“For the first time, we are going to ensure fair treatment between our companies, which pay a carbon price in Europe, and their foreign competitors, which do not. This is a major step that will allow us to do more for the climate while protecting our companies and our jobs.”
CBAM starts on limited scale October 1, 2023 and goes into full force in 2026. Carbon credit prices will jump. The EU’s carbon credit market has a fixed supply. Importers must buy these credits if they have high emissions. Demand will far exceed supply.Importers must provide an audited emissions statement on their prior year emissions, and a calculation of product-level emissions intensity, which is used to set their CBAM tax level by product.
HOW CBAM WORKSRegulators use audited emissions statements to determine the import tax
Source: European Commission