- The European Union (EU) will begin implementing a transitional phase of the Carbon Border Adjustment Mechanism (CBAM) from 1 October 2023 as part of its “Fit for 55” package of measures.
- The CBAM is designed to tackle carbon leakage, which occurs when companies relocate their production to non-EU countries with less stringent carbon regulations.
- Importers of various products will be required to pay a CO2 price, aiming to ensure that EU companies producing comparable products are not put at a competitive disadvantage.
- The main area of application will initially be direct emissions, and the CBAM may be extended to indirect emissions in the future.
Source Taxand
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