Carbon Border Adjustment Mechanism

An EU measure that applies a carbon price to the emissions embedded in certain imported goods — at the outset iron and steel, aluminium, cement, fertilisers, electricity and hydrogen — with the stated objective that imported and EU-produced goods face comparable carbon costs (its design and trade-law compatibility are the subject of ongoing discussion among Parties). It opened with a transitional phase from October 2023 in which importers reported embedded emissions without a financial adjustment, and entered its definitive phase, in which authorised declarants surrender CBAM certificates, from 1 January 2026, with the first declaration and surrender of certificates due by 30 September 2027. A carbon price already paid in the country of production can be taken into account, and the rules continue to be refined through implementing legislation and guidance.

Why it matters in the room

CBAM makes a producing country’s own carbon pricing and MRV architecture directly relevant to its trade with the EU, which is why the term surfaces in trade, climate and bilateral partnership discussions alike. Most of the technical conversation is about emissions methodology, verified data and administrative capacity.