What is CBAM (Carbon Border Adjustment Mechanism)?

What is CBAM (Carbon Border Adjustment Mechanism)?

Today, many countries and regions are increasing their efforts to reduce carbon emissions as part of the fight against global climate change. In this context, one of the important issues that are on the agenda of the European Union and discussed is the "Carbon Border Adjustment Mechanism" (CBAM).

What is CBAM?

CBAM is the European Union's carbon border adjustment mechanism. Its main purpose is to support efforts to reduce carbon emissions from production processes in EU member countries and, at the same time, to prevent carbon leakage in the absence of similar efforts for imported products. This mechanism aims to make an evaluation according to the carbon emissions resulting from the production processes of imported products.

How Does CBAM Work?

CBAM measures the carbon intensity of imported products and creates a regulatory mechanism based on the carbon emissions resulting from the production processes of these products. Importing companies may have to pay a fee determined according to these carbon intensity coefficients when selling their products to the EU. Thus, a similar regulation and cost advantage is provided to manufacturers within the EU.

This system also encourages the reduction of carbon emissions in the production processes of imported products. By switching to more environmentally friendly production methods, manufacturers may have the opportunity to reduce their CBAM coefficients and therefore reduce regulatory costs.

Effects of CBAM on the Global Economy:

Implementation of CBAM may result in some changes in global trade. Competition conditions may change as importing countries will have to take into account the cost of CBAM when selling their products to the EU. At the same time, this mechanism could promote more environmentally friendly production processes globally and support global efforts to reduce carbon emissions.

As a result, CBAM is a regulatory mechanism that takes into account import processes in line with the European Union's carbon emissions reduction targets. Their impact on the global economy includes the potential to shift towards environmentally friendly production processes and changes in trade conditions. How this mechanism will be implemented and the developing processes will continue to be discussed as an important issue in the global economic context.