CBAM

The Carbon Border Adjustment Mechanism (CBAM) is an EU policy that places a carbon price on imports of certain carbon-intensive goods. The aim is to reduce the risk of carbon leakage, where production moves outside the EU to avoid carbon costs, by aligning the carbon cost of imports with the cost EU producers face under the EU Emissions Trading System.

CBAM started with a transitional phase focused on reporting. During this phase, importers report the embedded greenhouse gas emissions in covered goods but do not yet make financial payments. The covered goods initially include cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen.

Under the definitive regime, importers will need to buy CBAM certificates corresponding to the embedded emissions of their imports, with adjustments for any carbon price already paid in the country of production.

CBAM has increased demand for emissions accounting, customs and trade compliance, and carbon data skills, especially in manufacturing and import-heavy sectors.