CBAM
Category: other
Carbon Border Adjustment Mechanism — EU's carbon tariff on imports of carbon-intensive goods.
The Carbon Border Adjustment Mechanism (CBAM) is an EU regulation imposing a carbon price on imports of certain carbon-intensive goods (cement, iron, steel, aluminum, fertilizers, electricity, hydrogen) to prevent carbon leakage. Importers must purchase CBAM certificates corresponding to the embedded emissions of their goods. CBAM entered its transitional phase in October 2023, with full implementation from January 2026.
Examples
- • An EU importer of Chinese steel must report embedded emissions and purchase CBAM certificates to cover the carbon cost.
- • During the CBAM transitional phase (2023-2025), importers must submit quarterly reports on embedded emissions but do not yet need to purchase certificates.
- • CBAM applies to direct and indirect emissions; affected industries must track their carbon footprint throughout the supply chain.