On the 1 October 2023, the European Union's Carbon Border
Adjustment Mechanism ("CBAM") entered
into effect, starting with a transitional phase that runs until the
end of 2025 (the Transitional Period"). The
CBAM was introduced by EU Regulation 2023/956 establishing a carbon
border adjustment mechanism (the
"Regulation") and further supplemented
by Commission Implementing Regulation 2023/1773 of 17 August
2023.
The purpose of CBAM is two-fold. The primary objective is that
of addressing greenhouse gas emissions embedded in goods on their
importation into the customs territory of the EU to prevent carbon
leakage, thereby reducing global carbon emissions and supporting
the goals of the Paris Agreement. The secondary objective is to
financially incentivise operators based in non-EU countries to
reduce carbon emissions in their production processes. Moreover,
the CBAM will level the playing field between the producers of
goods based in non-EU Countries which export
