The European Union’s Carbon Border Adjustment Mechanism (CBAM), effective from October 2023 in its transitional phase, with full implementation expected by 2026, is a policy instrument imposing a carbon price on imports of carbon-intensive goods within the EU, aiming to prevent carbon leakage, aligning with the EU’s climate goals. Currently, the CBAM applies to six types of imported goods (i.e., cement, fertilisers, steel and iron, aluminium and hydrogen). Integral to EU’s ‘Fit For 55’ vision, CBAM is a tool to not only ensure compliance among imported goods with EU’s climate goals but also a key incentive for other countries to leverage their decarbonisation strategies. However, within the rigours of the CBAM mandate, it was felt that certain SMEs were impacted disproportionately with regulatory burdens and to facilitate level-playing among EU companies and importers, a broader “de minimis’ exemption was brought about through the Omnibus I package, presented in February 2025 and formally adopted in October 2025. These Amfinishments are aimed at simplifying the CBAM and introducing exemptions for certain declarants.
Under the Omnibus Regulations, a cumulative threshold of 50 tonnes per importer is adopted, thus exempting over 90% of the importers while continuing to cover 99% of the emissions. Notably, Hydrogen is not eligible for exemption under the simplification provisions. Moreover, under the Omnibus Regulation, the timeline for implementation has been revised. Under the simplification framework, while the CBAM mechanism will still be launched in 2026, importers will no longer be required to immediately purchase CBAM certificates corresponding to the emissions of imported goods. Instead, they will launch payments in 2027 for their 2026 emissions, allowing for a transitional adaptation period. Consequently, the deadline for submitting certificates will be extfinished from 31 August to 30 September, starting in 2027. This is likely to significantly impact hydrogen and its derivatives, especially grey hydrogen and ammonia products heavily reliant on fossil fuels for production, particularly for Indian exporters tarreceiveing the EU market.
The report “Impact of EU’s Carbon Border Adjustment Mechanism and Opportunities for Green Hydrogen and Derivatives: A Perspective for Indian Exporters” has been published by GH2 India and Nangia Group. This note explores the price impacts, India’s readiness, and realistic opportunities for transitioning to green hydrogen and its derivatives, considering the current plans and capabilities of Indian manufacturers.
The complete report can be accessed here
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