Segments of the industrial sector in non-European countries, as exporters of goods, need to adapt to the new European Union import regulations: the CBAM - Carbon Border Adjustment Mechanism. This approach is nothing more than an acknowledgement of the global impact of Climate Change.

In this system, the European carbon tax mechanism, Emissions Trading System (ETS), is extrapolated to non-European countries, with or without a regulated internal carbon market, in order to avoid carbon leakage. In other words, even with production not established on European soil, companies that already explore or intend to explore this market need to adapt to the methodology and carbon pricing adopted in European Union countries.

To comply, reporting carbon emissions is mandatory, along with financial compensation. The amount charged can be deducted if some payment has been made previously in the country of origin (purchase of carbon credits, for example).

The methodology applied to account for emissions is specific to CBAM regulations and differs in some aspects from commonly recognized standards, such as the GHG Protocol and Life Cycle Assessment.

To date, the sectors considered are: Cement, Iron and Steel, Aluminum, Fertilizers, Electricity and Hydrogen. The transition phase began in October 2023, with no financial charges yet, but with mandatory quarterly reporting, the first being in January 2024. From January 2026 onwards, reports will be annual and payment of carbon credits due will be mandatory.

In general, CBAM highlights that voluntary carbon markets are increasingly giving way to mandatory regulations. Furthermore, it reinforces that accounting for emissions, compensatory measures and adherence to decarbonization mechanisms are establishing themselves as the new and definitive market profile.

For more detailed information on this mechanism, we recommend accessing the European Commission website dedicated to CBAM.