What is the EU's Carbon Border Adjustment Mechanism (CBAM)?

CBAM is an EU policy requiring importers to pay a carbon price on certain goods, aiming to level the playing field with domestic EU producers.

When did the EU's CBAM rules come into force?

The EU's CBAM rules officially went into effect on January 1, 2026.

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EU's Green Tariff: Carbon Border Tax Starts Now

Q: What products are initially covered by the EU's CBAM?

Initially, CBAM covers iron and steel, aluminium, cement, hydrogen, electricity, and fertilisers.

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Summary

EU's Carbon Border Adjustment Mechanism (CBAM) takes effect today.
CBAM aims to level the playing field and prevent carbon leakage.
UK and EU carbon markets are not yet linked, causing potential UK penalties.

EU's Green Tariff: Carbon Border Tax Starts Now

The European Union has implemented a landmark Carbon Border Adjustment Mechanism (CBAM) today, marking a significant shift in green trade rules. This mechanism mandates that companies importing steel, cement, and other carbon-intensive products into the EU must now demonstrate compliance with low-carbon regulations or face financial penalties. The stated goal is to foster a more equitable market by ensuring EU industries are not undercut by competitors operating under less stringent environmental standards.

This initiative is designed to prevent "carbon leakage," a phenomenon where production shifts to regions with more lenient regulations due to cost advantages. Initially, CBAM will cover sectors including iron and steel, aluminium, cement, hydrogen, electricity, and fertilisers. Future expansion is planned for 2028 to include products utilizing steel and aluminium, such as machinery and appliances, to close potential loopholes.