The Regulation of the European Parliament and the Council of 10 May 2023 introduced a mechanism for adjusting border prices taking into account greenhouse gas emissions. The new regulations aim to increase the competitiveness of European industry. The regulations entered into force on 1 October 2023. As a result, new reporting obligations have been imposed regarding products acquired. The new mechanism for adjusting prices at the borders, taking CO2 emissions into account, is called the Carbon Border Adjustment Mechanism (CBAM). The purpose of the new regulations is to level the playing field for European markets, which are burdened with additional costs due to the European Union’s climate policy.
Currently, CBAM only applies to a few industrial sectors, namely:
The new regulations are designed to protect goods with a high risk of carbon leakage, i.e., goods produced in the EU that face competition from countries with lower environmental standards, thus aiming to equalize the prices of goods produced within the EU and in countries that are not required to limit greenhouse gas emissions.
Over the coming years, CBAM will gradually replace the free allowances granted under the EU Emissions Trading System (ETS). In this way, CBAM will serve as an important incentive for EU producers to reduce emissions.
The CBAM mechanism is divided into two phases. During the transitional period, from 1 October 2023 to 31 December 2025, importers will be required to submit quarterly reports on the embedded emissions related to the import of goods subject to the EU carbon tax. After January 1 2026, these entities will be required to pay for emissions.
The Enim Institute supports entrepreneurs in meeting EU requirements related to CBAM in the following areas: