• UGI USER
  • May 13, 2023
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Carbon Border Adjustment Mechanism (CBAM):

News: The European Union (EU) has announced that its Carbon Border Adjustment Mechanism (CBAM) will be introduced in its transitional phase from October 2023, which will levy a carbon tax on imports of products made from the processes which are not Environmentally sustainable or non-Green.

CBAM will translate into a 20-35 % tax on select imports into the EU starting 1st January 2026.

CBAM is part of the “Fit for 55 in 2030 package”, which is the EU’s plan to reduce greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels in line with the European Climate Law.

The CBAM is a policy tool aimed at reducing Carbon Emissions by ensuring that imported goods are subject to the same carbon costs as products produced within the EU.

The CBAM will be implemented by requiring importers to declare the quantity of goods imported into the EU and their embedded Greenhouse Gas (GHG) emissions on an annual basis.

To offset these emissions, importers will need to surrender a corresponding number of CBAM certificates, the price of which will be based on the weekly average auction price of EU Emission Trading System (ETS) allowances in €/tonne of CO2 emitted.

CBAM will ensure its climate objectives are not undermined by carbon-intensive imports and spur cleaner production in the rest of the world.