The Mechanism for EU Carbon Border Adjustment (CBAM)

Agile Advisors provide Carbon Border Adjustment Mechanism, the EU has set an ambitious target by 2030, CO2 emissions will be cut by 55% from 1990 levels. As part of this program, the EU has been progressively lowering the free distribution of EU Emissions Trading System (EU-ETS) certificates to energy-intensive companies. Because of this decrease, businesses in some industries could relocate their manufacturing to non-EU nations to save money, which might undermine the EU's efforts to reduce emissions. To offset potential competitive disadvantages for domestic manufacturers of comparable goods, importers of CBAM-covered products must pay a carbon price. While businesses based in the EU are already required to account for the carbon footprint of their production, CBAM extends this requirement to businesses importing goods from outside the EU. CBAM requires a carbon price based on the corresponding carbon emissions of some commodities manufactured outside the EU for import.