What IS IT?
CBAM is Designed in compliance with World Trade Organization (WTO) rules and other international obligations of the EU, the CBAM system will work as follows: EU importers will buy carbon certificates corresponding to the carbon price that would have been paid, had the goods been produced under the EU's carbon pricing rules. Conversely, once a non-EU producer can show that they have already paid a price for the carbon used in the production of the imported goods in a third country, the corresponding cost can be fully deducted for the EU importer. The CBAM will help reduce the risk of carbon leakage by encouraging producers in non-EU countries to green their production processes.
Which sectors will the new mechanism cover and why were they chosen?
The CBAM will initially apply to imports of the following goods:
Cement
iron and steel
aluminium
fertilisers
electricity
CBAM regulation in the Official Journal of the EU
establishing a carbon border adjustment mechanism
CBAM Implementing Regulation for the transitional phase
laying down the rules for the application of Regulation (EU) 2023/956 of the European Parliament and of the Council as regards reporting obligations for the purposes of the carbon border adjustment mechanism during the transitional period
Learn More: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ%3AJOL_2023_228_R_0006#d1e40-94-1
Reference:https://eur-lex.europa.eu
