Capital and Carbon Border Adjustment Mechanism: Difference between pages

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1. ''Financial reporting''. 
''Environmental policy - European Union - regulation.''  


In financial accounting, capital is money the business owes the owner.  
(CBAM).


This is equal to assets minus liabilities (including debt).
The Carbon Border Adjustment Mechanism is an EU Regulation, phased in over the period 2023 to 2026.


In other words, the equity.
It is designed to address the problem of ''carbon leakage'' out of the EU and into other countries.


Equity capital funds the net assets of the business.
Carbon leakage is the risk that greenhouse gas (GHG) emissions may increase in other countries, as a consequence of reductions within the EU.


It also acts as a buffer to absorb losses or other deficits, to support the business to continue its operations following financial stress.


The mechanism of the CBAM is a charge on goods imported into the EU, that have excessive levels of embedded carbon.


2. ''Corporate finance''. 
Embedded carbon is a measure of the GHG emissions released during the production of goods in those other countries.


More broadly in the corporate finance context, 'capital' is the total amount of funding available for the operations of an organisation. 


This includes both its debt and its equity.
Importers need to buy and surrender CBAM certificates for each tonne of CO<sub>2</sub> - or equivalent GHG emissions.


The price of CBAM certificates is the same as the price of the equivalent EU Emissions Trading System (EU ETS) allowances.


3. ''Company law''.


More narrowly in company law, 'capital' is the component of the total equity represented by the share capital of the company.
The Carbon Border Adjustment Mechanism is sometimes known as the EU's ''carbon border tax''.




4. ''Regulation''.
== See also ==
 
* [[Carbon credits]]
In the regulatory capital context, 'capital' means what the particular detailed regulations say that it means.
* [[Carbon footprint]]
 
* [[Carbon leakage]]
Here as elsewhere, care and consistency in definitions is essential.
* [[Carbon-neutral]]
* [[Carbon tax]]
* [[Carbon Trust]]
* [[Corporate social responsibility]]
* [[Decarbonise]]
* [[Embedded carbon]]
* [[Environmental profit and loss]]
* [[Footprint]]
* [[International Institute for Sustainable Development]]
* [[Regulation]]
* [[Renewables]]
* [[Streamlined Energy and Carbon Reporting]]
* [[UK CBAM]]
* [[World Trade Organization]] (WTO)


Regulations and related supervision specify minimum mandatory amounts of capital, held for the protection of direct stakeholders and the wider community.


 
==External links==
5. ''Economics''.
*[https://ec.europa.eu/taxation_customs/green-taxation-0/carbon-border-adjustment-mechanism_en Carbon Border Adjustment Mechanism - European Commission]
 
*[https://www.globalpolicywatch.com/2021/06/twelve-things-to-know-about-the-upcoming-eu-carbon-border-adjustment-mechanism/ The upcoming EU Carbon Border Adjustment Mechanism - Covington Global Policy Watch]
'Capital' is one of the 'factors of production' in economics, the others classically being labour, land and enterprise.
*[https://sdg.iisd.org/commentary/guest-articles/an-eu-carbon-border-adjustment-mechanism-can-it-make-global-trade-greener-while-respecting-wto-rules/ Can an EU CBAM make global trade greener while respecting WTO rules? - International Institute for Sustainable Development]
 
In this context, 'capital' traditionally referred to the things that have been created to help in the production process, like machinery, factories and transport facilities. These things are sometimes known as 'capital goods'.
 
Human capital, natural capital and social capital are also fundamentally important parts of economic capital.
 
 
6. ''Individual capital''.
 
The valuable and productive longer term resources available to an individual including their knowledge, skills, relationships, physical and financial resources.
 
 
== See also ==
* [[Assets]]
* [[Capital adequacy]]
* [[Capital goods]]
* [[Capital intensity]]
* [[Capital market]]
* [[Capital mobility]]
* [[Capital structure]]
* [[Capital to labour ratio]]
* [[Capitalisation]]
* [[Capitalism]]
* [[Corporate finance]]
* [[Cost of capital]]
* [[Credit balance]]
* [[Debt]]
* [[Debt capital]]
* [[Enterprise]]
* [[Equity]]
* [[Equity cost of capital]]
* [[Factors of production]]
* [[Finance ]]
* [[Financial risk]]
* [[Funding]]
* [[Human capital]]
* [[Interest]]
* [[Investment bank]]
* [[Labour]]
* [[Land]]
* [[Liabilities]]
* [[Natural capital]]
* [[Public interest]]
* [[Regulatory capital]]
* [[Return]]
* [[Servitisation]]
* [[Share capital]]
* [[Social capital]]
* [[Stakeholder]]
* [[Working capital]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:Compliance_and_audit]]
[[Category:Compliance_and_audit]]
[[Category:Ethics]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]
[[Category:Financial_products_and_markets]]
[[Category:Technology]]
[[Category:Trade_finance]]

Revision as of 08:55, 18 May 2023

Environmental policy - European Union - regulation.

(CBAM).

The Carbon Border Adjustment Mechanism is an EU Regulation, phased in over the period 2023 to 2026.

It is designed to address the problem of carbon leakage out of the EU and into other countries.

Carbon leakage is the risk that greenhouse gas (GHG) emissions may increase in other countries, as a consequence of reductions within the EU.


The mechanism of the CBAM is a charge on goods imported into the EU, that have excessive levels of embedded carbon.

Embedded carbon is a measure of the GHG emissions released during the production of goods in those other countries.


Importers need to buy and surrender CBAM certificates for each tonne of CO2 - or equivalent GHG emissions.

The price of CBAM certificates is the same as the price of the equivalent EU Emissions Trading System (EU ETS) allowances.


The Carbon Border Adjustment Mechanism is sometimes known as the EU's carbon border tax.


See also


External links

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