Between Adjustment and Delay: CBAM under Political Stress

Status Quo: The Omnibus Proposal Takes Shape

The next revision of CBAM is taking clearer form. The so-called Omnibus initiative, presented by the European Commission in February, has now been approved by the Council of Member States – without significant opposition. The European Parliament has also expressed strong support for simplifying the CBAM framework. This paves the way for trilogue negotiations between the Commission, Council and Parliament, with the goal of completing the legislative process before the summer. At its core, the proposal aims to lower the administrative burden for businesses. Planned changes include raising reporting thresholds and delaying the start of financial obligations to 2027. A first formal review of CBAM is scheduled for the second half of 2025, along with a proposal to extend the scope to include downstream products.

Criticism from the Aluminium Sector: Systemic Gaps and Market Distortions

Alongside political progress, there is growing resistance from industry. The aluminium sector in particular is sharply critical of the current CBAM design. A new study commissioned by European Aluminium points to major loopholes that could even promote carbon leakage.

The Treatment of Scrap

The main point of contention remains the treatment of scrap. Aluminium products with a high scrap content are exempt from CBAM costs – despite the lack of a reliable verification system. This creates an incentive to export such products to the EU, while carbon-intensive primary products are sent to other markets. The result would be market distortion at the expense of European producers. The study estimates the potential financial advantage for foreign producers from such circumvention strategies to be up to 6.5 percent of the aluminium price on the London Metal Exchange.

Focus on Specific Inputs

The import of non-CBAM-covered precursor products like alumina is also flagged as problematic. Price increases could lead to significant additional costs for European industry through 2034. European Aluminium is calling for a fundamental overhaul of CBAM rules for the sector – including the introduction of default values and a specific emissions benchmark for alumina. If no fair solution can be found, the Commission should consider removing the sector from the CBAM scope entirely.

Ukraine: Delay in Exceptional Circumstances?

While the aluminium industry is fighting to maintain competitiveness, for Ukraine the issue is existential. Around 20 percent of Ukraine’s exports to the EU fall under CBAM – including steel, fertilizers and electricity. According to a report by the Ukrainian Ministry of Environment, the European Commission has shown openness to a deadline extension until 2027 – although no formal request has yet been made. The legal basis is already laid out in the CBAM regulation, which allows for exemptions in extraordinary circumstances. Ukraine would have to submit an official request, upon which the Commission could present a proposal for a time-limited exemption to Parliament and Council. This process is complex and time-consuming – but the Ukrainian government is reportedly preparing such a request. Both a general exemption and a targeted solution for electricity exports are under discussion.

Economic Consequences of No Exemption

Without a CBAM exemption, Ukraine faces significant losses starting in 2026. According to estimates, missed investments could total around 2.7 billion dollars by 2030. Industry associations like the European Business Association and cement federation Ukrcement are therefore calling for an immediate moratorium or at least a reporting-only model during the war and reconstruction phase.

Conclusion

CBAM is becoming concrete – and so is the criticism. While the EU continues to streamline and expand the mechanism internally, tensions are emerging. The aluminium sector warns of unfair effects and circumvention risks, while Ukraine needs more time to prepare for this mechanism. For affected businesses, this once again highlights that CBAM implementation is not a static process but a dynamic framework – shaped by adjustments, competing interests and political leeway. Those who identify risks and analyse options early will gain a critical edge.

Support with Implementation

If you would like to understand how the Omnibus proposal or a possible exemption might impact your supply chains, feel free to contact us directly at helge@kolum.earth.