The European Union’s (“EU”) Carbon Border Adjustment Mechanism (“CBAM”) came into effect on October 1, 2023, marking a significant milestone in the EU’s approach to addressing climate change and reducing global Greenhouse Gas Emissions (“GHG”).
Created by Regulation EU No. 2023/956 of the European Parliament and the Council (“Regulation”), the CBAM’s primary objective is to burden carbon emissions embedded in products imported by the EU, thus preventing the phenomenon known as carbon leakage, whereby companies relocate their emissions outside the EU to avoid emission regulations.
Emissions from imported products shall be assessed by the importer and reported to the EU member state where the importer is established, with the emissions described in the report to be verified by an accredited verifier in accordance with EU regulation standards – the same as the European carbon market (“ETS”).
