The Carbon Border Adjustment Mechanism (CBAM) is an EU policy that charges importers for the carbon emissions embedded in certain high-emission goods, ensuring fair competition and encouraging lower-carbon production abroad.

Carbon Border Adjustment Mechanism

Laws and Policies

CCLW

CCLW national policies

Commission Implementing Regulation (EU) 2023/1773 laying down the rules for the application of Regulation (EU) 2023/956

Published

Commission Implementing Regulation (EU) 2023/1773, adopted on 17 August 2023, lays down the detailed reporting rules for the Carbon Border Adjustment Mechanism (CBAM) during its transitional period, running from 1 October 2023 to 31 December 2025. It defines the obligations of “reporting declarants” — typically importers or their customs representatives — who must submit quarterly reports on the quantity and type of goods imported, their country of origin, and the emissions embedded in their production. The Regulation specifies the calculation methods for both direct and indirect emissions, aligning them with methodologies used under the EU Emissions Trading System.

Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishing a carbon border adjustment mechanism

Regulation (EU) 2025/2083 amending Regulation (EU) 2023/956 as regards simplifying and strengthening the carbon border adjustment mechanism

Regulation (EU) 2023/956 establishing a carbon border adjustment mechanism - Consolidated text

Regulation passed

Amended

The EU’s Carbon Border Adjustment Mechanism (CBAM) allows for a price to be put 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 gradual introduction of the CBAM from October 2023 is aligned with the phase-out of the allocation of free allowances under the EU Emissions Trading System (ETS) to support the decarbonisation of EU industry.
The CBAM will initially apply to imports of certain goods and selected precursors whose production is carbon intensive and at most significant risk of carbon leakage: cement, iron and steel, aluminium, fertilisers, electricity and hydrogen. CBAM will eventually – when fully phased in – capture more than 50% of the emissions in EU ETS covered sectors.
By confirming that a price has been paid for the embedded carbon emissions generated in the production of certain goods imported into the EU, the CBAM is intended to ensure the carbon price of imports is equivalent to the carbon price of domestic production, and that the EU's climate objectives are not undermined.

Regulation (EU) 2023/956 establishing a carbon border adjustment mechanism, amended by Regulation (EU) 2025/2083 (CBAM)

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Carbon Market Regulations Tracker offers standardised summaries and direct links to relevant regulations concerning baseline-and-crediting market activities, within voluntary carbon markets and those under Article 6 of the Paris Agreement.

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The process of adjusting to living in a changing climate. This can include altering behaviour, systems, and ways of life to reduce or avoid both current and future harms from climate impacts.

Any compulsory, unrequited payment to the government levied on corporations or individuals. This can be for environmental reasons, such as introducing a Carbon tax to set a price that emitters must pay for the greenhouse gases they emit.

Tradable permits are market-based tools that grant permission for specific activities, frequently used to regulate emissions. These permits can be issued within a trading system to manage environmental impacts.

The processes through which enterprises can identify, prevent, mitigate and account for how they address their actual and potential adverse impacts. Due diligence is the idea that reasonable precautions should be taken to avoid causing harm to people, the environment, or society. It also involves identifying and mitigating risks before they occur.

A financial institution that manages a country's currency and can promote climate-related initiatives through green monetary policy and other means.

A long-lived, colourless gas, chiefly emitted from fossil fuel combustion, deforestation and cement production.

Molecules in the atmosphere that play a key role in the greenhouse effect by trapping heat radiating from Earth’s surface.

A potent, short-lived greehouse gas, largely released from livestock, fossil fuel extraction and waste management.

Energy derived from biological compounds that are renewable due to their short life cycle within the carbon dioxide cycle.

Renewable energy means all forms of energy produced from renewable sources in a sustainable manner.

Oil is a combustible liquid fossil fuel composed mainly of hydrocarbons, occurring as crude oil and refined into petroleum products such as petrol, diesel and kerosene.

Coal is a combustible sedimentary rock formed from carbonised plant matter, rich in carbon and hydrocarbons, and occurring in several main types including hard coal and brown coal.

Fossil fuel is a generic term for non-renewable energy sources such as coal, fossil gas, and oil (including crude oil, and petroleum products), that can be used for electricity and heat generation. Fossil fuels are hydrocarbons formed from pressurised and heated organic material buried over millions of years.

Fossil gas, commonly known as natural gas, is a fossil fuel consisting chiefly of methane with smaller amounts of other hydrocarbons and trace gases, found in underground deposits.

This sector involves the wholesale and retail selling of goods.

Activities involving the catching, processing, and selling of fish for food, recreation, and industry.

The activities of industries that transforms raw materials into finished goods through industrial processes.

The activities of industries involved in the production, distribution, and sale of energy, including electricity, gas, and renewables.

Activities of industries that extract natural resources, such as mining, oil, and gas, for commercial use.

This sector involves managing waste treatment, sanitation, pollution control and environmental cleanup.

Activities that involve the cultivation of crops and raising of livestock for food, fibre, and other products essential for human life and industry.

Activities that involve planning, designing and building infrastructure, residential, and commercial structures.

This sector involves the distribution, treatment, and conservation of water resources.

This sector provides communication services, software development, and IT solutions.

This sector involves activities to move goods and people, alongside the storage of products.

Any substance with chemical properties that can cause physical harm to people or damage the environment, including ammonia, carbon monoxide, phosphine, chlorine, arsenic, cadmium, mercury, pesticides, dioxins, microplastics, benzene, asbestos, aflatoxins, fluoride, methanol, and toxins from marine sources.

Slow onset events evolve gradually from incremental changes over many years or from increased frequency or intensity of recurring events. As defined in the Cancun Adaptation Framework (2010), slow onset events include risks and impacts from rising temperatures, desertification, biodiversity loss, land and forest degradation, glacial retreat, ocean acidification, sea level rise, and salinization.

An aim to achieve a quantifiable outcome within a given time-frame, set by an institution such as a national government.

Policy instruments are techniques or tools used by governing authorities to promote certain policies in order to achieve predetermined goals. Put simply, instruments are how a government tries to achieve its goals, with this taxonomy being focused on national policy instruments.

Risk is the potential for adverse consequences resulting from the dynamic interplay between (climate-related) hazards, exposure, and vulnerability of affected human or ecological systems.

Groups  of people who are adversely affected by climate change or the response to it

A set of principles, processes, and practices that build economic and political power to shift from an extractive economy to a regenerative economy.

Area of the economy in which actors engage in identical or related activities.

Financial actors and resources that are primarily directed towards climate change mitigation, adaptation and compensation.

An enterprise or financial institution that is usually majority-owned, backed or significantly controlled by nation-state governments.

Commission Implementing Regulation (EU) 2023/1773 laying down the rules for the application of Regulation (EU) 2023/956

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Carbon Border Adjustment Mechanism

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Commission Implementing Regulation (EU) 2023/1773 laying down the rules for the application of Regulation (EU) 2023/956

Summary

Documents

About this policy

Topics mentioned most in this policy Beta

Part of a collection

Carbon Border Adjustment Mechanism

Note

Topics mentioned most in this policy
Beta