Implementation of Carbon Border Adjustment Mechanism in the EU
The Carbon Border Adjustment Mechanism (CBAM) will apply to several imported products, imposing additional costs based on carbon emissions. This aims to promote decarbonization among exporters and protect EU companies under the Emissions Trading System (ETS).
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The Carbon Border Adjustment Mechanism (CBAM) was adopted in 2023 and will enter its final phase in 2026. It targets imported products including iron, steel, cement, fertilizers, aluminum, electricity, and hydrogen from non-EU countries.
The mechanism imposes additional costs depending on the carbon emissions of exporting companies, incentivizing them to reduce their carbon footprint. This adjustment is crucial for maintaining a level playing field for EU companies participating in the Emissions Trading System (ETS). The implementation of CBAM may lead to increased compliance costs for non-EU exporters and encourage global decarbonization efforts, impacting international trade dynamics.
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