Carbon Border Adjustment Mechanism (CBAM)

The EU Carbon Border Adjustment Mechanism puts a carbon price on imports of selected goods (iron and steel, cement, aluminum, fertilizers, hydrogen, and electricity) equal to what EU producers pay under the ETS, to stop carbon leakage to regions with looser rules. It is not a shipping measure itself, but it raises the embedded-carbon cost of traded commodities and signals the direction of border carbon pricing that could later reach transport. Reporting began in 2023, with charges from 2026.