The European Union’s Carbon Border Adjustment Mechanism affects international trade by addressing the green cost of being green to the real cost of foreign imported goods. This vision for the future will ensure the carbon cost brings foreign products into the EU market in line with other domestically produced products—smoothing the playing field and ensuring a green cleaner economy.
CBAM: Trailing the Road to Green Trade out of the Battlefield
The system has two strategic purposes: to avoid carbon leakage and to enable international decarbonisation. As the rate of climate change accelerates and nations move toward more ambitious emission-cutting targets, coordinating trade with environment objectives is now not a choice—it’s unavoidable.
The CBAM is a policy instrument introducing a carbon price into imported goods in the EU.However, the purchaser must buy carbon instruments for what would have been collected under the EU Emigrations Trading System, If imported good into the EU has high hothouse gas emigrations but originates from a low ornon-carbon-priced nation.
It’s not a secret tariff or levy. It’s a carbon pricing correction—keeping European industry, which already has to pay for what it pollutes, from being undercut by cheap, dirty imports. CBAM initially targets energy-intensive sectors like cement, steel, iron, aluminium, fertilisers, hydrogen, and electricity.