CBAM – Carbon Border Adjustment Mechanism
The Carbon Border Adjustment Mechanism (CBAM) is a climate policy instrument of the European Union designed to reduce competitive distortions arising from differences in carbon pricing in third countries. Aborder adjustment is not a new concept: a value-added tax, for instance, is levied on imports and rebated on exports. CBAM transfers this principle to carbon costs.
Since January 2026, companies importing into the EU have to pay carbon costs on emissions-intensive raw materials such as steel, cement, and aluminium, as well as on selected downstream products derived from these materials. The charge is based on the greenhouse gas emissions caused by the production of the imported goods. Carbon prices already paid in the country of origin are credited to avoid double charging.
The aim of CBAM is to prevent carbon leakage — that is, the relocation of emissions-intensive production to countries without comparable climate policy — while also creating incentives for international convergence of carbon pricing. However, the political and academic debate has pointed to challenges in the current design, including limited product coverage, potential competitive disadvantages for European exports (since rebating carbon costs under the current CBAM design is not WTO-compliant), and the risk of circumvention especially through resource shuffling.
Because of these challenges, reforms to CBAM are currently under discussion. A pragmatic solution would be for raw materials with complex downstream value chains (steel, organic chemicals, and aluminium) to base CBAM on standardized values. This would allow for simpler administration using established mechanisms and offer a WTO-compliant approach to addressing the above-mentioned problems for EU-exporter, downstream sectors and circumvention — ultimately providing adequate protection against carbon leakage.
As of September 2026
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Was ist der CO2-Grenzausgleich (CBAM)?
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