What is CBAM?

CBAM stands for the Carbon Border Adjustment Mechanism. It is a cornerstone of the “Fit for 55” package under the European Green Deal, designed to achieve the European Union’s ambitious goal of Net Zero Emissions by 2050.

On April 18, 2023, the European Parliament officially approved the CBAM regulation. The implementation is divided into two major phases:

1. The Transitional Period (October 1, 2023 – December 31, 2025): During this phase, importers are required to report the quantity of imported goods and the Embedded Emissions generated during the production process.
2. Full Implementation (Starting January 1, 2026): Importers will be legally mandated to purchase CBAM Certificates corresponding to the actual carbon emissions embedded in their imported products.

Scope of Affected Goods

Currently, the CBAM measures cover seven primary categories:

• Aluminium
• Iron & Steel
• Cement
• Fertilizer
• Electricity
• Hydrogen
• Other Downstream Products (e.g., screws and bolts made of iron/steel)