The European Commission has initiated amendments to the regulation concerning the Cross-Border Carbon Adjustment Mechanism (CBAM), aimed at protecting the EU’s internal market from sharp price fluctuations. This involves the implementation of Article 27a, which will allow for the temporary suspension of CBAM for specific goods in cases of serious and unforeseen circumstances.
This is reported by Finway
Proposals from the European Commission and Features of the New Tool
Article 27a was included in the amendment to EU Regulation 2023/956, published last December, but it is still awaiting approval from the European Parliament and the EU Council. The new approach stipulates that if the inclusion of a specific good in CBAM causes significant harm to the EU’s internal market due to a substantial impact on prices, the European Commission will have the right to remove this good from Annex 1 of the regulation for the duration of such circumstances.
The current regulation does not allow for the suspension or exclusion of goods from the CBAM list, which is why the European Commission has initiated the implementation of an additional temporary mechanism. Article 27a may also be applied retroactively after its final adoption.
Implementation Mechanism and Financial Implications
Before making a decision to suspend CBAM for specific goods, the European Commission must conduct an official assessment to determine the grounds for intervention. If the market consequences are found to be significant, the Commission will be able to issue the appropriate delegated act.
“The European Commission clarified that retroactive application will not have financial implications for imports in 2026, as CBAM certificates can only be purchased from February 1, 2027. However, if the delegated act arising from Article 27a is applied after this date, and CBAM declarants have purchased the relevant certificates corresponding to imports in 2026, they will be entitled to a refund of the price paid for the certificate.”
The need for the development of Article 27a arose amid reports of the negative impact of CBAM on the fertilizer market. In particular, France and Italy insist on exempting imported fertilizers from the carbon levy to support the competitiveness of local farmers. According to estimates from France, prices for imported fertilizers could rise by approximately 25% due to the introduction of the new tax, raising concerns in the European agricultural sector.