan:

• Assess your exposure under the new 50-tonne/100 tCO2e threshold
• Start collecting actual emissions data from suppliers to avoid punitive default values
• Consider EUA hedging strategies to manage cost volatility
• Register as an Authorised Declarant if you haven't already
• Build relationships with suppliers who can provide verified emissions data

CBAM is complex, but it doesn't have to be overwhelming. At EnCarbonSys, we help businesses navigate these changes with practical tools and expert guidance.