CBAM regulation adopted on 10 May 2023

On 10 May 2023, the Council of the European Union and the European Parliament adopted the new regulation (EU) 2023/956 establishing a carbon border adjustment mechanism (CBAM). CBAM is designed to address greenhouse gas emissions embedded in specific goods on their importation into the customs territory of the European Union (EU) to prevent the risk of carbon leakage. Carbon leakage occurs when, for cost reasons related to climate policies, businesses in certain industry sectors or subsectors transfer production to other countries, or import from other countries products that are more carbon-intensive than equivalent products manufactured in the EU.