The Carbon Border Adjustment Mechanism (CBAM) is a new instrument for preventing carbon leakage, that is, release of emissions to another countries. The mechanism is applied to so-called CBAM goods include, for example, certain iron and steel products, fertilisers, aluminium and cement products as well as hydrogen and electricity.
The objective of the mechanism is for the prices of goods imported to the another countries to reflect more accurately their carbon content. The CBAM also aims to encourage third countries, foreign producers and importers to reduce their emissions.
