What is the Carbon Border Adjustment Mechanism? & How is CBAM calculated?
The Carbon Border Adjustment Mechanism (CBAM) is a climate policy instrument introduced by the European Commission to address carbon leakage What is the Carbon Border Adjustment Mechanism? The Carbon Border Adjustment Mechanism (CBAM) is a climate policy instrument introduced by the European Commission to address carbon leakage and ensure fair carbon pricing on imported goods into the European Union. CBAM requires importers and exporters to monitor, calculate, and report embedded carbon emissions associated with specific goods. During the transitional phase (2023–2025), only reporting is required; however, from 2026 onwards, financial obligations will apply through the purchase of CBAM certificates. How is CBAM calculated? There are three basic steps: 1. Identify the CBAM goods you import 2. Choose the emissions data you need for reporting / decision-making purposes 3. If you don’t have actual data from su...