Carbon Border Adjustment Mechanism
Environmental policy - European Union - regulation.
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.
- Carbon credits
- Carbon footprint
- Carbon leakage
- Carbon tax
- Carbon Trust
- Corporate social responsibility
- Embedded carbon
- Environmental profit and loss
- International Institute for Sustainable Development
- Streamlined Energy and Carbon Reporting
- World Trade Organization (WTO)