Climate change is a global problem that needs global solutions. As the EU raises its own climate ambition, and as long as less stringent climate policies prevail in many non-EU countries, there is a risk of so-called ‘carbon leakage'. Carbon leakage occurs when companies based in the EU move carbon-intensive production abroad to countries where less stringent climate policies are in place than in the EU, or when EU products get replaced by more carbon-intensive imports.

The EU’s Carbon Border Adjustment Mechanism (CBAM) is our landmark tool to put a fair price on the carbon emitted during the production of carbon intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries.

The CBAM regulation officially entered into force the day following its publication in the Official Journal of the EU on 16 May 2023. The CBAM itself will enter into application in its transitional phase on 1 October 2023, with the first reporting period for importers ending 31 January 2024.

The reporting obligations and information sought from EU importers of CBAM goods, as well as the provisional methodology for calculating embedded emissions released during the production process of CBAM goods were further specified in an Implementing Regulation adopted by the Commission on 17 August 2023.

Related links:

CBAM regulation: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32023R0956

Q & A on CBAM: https://taxation-customs.ec.europa.eu/system/files/2023-07/20230714%20Q%26A%20CBAM_0.pdf

Link to the main webpage on CBAM at TAXUD’s website: https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en

CBAM implementation regulation: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ%3AJOL_2023_228_R_0006#d1e40-94-1

Annex to CBAM implementation regulation: CBAM implementation regulation: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ%3AJOL_2023_228_R_0006#d1e32-113-1