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European Parliament adopts final agreement on CBAM

With 487 votes to 81 and 75 abstentions, EP adopted the interinstitutional agreement with the Council on the new EU Carbon Border Adjustment Mechanism (CBAM) on 18 April. It aims to incentivise non-EU countries to increase their climate ambition and to ensure that EU and global climate efforts are not undermined by production relocated from the EU to countries with less ambitious policies. 

The goods covered by CBAM are iron, steel, cement, aluminium, fertilisers, electricity, hydrogen, and indirect emissions under certain conditions. Importers of these goods would have to pay any difference between the carbon price paid in the country of production and carbon allowances in the EU Emissions Trading Scheme (ETS). 

Following EP’s vote and Council’s adoption (see below), CBAM can become EU law. The system will be phased in from 2026 until 2034 at the same speed as the free allowances in the EU ETS are being phased out.

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