Carbon Border Adjustment Mechanism

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Environmental policy - European Union - regulation.


The Carbon Border Adjustment Mechanism is a draft EU Regulation.

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 would be a charge on goods imported into the EU, that had 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 would need to buy and surrender CBAM certificates for each tonne of CO2 - or equivalent GHG emissions.

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

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