Study Guide

3.6. Climate-related trade measures

Alongside enforcement, customs is beginning to administer measures that price or restrict trade based on its climate impact. The clearest example is the EU’s Carbon Border Adjustment Mechanism.

Carbon Border Adjustment Mechanism (CBAM)

The Carbon Border Adjustment Mechanism (CBAM) puts a carbon price on the emissions embedded in certain imports, so foreign goods face a cost comparable to EU-produced goods under the EU Emissions Trading System. It supports the EU’s target to cut greenhouse-gas emissions 55% by 2030 and reach climate neutrality by 2050, and it aims to:

•          Reduce carbon leakage, where production shifts to countries with weaker climate rules
•          Encourage cleaner production outside the EU
•          Keep a level playing field between EU and foreign producers

CBAM initially covers six carbon-intensive sectors: cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen. It ran as a reporting-only transitional phase from October 2023 to December 2025, and its definitive phase began on 1 January 2026, when financial obligations took effect. In-scope importers must now:

•          Hold Authorized CBAM Declarant status
•          Report on the verified embedded emissions in their imports each year
•          Purchase and surrender CBAM certificates to cover those emissions