Carbon Border Adjustment Mechanism (CBAM): first step to avoid carbon leakage

The Carbon Border Adjustment Mechanism (CBAM) pilot phase began on 1 October 2023. It introduces a levy on imports coming from countries with more relaxed carbon emission rules and discourages companies from moving production out of the EU; a situation known as ´carbon leakage´.

CBAM explained in 60 seconds, courtesy of the EU Tax and Customs Union

The CBAM will initially apply to imports of certain goods and selected precursors whose production is carbon intensive and at most significant risk of carbon leakage: cement, iron and steel, aluminium, fertilizers, electricity and hydrogen. 

To find out more about CBAM, visit the EC´s Taxation and Customs Union website. 

A EU Green Deal for carbon neutrality in 2050

This is one of a series of policies under the EU Green Deal with the aim of achieving a 55% cut in emissions by 2030, and carbon neutrality in 2050. The CBAM will be fully in place as of 2026.

The phasing-out of free allocation under the EU ETS will take place in parallel with the phasing-in of CBAM in the period 2026–2038 (proposed extension).

Are you on board? Keep up to date with CBAM developments as well as other EU climate initiatives such as #EUETS reforms and the #SocialClimateFund (SCG): sign up to our newsflashes now.

Read the latest with a full interview on what's changed, what's still being decided, and where you actually have room to influence cost: Beyond compliance: what CBAM costs, and how to control it