The European Commission has proposed the introduction of a new article, Article 27a, into the Carbon Border Adjustment Mechanism (CBAM) regulation, aiming to address situations in which the mechanism could trigger severe price distortions in the EU internal market.
Under the existing CBAM framework, the Commission does not have the authority to suspend or remove goods from the mechanism’s scope. Any permanent change to Annex I, which currently covers iron and steel, hydrogen, cement, fertilizers, aluminum and electricity, requires a full legislative amendment adopted by both the European Parliament and the Council.
Temporary and exceptional removal of goods
The proposed Article 27a would introduce a temporary and exceptional safeguard tool. If approved by the co-legislators, it would empower the Commission to temporarily remove specific goods from CBAM coverage where there is evidence that their inclusion causes severe harm to the EU internal market, particularly through significant and unforeseen price impacts.
Before taking action, the Commission would be required to conduct a formal assessment to verify that the conditions for intervention are met. If the assessment confirms the existence of serious market disruption, the Commission could act through a delegated act, enabling a faster response than the standard legislative process.
Retroactive application possible
A notable feature of Article 27a is the possibility of retroactive application. This reflects the reality that serious and unforeseen market disruptions may occur before the Commission is able to formally adopt and publish a delegated act in the Official Journal of the EU.
In such cases, the Commission could determine that CBAM should cease to apply to the affected goods from the moment the harmful conditions first arose, rather than from the date of publication of the delegated act.
Implications for CBAM certificates and reimbursement
The Commission clarified that retroactive application would not have financial consequences for 2026 imports, as CBAM certificates can only be purchased starting from February 1, 2027.
If a delegated act under Article 27a were to enter into force before that date, no certificates could have been purchased and therefore no reimbursement would be required. However, if the delegated act were adopted after certificates had already been purchased for the affected goods, CBAM declarants would be entitled to a reimbursement of the certificate price paid.