The Carbon Border Adjustment Mechanism (CBAM): The New EU Import Tariff on Carbon-intensive Goods

May 2023
Region: Europe

The new EU import tariff on carbon-intensive goods aims to reduce greenhouse gas emissions (GHG) in identified industrial carbon intensive sectors. The EU has introduced a new mechanism to put a levy on GHG emissions embedded in goods imported into the EU and this new EU law was adopted on April 25, 2023, with entry into force expected in due course.

The obligations of the system introduced by the CBAM Regulation are imposed on importers and not directly to non-EU companies that export in the EU.

However, even if the obligations to pay the carbon tariffs weigh on the importer, the imposition of the tax will have an impact (inevitably negative) on the purchase price and on demand of goods coming from outside the EU.