- On 13 December 2022, the European Parliament reached a provisional agreement with the Council of the European Union (EU) to implement an EU Carbon Border Adjustment Mechanism (CBAM).
- The regime will apply from 1 October 2023 (previously 1 January 2023), with a transitional period linked to the phasing out of free allowances under the EU Emission Trading System (EU ETS) which is yet to be announced.
- Scope of the proposed CBAM has been extended to hydrogen, certain precursors and only certain indirect emissions and downstream products.
- Governance of CBAM will be centralized with the majority of activities managed by European Commission.
- Formal approval of the agreement by the European Parliament and the Council of the EU will be required before the new law can come into force.
Source EY
