In December 2022, the European Parliament and Council agreed on
the text of the regulation on the Carbon Border Adjustment
Mechanism (the “CBAM”) which is expected to be
published in the Official Journal of the EU and enter into force
soon.
The CBAM aims to prevent carbon leakage which
results when EU companies move production in carbon-intensive
sectors to non-EU countries whose environmental policies are less
strict than those of the EU.
The CBAM will impose a carbon price on certain products that are
imported in the EU. This will be based on the price payable under
the EU Emissions Trading System (ETS) when the goods are produced
in the EU (the ETS requires companies to pay for a European
Emission Allowance for every tonne of carbon they emit).
