The Carbon Border Adjustment Mechanism (CBAM)
A step towards sustainability
The Carbon Border Adjustment Mechanism (CBAM) is a promising step towards a more sustainable future and a fairer playing field for companies committed to the environment. This policy instrument is designed to reduce carbon emissions and prevent unfair competition between domestic companies that are bound by strict emissions rules and foreign companies that are not.
What is the CBAM?
From October 2023 to December 2025, CBAM is subject to a transition period. During this period, importers or their representative must report quarterly how much CO2 was emitted in the production of imported CBAM goods. No other obligations apply yet. This transition period is explicitly intended to gain experience and learn. By gaining knowledge and experience, all stakeholders can properly prepare for CBAM from 2026 onwards.
The CBAM, which came into force on 1 October 2023 in its transitional phase, taxes importers based on the carbon emissions associated with the production of imported goods from outside the EU. This tax aims to discourage imports of high-carbon-emitting products while protecting domestic producers who may already have higher costs to comply with stricter environmental regulations.
CBAM initially applies to imports of specific goods and raw materials, such as cement, iron and steel, aluminium, fertilisers, electricity and hydrogen, whose production is carbon-intensive. This selection is based on the highest risk of carbon leakage. The first reporting period for importers ended on 31 January 2024.
Goal and impact
The purpose of CBAM is twofold: to strengthen environmental policy by encouraging global emission reductions and to protect the competitive position of domestic companies that adhere to strict emission standards. By encouraging importers to choose products with lower carbon emissions, the CBAM will accelerate the global transition to a low-carbon economy.
With its expanded scope, the CBAM will eventually capture more than 50% of emissions in the sectors covered by the European Emissions Trading Scheme (ETS), confirming it as a powerful tool in the fight against climate change and demonstrating the EU's commitment to a more sustainable future and a global low-carbon economy. The Carbon Border Adjustment Mechanism is more than just a policy tool; it is a demonstration of the EU's commitment to a more sustainable future and a powerful step towards a global low-carbon economy. With its impact on both the environment and business competitiveness, the CBAM promises a promising future for our planet and economy.
Would you also like to know how this applies to your business? Then be sure to get in touch or schedule a no-obligation consultation with one of our experts.
Curious to know more? Then be sure to register for the webinar in collaboration with KBC. In it, we will explain more about CBAM and other European regulations related to sustainability.