The Carbon Border Adjustment Mechanism (CBAM) is a

carbon tariff An eco-tariff, also known as an environmental tariff or carbon tariff, is a trade barrier erected for the purpose of reducing pollution and improving the environment. These trade barriers may take the form of import or export taxes on products th ...

on carbon intensive products, such as

cement A cement is a binder, a chemical substance used for construction that sets, hardens, and adheres to other materials to bind them together. Cement is seldom used on its own, but rather to bind sand and gravel (aggregate) together. Cement mixe ...

and some electricity, imported by the

European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are located primarily in Europe, Europe. The union has a total area of ...

. Currently being legislated as part of the

European Green Deal The European Green Deal, approved 2020, is a set of policy initiatives by the European Commission with the overarching aim of making the European Union (EU) climate neutral in 2050. An impact assessed plan will also be presented to increase the ...

it will to take effect in 2026 with reporting starting in 2023. The CBAM was passed with 450 votes for, 115 against and 55 abstentions. The price of CBAM certificates would be linked to price of EU allowances under the European Union Emissions Trading System and it is designed to stem

carbon leakage Carbon leakage occurs when there is an increase in greenhouse gas emissions in one country as a result of an emissions reduction by a second country with a strict climate policy. Carbon leakage may occur for a number of reasons: * If the emissi ...

from countries without a

carbon price Carbon pricing (or pricing), also known as cap and trade (CAT) or emissions trading scheme (ETS), is a method for nations to reduce global warming. The cost is applied to greenhouse gas emissions in order to encourage polluters to reduce the co ...

. Some observers have warned about the potential economic risks to the

Global South The concept of Global North and Global South (or North–South divide in a global context) is used to describe a grouping of countries along socio-economic and political characteristics. The Global South is a term often used to identify region ...

, as developing nations may struggle to decarbonise fast enough to remain competitive in the global market. The transition to a low-carbon economy requires technology and investment beyond the resources of many countries; proposed solutions include

technology transfer Technology transfer (TT), also called transfer of technology (TOT), is the process of transferring (disseminating) technology from the person or organization that owns or holds it to another person or organization, in an attempt to transform invent ...

and

green finance Sustainable finance is the set of financial regulations, standards, norms and products that pursue an environmental objective. It allows the financial system to connect with the economy and its populations by financing its agents while maintaining a ...

References

External links

Carbon Border Adjustment Mechanism proposal
{{EU-stub Customs duties Greenhouse gas emissions Emissions trading