European Economic
and Social Committee
CBAM renewal: Protecting Europe’s clean industrial future
What is the CBAM?
The Carbon Border Adjustment Mechanism (CBAM) is the European Union’s tool to ensure that the EU’s climate ambition is not undermined by carbon leakage. It applies a carbon price to certain imported goods, reflecting the emissions generated during their production, and aligns this cost with the price paid by EU producers under the EU Emissions Trading System (EU ETS).
The renewal of the CBAM, which is the subject of our European Economic and Social Committee (EESC) upcoming opinion NAT/976, comes at a decisive moment for Europe’s clean industrial development.
As free allocation under the EU ETS is progressively phased out, protecting the credibility of the carbon price becomes increasingly important. CBAM’s immediate function is to safeguard European industrial competitiveness while supporting EU ETS in building a more resilient industry and preventing carbon leakage. More broadly, it should serve as a tool to encourage global alignment with Europe’s ambition, supporting a clean economy transition that strengthens competitiveness while delivering shared benefits beyond the Union.
For clean industry and clean technology companies, the transition must be both credible and manageable. Decarbonisation requires long-term investment, adjustments across supply chains and the gradual improvement of emissions data systems. This transformation cannot occur overnight. Well-designed flexibilities within CBAM are therefore not a concession to lower ambition, but a necessary condition for making the transition effective in practice.
The extension of CBAM to downstream goods reflects the need to close circumvention risks and reinforce the EU ETS across value chains. Yet many companies, particularly SMEs and innovative scale-ups, operate in complex manufacturing environments where verified emissions information is not yet consistently available. Transitional arrangements, proportionate reporting obligations and pragmatic use of default values give companies the time and practical means to adapt. A smooth transition enables industry to align with higher climate ambition without unnecessary disruption.
Flexibility should be understood as a stabilising mechanism. Clear phases of implementation, predictable methodologies and workable compliance pathways provide the certainty required for investment in clean technologies. Abrupt or overly rigid application, by contrast, risks creating uncertainty that could slow innovation and weaken Europe’s industrial momentum at a time when global competition in clean technologies is intensifying.
Robust anti-circumvention measures remain essential to preserve trust in both CBAM and the EU ETS. At the same time, their application must be transparent and based on clearly defined criteria. Exceptional measures or temporary adjustments should reinforce stability, not introduce unpredictability.
Ultimately, the success of the CBAM renewal will depend on its ability to support the EU ETS while allowing Europe’s industry to transition in an orderly and competitive manner. When ambition is combined with appropriate flexibilities and adequate means for adaptation, decarbonisation can become a driver of resilience, innovation and global industrial leadership.
What’s next?
1. Finalise the CBAM legislative adjustments and implementation framework (Short term: 2025–2026)
CBAM Regulation (EU) 2023/956 – legal framework
https://eur-lex.europa.eu/eli/reg/2023/956/oj
2. Ensure a smooth transition for industry through proportionate flexibilities
European Commission guidance on default values and transitional reporting
https://taxation-customs.ec.europa.eu/news/commission-publishes-default-values-determining-embedded-emissions-during-cbam-transitional-period-2023-12-22_en
3. Strengthen anti-circumvention measures while preserving predictability
Commission proposal on downstream products and anti‑circumvention (COM(2025) 989)
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:52025PC0989
4. Align CBAM implementation with industrial and clean technology investment
European Commission – Carbon Border Adjustment Mechanism overview
https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en
5. Review effectiveness and global impact (Medium term: 2026–2027)
Commission CBAM review and implementing acts package https://taxnews.ey.com/news/2025-2607-european-commission-publishes-provisional-implementing-acts-and-their-annexes-regarding-cbam
Kädi RISTKOK (Estonia)
EESC study group member, NAT/976 on the Revision of the carbon border adjustment mechanism (CBAM) (opinion to be presented at the EESC plenary session in March 2026)
Member, EESC Civil Society Organisations' Group
Chief Executive Officer, Estonian Cleantech Association
Executive Director, Cleantech for Baltics
© EU/EESC