What Is CBAM and Why Is It Important for Your Business?
The Carbon Border Adjustment Mechanism (CBAM) is a trade policy introduced by the European Union to address the issue of carbon leakage. Carbon leakage occurs when companies relocate production to countries with more lenient environmental regulations to avoid the high costs associated with carbon emissions in the EU. CBAM is designed to ensure that goods imported into the EU are subject to a carbon cost equivalent to that applied to goods produced within the EU, which are subject to the EU Emissions Trading System (ETS).
In Which Countries Is CBAM Implemented?
The Carbon Border Adjustment Mechanism (CBAM) applies to goods imported into the European Union, particularly from countries that do not have a carbon pricing system equivalent to the EU ETS. This policy has been implemented in stages since October 2023 through a transitional phase, during which importers are required to report the carbon emissions embodied in their imported goods. This transitional phase runs until December 2025; in January 2026, CBAM will enter its full implementation phase, requiring importers to purchase CBAM certificates to offset the carbon emissions associated with their products.



