What is CBAM?

CBAM stands for Carbon Border Adjustment Mechanism. It is a climate policy tool implemented by the European Union (EU) to address carbon leakage and ensure that the EU's ambitious climate goals are not undermined by production shifting to countries with weaker environmental regulations.

Key Objectives of CBAM

Prevent Carbon Leakage
Companies might move carbon-intensive production to countries with less strict climate policies, or EU products could be replaced by more carbon-intensive imports. CBAM aims to level the playing field.

Encourage Global Decarbonization
By imposing a carbon cost on imports, CBAM incentivizes non-EU producers to reduce their carbon footprint.

Support the EU's Green Deal
The EU aims to be climate-neutral by 2050. CBAM helps ensure that emissions reductions in the EU are not offset by increased emissions elsewhere.

In a Nutshell

CBAM is essentially a carbon tariff on imports into the EU, designed to extend the bloc's carbon pricing to foreign products and drive global climate action. It represents a major shift in how trade policy is used to advance environmental goals.