Carbon Border Adjustment Mechanism (CBAM)

How it is used

Usually called CBAM, pronounced 'see-bam'. It aims to prevent carbon leakage and follows the EU ETS price. EU importers report the embedded emissions of covered goods and, after a reporting-only transitional phase (2023–2025), pay through CBAM certificates. Exporters must give verified emissions data to EU buyers.

Example sentences

1. Because of the Carbon Border Adjustment Mechanism, our EU customers now ask for the emissions data of every steel shipment.

2. Under the Carbon Border Adjustment Mechanism, goods made with lower emissions face a lower carbon cost at the EU border.

Common collocations

• CBAM reporting
• embedded emissions
• carbon leakage
• CBAM certificates
• goods covered by CBAM

Related terms

• emissions trading system (ETS)A market-based scheme that sets a cap on total emissions and lets companies buy and sell allowances, each giving the right to emit one tonne of CO2 or its equivalent.
• carbon pricingPolicies that put a price on greenhouse gas emissions, mainly through carbon taxes or emissions trading systems, so that polluters pay and cleaner options become more attractive.
• European Green DealThe EU's main policy package, launched in 2019, that aims to make Europe climate-neutral by 2050 and to cut net emissions by at least 55% by 2030 compared with 1990.
• decarbonizationThe process of reducing the carbon dioxide and other greenhouse gas emissions of an economy, sector or company, for example by switching to clean energy and electrifying processes.
• emission factorA value that converts an activity, such as liters of fuel burned or kilowatt-hours of electricity used, into the amount of greenhouse gas or pollutant emitted.

More terms: Environmental Policy and Law

• Paris Agreement
• environmental permit
• polluter pays principle
• carbon tax
• nationally determined contribution (NDC)
• COP
• phase out
• extended producer responsibility (EPR)