Simplification: Brussels means business. Green light already given for the first Omnibus on carbon tax

Brussels – Just over one hundred days, a record time that certifies the resoluteness with which the EU wants to proceed on the announced path of regulatory simplification. The European institutions have already given the green light to the first of the five Omnibus packages presented so far by the European Commission, which concerns the deregulation of the border carbon adjustment mechanism (CBAM)—also known as the carbon tax.

The regulation was proposed on 26 February, and has raced through the European legislative process. Today (18 June) the provisional agreement between the negotiators of the EU Council and the EU Parliament put it in the safe. Now, the only thing missing is the formal adoption by the two institutions, which is expected to arrive by September at the latest. The proposal remains the EU executive’s original one, and aims to simplify the CBAM regulation without compromising its climate objectives.

Through the establishment of a new minimum threshold of 50 tonnes per importer per year, 90 per cent of importers will be exempt from paying the carbon tax, primarily small and medium-sized enterprises and individuals who import small quantities of products subject to the CBAM into the EU. In line with the overall objective, i.e. to reduce regulatory and administrative burdens and compliance costs for EU companies, especially SMEs.

“The climate ambition behind the mechanism remains unchanged,” the European Parliament assures in a note, as 99 per cent of the total CO2 emissions from imports of iron, steel, aluminium, cement, and fertilisers will continue to be covered by the CBAM. In revising the border carbon adjustment mechanism, safeguards were included to prevent circumvention of the rules.

The agreement reached today also contains several other simplification measures for all importers of CBAM goods above the set minimum threshold. In particular, with regard to the authorisation procedure, data collection processes, calculation of embodied emissions, emission verification rules, calculation of the financial responsibility of CBAM registrants during the year of import, and the request by CBAM registrants for carbon prices paid in third countries where the goods are produced.

Now, on with the other Omnibuses, starting with the one on the relaxation of rules on sustainability and farm reporting, presented at the same time as the CBAM amendment. EU Parliament and the EU Council will then have to give the joint green light to the simplifications of the common agricultural policy, the single market and the regulatory framework for the defence industry (the latter presented yesterday). The European Commission is also working on two other Omnibus packages, one for the chemical industry and one for the digital sector.