Carbon Border Adjustment Mechanism (CBAM)

The Carbon Border Adjustment Mechanism is a trade and climate policy instrument that requires a carbon price to be applied to the embedded emissions generated during the production of certain carbon-intensive products imported into the European Union. The aim is to prevent carbon leakage by equalizing the carbon cost of imported products with EU domestic production, and to promote cleaner production technologies on a global scale.

For companies trading with the EU, CBAM creates direct cost and reporting obligations and turns carbon-intensive supply chains into a strategic risk. Properly understanding and managing this mechanism is critical for maintaining competitiveness and reducing unexpected compliance costs.