EU member states agree to exempt most firms from CBAM

EU member states have agreed to exempt most firms from the carbon border adjustment mechanism, according to Reuters (27 May 2025). The deal, reached at Council level, limits CBAM's immediate reach to a smaller subset of importers than the original regulation envisaged. No threshold figures were published alongside the headline, but the direction is a material narrowing of scope.

For European power and energy markets, CBAM matters most at the intersection of electricity imports and carbon-intensive goods such as steel, aluminium, and fertilisers. A broad exemption reduces the mechanism's near-term price signal for those commodity flows and may ease compliance cost assumptions built into some long-dated PPAs and industrial offtake contracts.

The Council agreement still requires European Parliament alignment before it is binding. Traders and asset managers with positions sensitive to carbon border pricing (particularly those active in Central and Eastern European bidding zones with cross-border commodity exposure) should treat current CBAM cost models as subject to downward revision pending final text.