Europe's new carbon tax on imported goods will change global trade
a day ago
- #carbon pricing
- #global trade
- #climate policy
- The Carbon Border Adjustment Mechanism (CBAM) will fully come into effect on January 1, 2026, imposing a carbon price on imported goods entering the EU.
- CBAM aims to prevent companies from relocating to regions with weaker climate regulations, ensuring fair competition and promoting global decarbonization.
- Importers will need to purchase CBAM certificates to cover emissions from goods like iron, steel, aluminium, cement, fertilizers, hydrogen, and electricity.
- The policy is influencing global trade, with countries like the UK planning their own versions and others investing in cleaner technologies to remain competitive.
- Morocco is introducing a domestic carbon tax in 2026 to align with CBAM and protect its exports from additional charges.
- CBAM is accelerating interest in renewable energy and greener industrial processes, seen by some as an opportunity for investment in low-carbon manufacturing.
- Critics, including India and China, label CBAM as 'green protectionism,' arguing it unfairly pressures developing economies without sufficient support.
- Consumers in the EU may face higher prices for goods reliant on carbon-intensive materials like steel, aluminium, and cement.
- CBAM could increase transparency by requiring importers to report embedded emissions, helping consumers make climate-conscious purchasing decisions.
- Revenue from CBAM certificate sales will support vulnerable households, clean technologies, and energy efficiency improvements in the EU.