As the European Union’s Carbon Border Adjustment Mechanism (CBAM) advances, 2025 will mark a critical juncture in its phased implementation. The transitional phase, focused on reporting obligations, will reach its final year, laying the groundwork for the official start in 2026. For businesses, 2025 represents the last opportunity to refine compliance systems, adapt to reporting requirements, and prepare for the financial realities of CBAM certificates.
This article explores the pivotal changes and expectations for CBAM in 2025, emphasizing how businesses can strategically position themselves for the years ahead.
Key Milestones for CBAM in 2025
The transitional phase of CBAM, introduced in October 2023, is designed to familiarize businesses with the reporting framework and emissions tracking without imposing financial obligations for carbon emissions. By 2025, this phase will be fully operational, with several significant developments to anticipate:
- Finalized Reporting Framework: The European Commission will continue to refine the CBAM reporting framework throughout 2025. By this stage, importers should have shifted entirely to reporting actual emissions data rather than default values. This requirement underscores the need for accurate and transparent data collection systems.
- Enhanced Enforcement Mechanisms: While no carbon costs are applied during the transitional phase, 2025 may see a tightening of compliance checks. The European Commission and national authorities are likely to increase scrutiny of reported data, ensuring businesses are adequately prepared for the financial enforcement of CBAM certificates in 2026.
- Alignment with Broader EU Climate Goals: CBAM in 2025 will play a critical role in aligning trade policy with the EU’s broader climate targets. As part of the Green Deal, the mechanism aims to reduce carbon leakage and encourage international partners to adopt similar carbon pricing measures.
Steps to Take in 2025
As CBAM’s transitional phase enters its final year, businesses should focus on critical actions to ensure readiness:
- Strengthen Supply Chain Collaboration: Work closely with suppliers to secure accurate emissions data, renegotiating agreements if necessary to include reporting requirements.
- Invest in Verification: Establish systems for tracking and auditing emissions data, engaging accredited verifiers to ensure compliance.
- Simulate Financial Scenarios: Model the potential costs of CBAM certificates based on current emissions data, identifying opportunities to reduce exposure through lower emissions or cleaner technologies.
Taking these steps in 2025 will not only ensure compliance but also position businesses to navigate CBAM’s definitive phase with confidence. This is also an opportunity for businesses to gain a competitive edge. Proactively reducing emissions and adopting sustainable practices can yield significant benefits. Lower emissions directly translate to fewer CBAM certificates required in 2026, helping to reduce financial burdens.
At the same time, businesses that demonstrate compliance and sustainability leadership can enhance their brand reputation, appealing to eco-conscious consumers and investors. Early adaptation to CBAM requirements also strengthens operational resilience, minimizing the risk of disruptions when the definitive regime takes effect. By acting decisively, companies can position themselves as leaders in the transition to a sustainable economy.
Broader Implications of CBAM
The global impact of CBAM will become increasingly evident in 2025. As the EU solidifies its reporting and enforcement mechanisms, other countries may accelerate the adoption of similar policies. This trend could reshape international trade, creating both challenges and opportunities for businesses engaged in global markets.
Moreover, the lessons learned during the transitional phase will influence the design of the definitive regime. Stakeholders should actively engage with policymakers to address practical challenges and shape a regulatory environment that supports both sustainability and economic growth.
Get Support
2025 is a pivotal year for CBAM, bridging the gap between the transitional phase and the definitive regime. For businesses, it’s a critical time to refine compliance systems, strengthen supply chain collaboration, and prepare for the financial implications of carbon pricing.
By approaching 2025 strategically, companies can transform CBAM from a regulatory challenge into an opportunity for innovation and leadership.
Tetra Tech can support EU importers by enhancing supply chain transparency and facilitating accurate CBAM reporting through services such as emissions data collection, quality assessment, and financial impact evaluation. For suppliers outside the EU, Tetra Tech offers assistance in CBAM readiness, determining embedded emissions, and developing broader decarbonization strategies and initiatives. For more information, please visit our CBAM Compliance Support Page or contact us by email at [email protected].
