CBAM - The carbon border adjustment mechanism set to shape the future of trade.
Later today the European Commission will be releasing details of its proposed carbon border adjustment mechanism, otherwise known as - "CBAM".
So what does all of this mean?
"CBAM" places a carbon price on the import of certain goods from outside the EU, to account for the carbon emissions embedded in certain carbon-intensive products. The proposal is an important measure to help protect Europe's domestic industry, and reduces their risk of 'carbon leakage'. 'Carbon leakage occurs when there is an increase in greenhouse gas emissions in one country as a result of an emissions reduction by a second country with a strict climate policy'. Imposing these trade restrictions, will help them to achieve the European 'Green Deal' and become the first carbon-neutral continent by 2050.
There is no doubt these new measures will shape the future of trade, global climate goals and governance. It has never been more important to recognise that the most significant economies are now committed to achieving net zero carbon emissions, and all market participants who are intent on remaining relevant should start to do the same.
"CBAM" officially launches on the 14 July 2021 with the new measures to be introduced in 2023.
Concerned about CBAM?
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