A device charging imports for the carbon embedded in certain goods, so that a domestic constraint does not simply relocate production.
An emissions cap applied to a single territory creates an incentive to produce elsewhere and import, what is called carbon leakage, which cancels the climate effect while destroying local activity. The border adjustment mechanism answers that objection by requiring importers to buy certificates matching the emissions embedded in the good, less any carbon price already paid in the country of origin. It covers first the most intensive and most tradable products, cement, iron and steel, aluminum, fertilisers, electricity and hydrogen, and it progressively replaces the free allocation those sectors enjoyed. Implementation began with a transitional reporting-only period, a deliberate choice meant to test the measurement of embedded emissions, which is the real difficulty of the scheme. For trade credit insurance and supply chain cover it introduces a new exposure, since the cost of certificates becomes an import charge whose misestimation can unbalance a long-term supply contract.
Regulation (EU) 2023/956 of 10 May 2023 established the carbon border adjustment mechanism, with a transitional reporting period opening on 1 October 2023 and the definitive regime taking effect on 1 January 2026.
CBAM, MACF, taxe carbone aux frontières, carbon border adjustment