Solution: CBAM

CBAM – Carbon Border Adjustment Mechanism

As part of the European “Green Deal”, which aims to gradually reduce greenhouse gas emissions and achieve climate neutrality by 2050, the EU has introduced the “Carbon Border Adjustment Mechanism” (CBAM), established under Regulation (EU) 2023/956. This regulation complements the existing EU-ETS (Emission Trading System) legal framework.

It establishes a GHG Taxation mechanism in importing certain products to EU, which imposes a price for emissions embedded in products from specific industries.

CBAM’s objective is to prevent the risk of carbon leakage by addressing the greenhouse gas emissions embedded in high-emission products when they are imported into the customs territory of the European Union. The mechanism ensures that the “carbon price” paid by the producer of these products in a non-EU country is equivalent to the price required for production within the EU.