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Carbon Border Adjustment Mechanism (CBAM)

Learn about the system that the EU uses to import goods from outside the EU, which sets a fair price for the carbon emitted during production and promotes cleaner energy. As well as the mechanism to be implemented at the border due to the risk of leakage of this carbon.

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How CBAM works

The CBAM Regulation officially entered into force on the day following its publication in the Official Journal of the EU , on May 16, 2023. The CBAM will begin to be applied on a transitional basis on 1 October 2023 and the first declaration period for importers will end on 31 January 2024.

The gradual introduction of CBAM is in line with the phasing out of the allocation of free allowances under the Community Emissions Trading Scheme (ETS) established under Directive 2003/87/ EC to support the decarbonisation of EU industry.

Starting in 2026 , the CBAM will operate as follows:

  • Goods shall be imported into the customs territory of the Union (TAU) only by authorised declarant for purposes of CBAM. EU importers of CBAM-covered goods register with national authorities, where they can also purchase CBAM certificates at a price based on weekly emissions allowances. ETS (expressed in €/tonne of CO 2 issued). The CBAM will ensure that the carbon price of imports is equivalent to the carbon price of domestic production, and that the EU's climate targets are not undermined. The CBAM is designed to be compatible with WTO rules.
  • The EU importer must declare by May 31 of each year the quantity of products imported into the EU in the previous year and the emissions embodied in those products. At the same time, the importer shall submit the number of CBAM certificates corresponding to the amount of GHG emissions incorporated into the products. The phasing out of free allocation under the ETS will take place in parallel with the phasing in of the CBAM in the period 2026-2034. If importers can demonstrate that a carbon price has already been paid during the production of the imported goods, the corresponding amount can be deducted from their final invoice.