Will CBAM Be Postponed?
CBAM Weekly - Issue 31 - Jan 24, 2025

CBAM Weekly
by Helge Wieggrefe
Many companies affected by CBAM are currently concerned about whether the launch of CBAM will be postponed. The background to this is a letter from the conservative faction in the European Parliament, which was recently published and has caused quite a stir.
The EPP's Letter
The conservative faction in the European Parliament recently met in Berlin at the invitation of Friedrich Merz and Manfred Weber to discuss, among other things, the European Union's competition policies. In the letter, the faction advocates for postponing key legislative packages of the Green Deal. The letter has drawn particular attention because it originates from the party family of Commission President Ursula von der Leyen.
EPP’s Demands
The politicians are calling for a two-year postponement of the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the Carbon Border Adjustment Mechanism (CBAM). During this period, an omnibus initiative is proposed to reduce double reporting and bureaucratic burdens, particularly for small and medium-sized enterprises. Specifically, the demand is that only companies employing more than 1,000 workers should fall under the regulations. Interestingly, a postponement of the regulation for deforestation-free supply chains (EUDR) is not being demanded again. CBAM, CSRD, and CSDDD – All the Same? It is noteworthy that the politicians of the conservative faction lump together measures with different objectives. While the CSRD and the CSDDD indeed aim to enforce stricter sustainability requirements, CBAM also has a competition policy component. On the one hand, the first two laws enforce requirements through standards and sanctions, while CBAM primarily relies on the market mechanism of price signaling. Ironically, competition policy is something the politicians themselves advocate elsewhere, as they praise the EU Emissions Trading System (EU ETS) as the most effective and market-based climate protection instrument. However, it remains unclear how the EU ETS can be effectively applied without CBAM, without leading to worse competitive conditions for the European economy. The current solution of granting free allowances is unconvincing and does not benefit the climate or fair competition. Thus, the politicians’ demands appear contradictory.
Proposed Exemptions for Legislative Initiatives
The demand for uniform exemptions for different legislative packages is also unconvincing. Laws should always be tailored to achieve their objectives as effectively as possible while minimizing burdens on affected parties. Certainly, there are good arguments for focusing on small and medium-sized enterprises. Since CBAM aims to prevent production shifts and thus emissions being relocated, exemptions should consider the emissions embodied in imports. For the law's purpose, the number of employees in a company is irrelevant; the business model is what matters. If a company imports goods containing hundreds of tons of CO2 emissions, it is reasonable for it to bear the regulatory burden of CBAM—even if it employs only 20 people. Conversely, it is equally appropriate to exempt large companies from the regulation if they are only marginally affected. The chambers of commerce (IHKs) have been advocating such exemptions for some time. A dialogue with the Berlin IHK might have been beneficial here.
Postponing CBAM?
It is also worth noting that among the politicians’ demands are CSRD and CSDDD, which are directives that still require national implementation laws. As such, they do not take immediate effect, and delays can be addressed, especially where national laws are still pending. However, the CBAM regulation is already directly applicable and has been in force since 2023. Therefore, a postponement of the regulation itself is no longer possible. The politicians’ demand is, at best, vague and unclear. It could refer to postponing the implementation phase set to start in 2026. However, this would delay the competitive impact of the measure and instead prolong the transitional phase. This phase is currently characterized by expanded reporting requirements, intended to compel companies to familiarize themselves with the processes and establish corresponding internal workflows in the short term. The politicians' demand would undermine competition policy and instead lead to more bureaucracy. Even suspending the regulation and restarting in two years with a new transition phase would have the same effect.
Reaction from the Business Community
The reaction from the business community to this letter has been as expected. The European Steel Association (Eurofer) and the European Cement Association (Cembureau) are firmly demanding that CBAM be upheld and swiftly implemented. Businesses have prepared for it and made investment decisions based on it. A policy reversal and more uncertainty are precisely what they do not need now. The EPP’s proposal is poorly thought out and unconvincing. It appears more like a maneuver in an election campaign.
Conclusion
For the reasons mentioned above, I do not consider a postponement of CBAM (whatever this might mean) to be realistic. Instead, an export exemption might come earlier to reduce competitive disadvantages in markets without carbon pricing. This would indeed benefit the European economy.
Support for Preparing for the Implementation Phase
My recommendation is not to let this uncertainty unsettle you. Use the time to prepare for the complex implementation phase. The mechanism will become significantly more challenging to handle starting in 2026. If you need support in this regard, feel free to contact us directly at (helge@kolum.earth). We are happy to assist you in navigating this process. Best regards, Helge Wieggrefe